Question 1

Jantore Industries Inc.reported the following information about the production and sale of its only product during the first month of operations:
$\begin{array}{ll}
\text { Selling price per unit } & \$ 65,00 \
\text { Sales } & \$ 78,000 \
\text { Direct materials used } & \$ 25,000 \
\text { Direct labor } & \$ 42,000 \
\text { Variable factory overhead } & \$ 17,000 \
\text { Fixed factory overhead } & \$ 15,000 \
\text { Variable selling and administrative expenses } & \$ 3,000 \
\text { Fixed selling and administrative expenses } & \$ 5,000 \
\text { Production volume variance } & 0
\end{array}$
The company sold one-half of the units it produced.Under absorption costing,what is the cost of goods sold?

Accepted Answer

A)  $30,000 
B)  $42,000 
C)  $49,500 
D)  $78,000

Question 2

Durante Company reported the following information about the production and sale of its only product during the first month of operations:
$$\begin{array} { l l } 
 \text {Selling price per unit  }&\$ 300\
\text {Sales }&\$ 480,000\
\text { Direct materials used}&\$ 220,000\
\text {Direct labor }&\$200,000 \
\text {Variable factory overhead}&\$60,000 \
\text {Fixed factory overhead }&\$80,000 \
\text {Variable selling and administrative expenses  }&\$20,000 \
\text {Fixed selling and administrative expenses }&\$ 10,000\
\text {Ending inventory, Direct Materials }& 0\
\text {Ending inventory, Work-in-process }& 0\
\text {Ending inventory, Finished Goods }&400 \text { units } \
\end{array}$$
Under variable costing,the cost of finished goods ending inventory is ________.

Accepted Answer

A)  $64,000 
B)  $68,000 
C)  $80,000 
D)  $96,000

Question 3

In determining product costs,variable costing and absorption costing differ in the treatment of ________.

Accepted Answer

A)  variable overhead costs 
B)  variable selling costs 
C)  fixed selling costs 
D)  fixed overhead costs

Question 4

When finished goods inventories decrease over an operating period,net income under variable costing ________ net income under absorption costing.

Accepted Answer

A)  exceeds 
B)  is less than 
C)  equals 
D)  not enough information to determine

Question 5

Jimmy Industries Inc.reported the following information about the production and sale of its only product during the first month of operations:
$\begin{array}{ll}
\text { Selling price per unit } & \$ 65,00 \
\text { Sales } & \$ 78,000 \
\text { Direct materials used } & \$ 25,000 \
\text { Direct labor } & \$ 42,000 \
\text { Variable factory overhead } & \$ 17,000 \
\text { Fixed factory overhead } & ? \
\text { Variable selling and administrative expenses } & \$ 3,000 \
\text { Fixed selling and administrative expenses } & \$ 5,000 \
\text { Gross profit } & \$ 30,000 \
\text { Production volume variance } & 0
\end{array}$
The company sold one-half of the units it produced.The company uses absorption costing.Fixed factory overhead costs included in the ending inventory of finished goods are ________.

Accepted Answer

A)  0 
B)  $6,000 
C)  $8,400 
D)  $12,000

Question 6

There is no production volume variance when expected production volume equals actual production volume.

Accepted Answer

A) True 
 B)False

Question 7

A direct-costing income statement has a subtotal for ________ whereas an absorption-costing income statement has a subtotal for ________.

Accepted Answer

A)  gross profit; contribution margin 
B)  contribution margin; gross profit 
C)  cost of goods sold; variable cost of goods sold 
D)  cost of goods manufactured; variable cost of goods manufactured

Question 8

The production volume variance appears when ________.

Accepted Answer

A)  the actual production volume equals the expected production volume used in computing the fixed overhead rate 
B)  the actual production volume deviates from the expected production volume used in computing the fixed overhead rate 
C)  the actual production volume deviates from the expected production volume used in computing the variable overhead rate 
D)  the actual production volume equals the expected production volume used in computing the variable overhead rate

Question 9

The production volume variance is the difference between ________.

Accepted Answer

A)  expected fixed overhead costs and actual fixed overhead costs 
B)  expected fixed overhead costs and budgeted fixed overhead costs 
C)  budgeted fixed overhead costs and actual fixed overhead costs 
D)  budgeted fixed overhead costs and applied fixed overhead costs

Question 10

Variable costing is also called ________.

Accepted Answer

A)  functional costing 
B)  indirect costing 
C)  absorption costing 
D)  the contribution approach

Question 11

Rocky Company had the following information:
$\begin{array}{ll}
\text { Budgeted factory overhead costs } & \$ 90,000 \
\text { Actual factory overhead costs } & \$ 80,000 \
\text { Budgeted production setups } & 12,000 \
\text { Actual production setups } & 11,500
\end{array}$
Assume production setups are the cost driver for factory overhead costs.The budgeted factory overhead rate is ________.

Accepted Answer

A)  $6.25 per setup 
B)  $6.52 per setup 
C)  $6.78 per setup 
D)  $7.50 per setup

Question 12

BOTH variable-costing and absorption-costing include ________ as product costs.

Accepted Answer

A)  indirect manufacturing costs 
B)  variable selling and administrative expenses 
C)  fixed selling and administrative expenses 
D)  direct manufacturing costs

Question 13

The following information was gathered for all the products made by the BBB Company:
$\begin{array}{ll}
\text { Budgeted direct labor hours } &8,000 \
\text { Actual direct labor hours } & 8,100\
\text { Budgeted factory overhead costs }&\$224,000\
\text { Actual factory overhead costs }&\$224,970
\end{array}$
Assume the cost driver for factory overhead costs is direct labor hours.What is the amount of overapplied or underapplied overhead?

Accepted Answer

A)  $970 underapplied 
B)  $970 overapplied 
C)  $1,830 underapplied 
D)  $1,830 overapplied

Question 14

Assume machine hours are the cost-allocation base for the budgeted rate for fixed overhead costs.The total fixed overhead cost applied to a product is the result of multiplying the ________ by the ________ for the product.

Accepted Answer

A)  budgeted fixed overhead costs; percent of completion 
B)  actual fixed overhead rate; budgeted machine hours 
C)  budgeted fixed overhead costs; budgeted machine hours 
D)  budgeted fixed overhead rate; actual machine hours used

Question 15

The immediate write-off method of disposing of underapplied overhead subtracts the dollar amount from Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 16

The most common reason for a variance between actual overhead costs and applied overhead costs is the actual level of volume does not equal the level used to calculate the budgeted overhead rate.

Accepted Answer

A) True 
 B)False

Question 17

To apply the budgeted overhead costs to a job,the budgeted overhead rate is multiplied by the ________.

Accepted Answer

A)  actual production in units 
B)  expected production in units 
C)  actual amount of cost driver used by the job 
D)  expected amount of cost driver used by the job

Question 18

When the actual volume of production exceeds the expected volume of production,the production volume variance is ________ and fixed overhead is ________.

Accepted Answer

A)  favorable; underapplied 
B)  favorable; overapplied 
C)  unfavorable; underapplied 
D)  unfavorable; overapplied

Question 19

In the immediate write-off approach to overhead variances,overapplied overhead is regarded as a(n)________.

Accepted Answer

A)  addition to the cost of inventory 
B)  reduction to the cost of inventory 
C)  increase in cost of goods sold 
D)  decrease in cost of goods sold

Question 20

USC Company has the following information available:
$\begin{array}{ll}
\text { Budgeted factory overhead costs } & \$ 90,000 \
\text { Actual factory overhead costs } & \$ 80,000 \
\text { Budgeted direct labor hours } & 20,000 \
\text { Actual direct labor hours } & 21,000
\end{array}$
Assume direct labor hours are the cost driver of factory overhead costs.The budgeted factory overhead rate is ________.

Accepted Answer

A)  $3.57 per direct labor hour 
B)  $3.81 per direct labor hour 
C)  $4.00 per direct labor hour 
D)  $4.50 per direct labor hour

Exam 13: Accounting for Overhead Costs

In determining product costs,variable costing and absorption costing differ in the treatment of ________.

When finished goods inventories decrease over an operating period,net income under variable costing ________ net income under absorption costing.

There is no production volume variance when expected production volume equals actual production volume.

A direct-costing income statement has a subtotal for whereas an absorption-costing income statement has a subtotal for .

The production volume variance appears when ________.

The production volume variance is the difference between ________.

Variable costing is also called ________.

BOTH variable-costing and absorption-costing include ________ as product costs.

Assume machine hours are the cost-allocation base for the budgeted rate for fixed overhead costs.The total fixed overhead cost applied to a product is the result of multiplying the by the for the product.

The immediate write-off method of disposing of underapplied overhead subtracts the dollar amount from Cost of Goods Sold.

The most common reason for a variance between actual overhead costs and applied overhead costs is the actual level of volume does not equal the level used to calculate the budgeted overhead rate.

To apply the budgeted overhead costs to a job,the budgeted overhead rate is multiplied by the ________.

When the actual volume of production exceeds the expected volume of production,the production volume variance is and fixed overhead is .

In the immediate write-off approach to overhead variances,overapplied overhead is regarded as a(n) ________.