Question 1

How does one create a meaningful performance report?

Accepted Answer

A)  calculate actual costs as a percentage of sales 
B)  compare actual costs with the prior year's actual costs 
C)  compare actual costs with the expected costs found in the static budget 
D)  compare actual costs with the expected costs at the same level of activity 
A)  calculate actual costs as a percentage of sales 
B)  compare actual costs with the prior year's actual costs 
C)  compare actual costs with the expected costs found in the static budget 
D)  compare actual costs with the expected costs at the same level of activity

Question 2

Assume that the expectations on the static budget were met. What can be concluded?

Accepted Answer

A)  The manager is very efficient. 
B)  The static budget was ill conceived. 
C)  There is no need for a flexible budget. 
D)  The effectiveness of the manager is not in question. 
A)  The manager is very efficient. 
B)  The static budget was ill conceived. 
C)  There is no need for a flexible budget. 
D)  The effectiveness of the manager is not in question.

Question 3

The variable cost component for each activity should correspond to the committed resources.

Accepted Answer

A) True 
 B)False

Question 4

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.
-Estimating activity output and then assessing the cost of resources to produce this output

Accepted Answer

A) Variable overhead efficiency variance 
B) Activity flexible budget 
C) Fixed overhead volume variance 
D) Variable overhead spending variance 
E) Flexible budget variance
F)Flexible budget
G)Static budget
H)Activity-based budgeting
I)Performance report
J)Fixed overhead spending variance 
A) Variable overhead efficiency variance 
B) Activity flexible budget 
C) Fixed overhead volume variance 
D) Variable overhead spending variance 
E) Flexible budget variance
F)Flexible budget
G)Static budget
H)Activity-based budgeting
I)Performance report
J)Fixed overhead spending variance

Question 5

Universal Forklifts, Inc.Universal Forklifts, Inc. produces a specialized machine part used in forklifts. For last year's operations, the following data were gathered: $\begin{array}{ll}
\text { Units produced: } & 60,000 \
\text { Direct labour: } & 30,000 \text { hours }(a) \$ 9.00 \text { per hour } \
\text { Actual variable overhead: } & \$ 150,000
\end{array}$ The company employs a standard costing system. During the year, a variable overhead rate of $4.50 per hour was used. The labour standard requires a half hour per unit produced.
-Refer to Long, Inc. What is the variable overhead spending variance?

Accepted Answer

A)  $20,000 U 
B)  $20,000 U. 
C)  $100,000 U 
D)  $100,000 U. 
A)  $20,000 U 
B)  $20,000 U. 
C)  $100,000 U 
D)  $100,000 U.

Question 6

The following standard costs were developed for one of the products of the Miller Corporation:
STANDARD COST CARD PER UNIT
Variable overhead: 9 hours × $9 per hour 81.00
Fixed overhead: 9 hours × $13 per hour 117.00
The following information is available regarding the company's operations for the period:
Units produced: 12,000
Direct labour: 85,000 hours costing $850,000
Overhead incurred:
Variable $786,000
Fixed $1,100,000
Budgeted fixed overhead for the period is $1,000,000, and the standard fixed overhead rate is based on expected capacity of 100,000 direct labour hours.
Required:
A. Calculate the variable overhead spending variance.
B. Calculate the variable overhead efficiency variance.
C. Calculate the fixed overhead spending variance.
D. Calculate the fixed overhead volume variance.

Accepted Answer

A. $21,000 U $786,000 - (85,00

Question 7

Suppose a company's variable overhead is applied on the basis of direct labour hours, and the company has an unfavourable direct labour efficiency variance. What is most likely to result?

Accepted Answer

A)  The direct labour rate variance will be favourable. 
B)  The direct materials usage variance will be unfavourable. 
C)  The variable overhead spending variance will be unfavourable. 
D)  The variable overhead efficiency variance will be unfavourable. 
A)  The direct labour rate variance will be favourable. 
B)  The direct materials usage variance will be unfavourable. 
C)  The variable overhead spending variance will be unfavourable. 
D)  The variable overhead efficiency variance will be unfavourable.

How does one create a meaningful performance report?

Assume that the expectations on the static budget were met. What can be concluded?

The variable cost component for each activity should correspond to the committed resources.

Suppose a company's variable overhead is applied on the basis of direct labour hours, and the company has an unfavourable direct labour efficiency variance. What is most likely to result?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, Production, Cash, and Master Budget

Standard Costing: a Managerial Control Tool

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 11: Flexible Budgets and Overhead Analysis

How does one create a meaningful performance report?

Assume that the expectations on the static budget were met. What can be concluded?

The variable cost component for each activity should correspond to the committed resources.

Suppose a company's variable overhead is applied on the basis of direct labour hours, and the company has an unfavourable direct labour efficiency variance. What is most likely to result?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, Production, Cash, and Master Budget

Standard Costing: a Managerial Control Tool

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters