Question 1

Managers should use unitized fixed manufacturing overhead costs for planning and control.

Accepted Answer

A) True 
 B)False

Question 2

Can the variable overhead efficiency variance
a.be computed the same way as the efficiency variance for direct-cost items?
b.be interpreted the same way as the efficiency variance for direct-cost items? Explain.

Accepted Answer

The answer of Can the variable overhead efficiency variance
a.be computed...

Question 3

Financial measures of performance include

Accepted Answer

A) operating income. 
B) market share. 
C) on-time delivery performance. 
D) customer acquisition rate. 
E) order time to completion.

Question 4

All Clean of Alberta manufactures individual shampoos for hotel/motel clientele.The fixed manufacturing overhead costs for 2016 will total $576,000.The company uses good units finished for fixed overhead allocation and anticipates 300,000 units of production.Good units finished average 92 percent of total units produced.During January,20,000 units were produced.Actual fixed overhead cost per good unit averaged $2.82 in January.
Required:
a.Determine the fixed overhead rate for 2016.
b.Determine the fixed overhead static-budget variance for January.
c.Determine the fixed overhead production-volume variance for January.
d.Determine the fixed overhead rate variance for January.

Accepted Answer

The answer of All Clean of Alberta manufactures individual shampoos...

Question 5

Use the information below to answer the following question(s).
Moeller Electric manufactures light fixtures.The following information pertains to the company's manufacturing overhead data.
 
-What is Moeller Electric's variable manufacturing overhead static-budget variance?

Accepted Answer

A) $2,750 favourable 
B) $2,750 unfavourable 
C) $40,375 favourable 
D) $40,375 unfavourable 
E) $44,000 unfavourable

Question 6

Briefly explain why a favourable variable overhead rate variance may not always be desireable.

Accepted Answer

The answer of Briefly explain why a favourable variable overhead...

Question 7

Use the information below to answer the following question(s).
Michelle Inc.uses a level 4-variance analysis of its manufacturing overhead costs,and has the following results for April.
A.Budgeted direct labour-hours per unit is used to allocate variable manufacturing overhead.
Fixed overhead is allocated on a per unit basis.
B.Budgeted amounts for April are:
  C.Actual amounts for April are:
 
-What is the variable manufacturing overhead efficiency variance?

Accepted Answer

A) $80,000 favourable 
B) $80,000 unfavourable 
C) $101,200 favourable 
D) $101,200 unfavourable 
E) $181,200 favourable

Question 8

If Pope Inc.uses standard costing,the overhead allocated to work-in-process is recorded as a

Accepted Answer

A) debit to Manufacturing Overhead Allocated and a credit to Work-in-Process. 
B) debit to Work-in-Process and credit to Manufacturing Overhead Control. 
C) debit to Manufacturing Overhead Allocated and a credit to Manufacturing Overhead Control. 
D) debit to Manufacturing Overhead Control and a credit to Manufacturing Overhead Allocated. 
E) debit to Work-in-Process and a credits to Manufacturing Overhead Allocated.

Question 9

What are the arguments for prorating a production-volume variance that has been deemed to be material among work-in-process,finished goods,and cost of goods sold,as opposed to writing it all off to cost of goods sold?

Accepted Answer

The answer of What are the arguments for prorating a...

Question 10

Which option(s)would be consistent with the proration approach for end-of-period adjustments when the underallocated or overallocated variable overhead costs are significant?

Accepted Answer

A) prorate based on the allocated overhead amount in the ending balance of work-in-process inventory and cost of goods sold 
B) immediate write-off to cost of goods sold 
C) prorate based on the total ending balance of variable overhead allocated and variable overhead control 
D) prorate based on the allocated overhead amount in the ending balance of work-in-process inventory,finished goods inventory,and cost of goods sold 
E) prorate based on the total ending balance of cost of goods sold and variable overhead control

Question 11

An unfavourable fixed setup overhead rate variance could be due to higher lease costs of new setup equipment or higher salaries paid to engineers and supervisors.

Accepted Answer

A) True 
 B)False

Question 12

Answer the following question(s)using the information below.
Munoz Inc.produces a special line of plastic toy racing cars in batches.To manufacture a batch of the cars Munoz Inc.must setup the machines and molds.Setup costs are batch-level costs because they are associated with batches rather than individual units of products.A separate Setup Department is responsible for setting up machines and molds for different styles of car.
Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup hours.The following information pertains to June 2012:
 
-Calculate the rate variance for fixed setup overhead costs.

Accepted Answer

A) $1,600 unfavourable 
B) $400 unfavourable 
C) $600 unfavourable 
D) $400 favourable 
E) $600 favourable

Question 13

A favourable variable manufacturing overhead efficiency variance may be interpreted as meaning which of the following if machine hours are the cost allocation base?

Accepted Answer

A) Employees used too much electricity during production. 
B) Improved quality of materials resulting in less downtime to clean the machines of debris. 
C) Excess supplies were used. 
D) Too much of the cost driver was used. 
E) The cost driver is inappropriate.

Question 14

When the actual output is more than expected and the volume is unusually high then the production volume variance is

Accepted Answer

A) unfavourable and should be prorated to work-in-process inventory,finished goods inventory,and cost of goods sold. 
B) unfavourable and should be charged to cost of goods sold. 
C) favourable and should be offset against cost of goods sold. 
D) unfavourable and should be applied to inventory. 
E) favourable and should be applied to inventory.

Question 15

If budgeted machine-hours allowed per actual output unit equals 1.0 hour,and budgeted variable manufacturing overhead per machine-hour is $200,what is the budgeted variable manufacturing overhead rate per output unit?

Accepted Answer

A) $100 
B) $200 
C) $300 
D) $400 
E) $500

Question 16

Both financial and nonfinancial performance measures are key inputs when evaluating the performance of managers.

Accepted Answer

A) True 
 B)False

Question 17

The fixed manufacturing overhead efficiency variance is used to analyze overhead costs.

Accepted Answer

A) True 
 B)False

Question 18

Answer the following question(s)using the information below.
Jenny's Corporation manufactured 25,000 grooming kits for horses during March.The fixed-overhead cost allocation rate is $20.00 per machine-hour.The following fixed overhead data pertain to March:
 
-What is the fixed overhead rate variance?

Accepted Answer

A) $1,000 unfavourable 
B) $2,000 favourable 
C) $3,000 unfavourable 
D) $5,000 favourable 
E) $983 unfavourable

Question 19

Answer the following question(s)using the information below.
Munoz Inc.produces a special line of plastic toy racing cars in batches.To manufacture a batch of the cars Munoz Inc.must setup the machines and molds.Setup costs are batch-level costs because they are associated with batches rather than individual units of products.A separate Setup Department is responsible for setting up machines and molds for different styles of car.
Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup hours.The following information pertains to June 2012:
 
-Calculate the production-volume variance for fixed setup overhead costs.

Accepted Answer

A) $4,666.67 unfavourable 
B) $400 unfavourable 
C) $1,600 unfavourable 
D) $4,666.67 favourable 
E) $400 favourable

Question 20

Managers have found that non-financial measures provide useful information for their planning and control decisions.

Accepted Answer

A) True 
 B)False

Exam 8: Flexible Budgets,variances,and Management Control: II

Managers should use unitized fixed manufacturing overhead costs for planning and control.

Can the variable overhead efficiency variance a.be computed the same way as the efficiency variance for direct-cost items? b.be interpreted the same way as the efficiency variance for direct-cost items? Explain.

Financial measures of performance include

Use the information below to answer the following question(s) . Moeller Electric manufactures light fixtures.The following information pertains to the company's manufacturing overhead data. -What is Moeller Electric's variable manufacturing overhead static-budget variance?

Briefly explain why a favourable variable overhead rate variance may not always be desireable.

If Pope Inc.uses standard costing,the overhead allocated to work-in-process is recorded as a

What are the arguments for prorating a production-volume variance that has been deemed to be material among work-in-process,finished goods,and cost of goods sold,as opposed to writing it all off to cost of goods sold?

Which option(s) would be consistent with the proration approach for end-of-period adjustments when the underallocated or overallocated variable overhead costs are significant?

An unfavourable fixed setup overhead rate variance could be due to higher lease costs of new setup equipment or higher salaries paid to engineers and supervisors.

A favourable variable manufacturing overhead efficiency variance may be interpreted as meaning which of the following if machine hours are the cost allocation base?

When the actual output is more than expected and the volume is unusually high then the production volume variance is

If budgeted machine-hours allowed per actual output unit equals 1.0 hour,and budgeted variable manufacturing overhead per machine-hour is $200,what is the budgeted variable manufacturing overhead rate per output unit?

Both financial and nonfinancial performance measures are key inputs when evaluating the performance of managers.

The fixed manufacturing overhead efficiency variance is used to analyze overhead costs.

Managers have found that non-financial measures provide useful information for their planning and control decisions.