Question 1

Which of the following best describes the cost of underutilising productive capacity?

Accepted Answer

A)  Lost sales of products that are produced. 
B)  Lost contribution margin of products that are not produced. 
C)  An implicit cost that is inevitable. 
D)  There is no cost. 
A)  Lost sales of products that are produced. 
B)  Lost contribution margin of products that are not produced. 
C)  An implicit cost that is inevitable. 
D)  There is no cost.

Question 2

Framlingham uses a standard costing system for product costing. The company uses direct labour hours as the cost driver to apply overhead costs. The following amounts were budgeted for the year:  
The following were the actual results:  
Calculate the variable overhead spending variance.

Accepted Answer

A)  $25 000 favourable 
B)  $50 000 favourable 
C)  $25 000 unfavourable 
D)  $10 000 unfavourable 
A)  $25 000 favourable 
B)  $50 000 favourable 
C)  $25 000 unfavourable 
D)  $10 000 unfavourable

Question 3

One of the main criticisms of standard costing systems is that it tends to focus too heavily on cost minimisation.

Accepted Answer

A) True 
 B)False

Question 4

Budgeted fixed overhead is the basis for controlling fixed overhead because

Accepted Answer

A)  it provides the benchmark against which actual expenditure is compared. 
B)  fixed overhead does not change as production activity varies. 
C)  budgeted fixed overhead is the same at all activity levels in the flexible budget. 
D)  All of the given answers 
A)  it provides the benchmark against which actual expenditure is compared. 
B)  fixed overhead does not change as production activity varies. 
C)  budgeted fixed overhead is the same at all activity levels in the flexible budget. 
D)  All of the given answers

Question 5

Which of the following statements is true for a standard cost system?

Accepted Answer

A)  Applied fixed manufacturing overhead is recorded as a debit to the manufacturing overhead account. 
B)  Overapplied fixed overhead is always debited to cost of goods sold. 
C)  Underapplied fixed overhead is always credited to finished goods inventory. 
D)  Applied fixed manufacturing overhead is recorded as a debit to the work in process inventory account. 
A)  Applied fixed manufacturing overhead is recorded as a debit to the manufacturing overhead account. 
B)  Overapplied fixed overhead is always debited to cost of goods sold. 
C)  Underapplied fixed overhead is always credited to finished goods inventory. 
D)  Applied fixed manufacturing overhead is recorded as a debit to the work in process inventory account.

Question 6

Security Doors has a standard variable overhead rate of $4 per direct labour hour. The standard quantity of direct labour per unit of production is 3 hours. The company's static budget was based on 50 000 units. Actual results for the year are as follows.  
What is Security Door's flexible budget for variable overhead costs for the actual output?

Accepted Answer

A)  $600 000 
B)  $540 000 
C)  $495 000 
D)  $432 000 
A)  $600 000 
B)  $540 000 
C)  $495 000 
D)  $432 000

Question 7

The focus of most variance reports is to highlight the differences between

Accepted Answer

A)  budgeted expenditure and actual expenditure. 
B)  budgeted expenditure and flexible expenditure. 
C)  budgeted revenue and actual revenue. 
D)  budgeted revenue and flexible revenue. 
A)  budgeted expenditure and actual expenditure. 
B)  budgeted expenditure and flexible expenditure. 
C)  budgeted revenue and actual revenue. 
D)  budgeted revenue and flexible revenue.

Question 8

Hamilton Pty Ltd uses a standard costing system for product costing. The company uses direct labour hours as the cost driver to apply overhead costs. The following amounts were budgeted for the year:  
The following were the actual results:  
Calculate the amount of fixed overhead budget variance.

Accepted Answer

A)  $10 000 favourable 
B)  $10 000 unfavourable 
C)  $24 000 favourable 
D)  $34 000 unfavourable 
A)  $10 000 favourable 
B)  $10 000 unfavourable 
C)  $24 000 favourable 
D)  $34 000 unfavourable

Question 9

Which of the following statements relating to standard costs is false?

Accepted Answer

A)  Standard costs result in more stable product costs. 
B)  Standard costs enable management to concentrate on significant variances. 
C)  Standard costs provide a valid basis for cost comparisons. 
D)  Standard costs cannot be used for external reporting. 
A)  Standard costs result in more stable product costs. 
B)  Standard costs enable management to concentrate on significant variances. 
C)  Standard costs provide a valid basis for cost comparisons. 
D)  Standard costs cannot be used for external reporting.

Question 10

Master Products has the following information at the end of the year:  
What is Master Product's sales price variance?

Accepted Answer

A)  $3000 favourable 
B)  $7500 favourable 
C)  $7000 favourable 
D)  $10 000 unfavourable 
A)  $3000 favourable 
B)  $7500 favourable 
C)  $7000 favourable 
D)  $10 000 unfavourable

Question 11

A four-way overhead analysis involves calculating variances for variable overheads, spending and efficiency, fixed overhead budget and fixed overhead volume.

Accepted Answer

A) True 
 B)False

Question 12

Choice of activity as the overhead cost driver in a service organisation's flexible budget.
Define overhead application and describe why direct labour hours would not be considered an accurate cost driver for allocating overhead costs for a hotel. Provide two examples of cost drivers that could be used in the hotel industry and justify your answer.

Accepted Answer

Overhead application refers to the metho

Question 13

Flexible budgets can be used by service organisations to

Accepted Answer

A)  plan overhead costs. 
B)  control overhead costs. 
C)  determine product costing. 
D)  plan and control overhead costs. 
A)  plan overhead costs. 
B)  control overhead costs. 
C)  determine product costing. 
D)  plan and control overhead costs.

Question 14

Which of the following is used in the computation of the variable overhead spending variance?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 15

When using activity-based costing, we recognise four types of activity costs: unit level, batch level, product level and facility level. Under activity-based budgeting, which of the following types of cost would be 'flexed'?

Accepted Answer

A)  Product level 
B)  Batch level 
C)  Unit level 
D)  All of the given answers 
A)  Product level 
B)  Batch level 
C)  Unit level 
D)  All of the given answers

Question 16

Which of the following interpretations of an unfavourable fixed overhead volume variance is correct?

Accepted Answer

A)  It measures the cost of underutilising productive capacity. 
B)  It is overapplied overhead. 
C)  It is similar to a favourable variable overhead efficiency variance. 
D)  It has no use for control purposes. 
A)  It measures the cost of underutilising productive capacity. 
B)  It is overapplied overhead. 
C)  It is similar to a favourable variable overhead efficiency variance. 
D)  It has no use for control purposes.

Question 17

Adams Corporation has developed the following flexible budget formula for annual indirect labour cost: Total cost = $4800 + 50c per machine hour. Operating budgets for the current month are based on 20 000 hours of planned machine time. Calculate the amount of indirect labour costs included in this planning budget.

Accepted Answer

A)  $7200 
B)  $10 000 
C)  $14 400 
D)  None of the given answers 
A)  $7200 
B)  $10 000 
C)  $14 400 
D)  None of the given answers

Question 18

Hamilton Pty Ltd uses a standard costing system for product costing. The company uses direct labour hours as the cost driver to apply overhead costs. The following amounts were budgeted for the year:  
The following were the actual results:  
Calculate the total amount of underapplied or overapplied manufacturing overhead.

Accepted Answer

A)  $80 000 underapplied 
B)  $64 000 underapplied 
C)  $50 000 overapplied 
D)  $24 000 underapplied 
A)  $80 000 underapplied 
B)  $64 000 underapplied 
C)  $50 000 overapplied 
D)  $24 000 underapplied

Question 19

The predetermined fixed overhead rate is found by

Accepted Answer

A)  budgeted total overhead / actual total activity. 
B)  actual fixed overhead / planned activity measure. 
C)  budgeted fixed overhead / planned activity measure. 
D)  budgeted fixed overhead / actual activity measure. 
A)  budgeted total overhead / actual total activity. 
B)  actual fixed overhead / planned activity measure. 
C)  budgeted fixed overhead / planned activity measure. 
D)  budgeted fixed overhead / actual activity measure.

Question 20

Although it is assumed that fixed overheads remain constant regardless of the level of activity, the total applied fixed overhead decreases with activity.

Accepted Answer

A) True 
 B)False

Which of the following best describes the cost of underutilising productive capacity?

Framlingham uses a standard costing system for product costing. The company uses direct labour hours as the cost driver to apply overhead costs. The following amounts were budgeted for the year: The following were the actual results: Calculate the variable overhead spending variance.

One of the main criticisms of standard costing systems is that it tends to focus too heavily on cost minimisation.

Budgeted fixed overhead is the basis for controlling fixed overhead because

Which of the following statements is true for a standard cost system?

The focus of most variance reports is to highlight the differences between

Hamilton Pty Ltd uses a standard costing system for product costing. The company uses direct labour hours as the cost driver to apply overhead costs. The following amounts were budgeted for the year: The following were the actual results: Calculate the amount of fixed overhead budget variance.

Which of the following statements relating to standard costs is false?

Master Products has the following information at the end of the year: What is Master Product's sales price variance?

A four-way overhead analysis involves calculating variances for variable overheads, spending and efficiency, fixed overhead budget and fixed overhead volume.

Flexible budgets can be used by service organisations to

Which of the following is used in the computation of the variable overhead spending variance?

When using activity-based costing, we recognise four types of activity costs: unit level, batch level, product level and facility level. Under activity-based budgeting, which of the following types of cost would be 'flexed'?

Which of the following interpretations of an unfavourable fixed overhead volume variance is correct?

The predetermined fixed overhead rate is found by

Although it is assumed that fixed overheads remain constant regardless of the level of activity, the total applied fixed overhead decreases with activity.

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

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Exam 11: Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Which of the following best describes the cost of underutilising productive capacity?

Framlingham uses a standard costing system for product costing. The company uses direct labour hours as the cost driver to apply overhead costs. The following amounts were budgeted for the year: The following were the actual results: Calculate the variable overhead spending variance.

One of the main criticisms of standard costing systems is that it tends to focus too heavily on cost minimisation.

Budgeted fixed overhead is the basis for controlling fixed overhead because

Which of the following statements is true for a standard cost system?

The focus of most variance reports is to highlight the differences between

Hamilton Pty Ltd uses a standard costing system for product costing. The company uses direct labour hours as the cost driver to apply overhead costs. The following amounts were budgeted for the year: The following were the actual results: Calculate the amount of fixed overhead budget variance.

Which of the following statements relating to standard costs is false?

Master Products has the following information at the end of the year: What is Master Product's sales price variance?

A four-way overhead analysis involves calculating variances for variable overheads, spending and efficiency, fixed overhead budget and fixed overhead volume.

Flexible budgets can be used by service organisations to

Which of the following is used in the computation of the variable overhead spending variance?

When using activity-based costing, we recognise four types of activity costs: unit level, batch level, product level and facility level. Under activity-based budgeting, which of the following types of cost would be 'flexed'?

Which of the following interpretations of an unfavourable fixed overhead volume variance is correct?

The predetermined fixed overhead rate is found by

Although it is assumed that fixed overheads remain constant regardless of the level of activity, the total applied fixed overhead decreases with activity.

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters