Exam 11: Flexible Budgets and Overhead Analysis

Static budgets are the best benchmarks for preparing a performance report.

Because activities are what consume resources, activity-based budgeting may prove to be a much more powerful planning and control tool.

Suppose a company had actual fixed overhead of $99,500, a $3,100 favourable spending variance, and a $700 unfavourable volume variance. What was the budgeted fixed overhead?

Budgeted variable overhead for the year was $130,000. Expected activity was 20,000 standard direct labour hours. The actual hours worked were 18,250, and the standard hours allowed for actual production were 19,750. What was the variable overhead efficiency variance?

Just Bags Just Bags produces leather purses. The company has developed a static budget for the first quarter, which is based on 20,000 direct labour hours. During the quarter, the actual activity was 22,000 direct labour hours. Data for the first quarter are summarized as follows: Direct materials \ 80,000 \ 87,000 Direct labour 160,000 174,000 Rent Total -Refer to Just Bags. What is the flexible budget variance for the first quarter?

Glassco Company was planning to produce 4,500,000 speakers for the current year. Actual production was 4,000,000 speakers. Each speaker requires 0.80 direct labour hours per unit. Predetermined overhead rates are calculated using expected production, measured in direct labour hours. The budgeted variable overhead for the current year was $720,000. The actual variable overhead incurred was $714,000. What was the applied variable overhead for the year?

Activity-based budgeting builds a budget for each activity based on the resources needed to provide the required activity output levels.

Suppose an organization has already implemented an activity-based system. What has the organization already accomplished?

In an activity flexible budget, which of the following best correlates with the fixed cost component?

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Prediction of what activity costs will be as activity output changes

Refer to Jewel Company. What is the fixed overhead volume variance?

What is characteristic of a performance report?

Most fixed overhead costs are affected by changes in production levels.

Which budget is prepared for a particular level of activity?

Hyphen Corporation Hyphen Corporation uses a standard costing system. Information for the month of June is as follows: Actual overhead costs ($26,000 is fixed) $80,000 Direct labour: Actual hours worked 12,000 hours Standard hours allow ed for actual production 10,000 hours Average actual labour cost per hour \ 18 The overhead rate is based on a normal volume of 12,000 direct labour hours. Standard cost data at 12,000 direct labour hours were as follows: Variable overhead \ 48,000 Fixed overhead 24,000 Total overhead \7 2,000 -Refer to the Hyphen Corporation. What is the fixed overhead spending variance?

Newby Company Newby Company uses an activity-based costing system. Four activities have been identified. The setup activity uses the number of setups as its cost driver. The following budget information is available for this activity: Fixed costs per month \ 240,000 Variable cost per setup \ 5,400 The company expects to perform 25 setups in June. -Refer to Newby Company. Actual costs incurred were $246,000 fixed and $144,000 variable. Suppose the actual number of setups in June was 30. What would be the activity-based flexible budget variance?

Bridgestone Company Bridgestone Company has developed the following flexible budget formulas for its four overhead items: Variable rate per Overhead item Fixed cost direct labour hour Maintenance \ 8,000 \ 2.00 Power \ 2,000 \ 0.40 The company normally produces 10,000 units (each unit requires 0.10 direct labour hours); however, this year 15,000 units were produced with the following actual costs: Overhead item Actual costs Maintenance \ 14,000 Power \ 3,600 Equipment lease \ 5,000 -Refer to Bridgestone Company. When using an after-the-fact flexible budget, what is the variance for power?

At the beginning of the year, Goodman Company had the following standard cost sheet for one of its food products: Direct materials ( 10@3.20 per kilogram) \ 32.00 Direct labour (4 hours (\ 9.00 per hour) 36.00 Fixed overhead (4 hours (\ 4.00 per hour) 16.00 Variable overhead (4 hours (\omega,\ 0.75 per hour) 3.00 Standard cost per unit \8 7.00 The company computes its overhead rates using practical volume, which is 72,000 units. The actual results for the year are: Units produced 70,000 Direct labour hours 290,000 Actual wage per hour \ 9.05 Fixed overhead \ 1,160,000 Variable overhead \ 218,000 Required: A. Compute the fixed overhead spending and volume variances. B. Compute the variable overhead spending and efficiency variances.

Refer to Jewel Company. What is the variable overhead spending variance?

Refer to Lifter Company. Suppose that the actual moves made are 80% of the forklifts' capacity. What is the after-the-fact budgeted fuel cost?