Question 1

Which of the following is the correct mathematical expression to calculate the fixed overhead production-volume variance?

Accepted Answer

A)  static-budget amount − flexible-budget amount
B)  flexible-budget amount − actual costs incurred
C)  actual costs incurred − fixed overhead allocated for actual output
D)  budgeted fixed overhead − fixed overhead allocated for actual output D

Question 2

At the start of the budget period,management will have made most decisions regarding the level of fixed overhead costs to be incurred.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following is the mathematical expression for the budgeted fixed overhead cost per unit of cost allocation base?

Accepted Answer

A)  Budgeted fixed overhead cost per unit of cost allocation base = Actual total costs in fixed overhead cost pool ÷ Budgeted total quantity of cost allocation base
B)  Budgeted fixed overhead cost per unit of cost allocation base = Budgeted total costs in fixed overhead cost pool ÷ Budgeted total quantity of cost allocation base
C)  Budgeted fixed overhead cost per unit of cost allocation base = Actual total costs in fixed overhead cost pool ÷ Actual total quantity of cost allocation base
D)  Budgeted fixed overhead cost per unit of cost allocation base = Budgeted total costs in fixed overhead cost pool ÷ Actual total quantity of cost allocation base B

Question 4

Which of the following journal entries is used to record fixed overhead costs allocated?

Accepted Answer

A)  Fixed Overhead Allocated 
B)  Work-in-Process Control   Fixed Overhead Allocated 	ext { Fixed Overhead Allocated } Fixed Overhead Allocated  
C)  Fixed Overhead Control   Work-in-Process Control 	ext { Work-in-Process Control } Work-in-Process Control  
D)  Fixed Overhead Allocated   Fixed Overhead Control 	ext { Fixed Overhead Control } Fixed Overhead Control

Question 5

Bristol Fabricators,Inc. ,produces air purifiers in batches.To manufacture a batch of the purifiers,Bristol Fabricators,Inc. ,must set up the machines and assembly line tooling.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 tooling for different models of the air purifiers.
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 2015:

Calculate the production-volume variance for fixed overhead setup costs.(Round all intermediary calculations to two decimal places and your final answer to the nearest whole number. )

Accepted Answer

A)  $2,832 favorable
B)  $2,832 unfavorable
C)  $363 unfavorable
D)  $363 favorable

Question 6

One possible reason for unfavorable variable overhead efficiency variance for materials handling is ________.

Accepted Answer

A)  inefficient layout of product distribution channels
B)  loosely budgeted standard hours
C)  very low wait time at work centers
D)  very tight standards for materials-handling time

Question 7

Allocated fixed overhead can be expressed in terms of allocation-base units or in terms of the budgeted fixed cost per unit.

Accepted Answer

A) True 
 B)False

Question 8

Advanced Manufacturing Company reported:

To isolate these variances at the end of the accounting period,John would debit Fixed Manufacturing Overhead Allocated for ________.

Accepted Answer

A)  $411,000
B)  $425,000
C)  $430,000
D)  $435,000

Question 9

Bristol Fabricators,Inc. ,produces air purifiers in batches.To manufacture a batch of the purifiers,Bristol Fabricators,Inc,Inc. ,must set up the machines and assembly line tooling.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 tooling for different models of the air purifiers.
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 2015:

Calculate the efficiency variance for variable overhead setup costs.(Round all intermediary calculations two decimal places and your final answer to the nearest whole number. )

Accepted Answer

A)  $315 favorable
B)  $218 favorable
C)  $533 unfavorable
D)  $533 favorable

Question 10

The following overhead variances would result in a total-overhead variance of $15,000 favorable: spending variance $5,000 U,efficiency variance $20,000 F,and production-volume variance $30,000 U.

Accepted Answer

A) True 
 B)False

Question 11

The production volume variance arises only for variable overhead costs.

Accepted Answer

A) True 
 B)False

Question 12

When distribution costs are high,managers can use standard costing to analyze variances for spending and efficiency variances.

Accepted Answer

A) True 
 B)False

Question 13

If the production planners set the budgeted machine hours standards too tight,one could anticipate there would be a favorable variable overhead efficiency variance.

Accepted Answer

A) True 
 B)False

Question 14

An unfavorable production-volume variance indicates an overallocation of fixed overhead costs.

Accepted Answer

A) True 
 B)False

Question 15

Castleton Corporation manufactured 36,500 units during March.The following fixed overhead data relates to March:
$\begin{array}{lll}& \text { Actual } & \text { Static Buidget } \
\text { Production } & 36,500 \text { units } & 35,000 \text { units } \
\text { Machine-hours } & 5,400 \text { hours } & 5,250 \text { hours } \
\text { Fixed overhead costs for March } & \$ 139.510 & \$ 131,250
\end{array}$
What is the fixed overhead spending variance?

Accepted Answer

A)  $2,635.00 unfavorable
B)  $8,260.00 favorable
C)  $8,260.00 unfavorable
D)  $2,635.00 favorable

Question 16

Time and Again Company makes clocks.The fixed overhead costs for 2017 total $900,000.The company uses direct labor-hours for fixed overhead allocation and anticipates 200,000 hours during the year for 330,000 units.An equal number of units are budgeted for each month.
During June,32,000 clocks were produced and $72,000 was spent on fixed overhead.
Required:
a.Determine the fixed overhead rate for 2017 based on units of input.
b.Determine the fixed overhead static-budget variance for June.
c.Determine the production-volume overhead variance for June.

Accepted Answer

The answer of Time and Again Company makes clocks.The fixed...

Question 17

Zitrik Corporation manufactured 90,000 buckets during February.The variable overhead cost-allocation base is $5.00 per machine-hour.The following variable overhead data pertain to February:
$\begin{array}{lll}&\text { Actual }&\text { Budgeted } \
\text { Production } & 90,000 \text { units } & 90,000 \text { units } \
\text { Machine-hours } & 10,800 \text { hours } & 10,000 \text { hours } \
\text { Variable overhead cost per machine-hour } & \$ 5.05 & \$ 5.00
\end{array}$
What is the flexible-budget amount?

Accepted Answer

A)  $54,000
B)  $50,000
C)  $50,500
D)  $54,540

Question 18

Explain two concerns when interpreting the production-volume variance as a measure of the economic cost of unused capacity.

Accepted Answer

The answer of Explain two concerns when interpreting the production-volume...

Question 19

Lazy Guy Corporation manufactured 4,000 chairs during June.The following variable overhead data relates to June:

What is the variable overhead flexible-budget variance?

Accepted Answer

A)  $2,200 favorable
B)  $1,480 favorable
C)  $2,200 unfavorable
D)  $1,480 unfavorable

Question 20

Mendel Company makes the following journal entry:

Which of the following statements is true of the given journal entry?

Accepted Answer

A)  A variable manufacturing overhead cost of $179,000 is written-off.
B)  An unfavorable spending variance of $57,000 is recorded.
C)  A favorable efficiency variance of $7,000 is recorded.
D)  A favorable flexible-budget variance of $50,000 is recorded.

Exam 8: Flexible Budgets, overhead Cost Variances, and Management Control

Which of the following is the correct mathematical expression to calculate the fixed overhead production-volume variance?

At the start of the budget period,management will have made most decisions regarding the level of fixed overhead costs to be incurred.

Which of the following is the mathematical expression for the budgeted fixed overhead cost per unit of cost allocation base?

Which of the following journal entries is used to record fixed overhead costs allocated?

One possible reason for unfavorable variable overhead efficiency variance for materials handling is ________.

Allocated fixed overhead can be expressed in terms of allocation-base units or in terms of the budgeted fixed cost per unit.

Advanced Manufacturing Company reported: To isolate these variances at the end of the accounting period,John would debit Fixed Manufacturing Overhead Allocated for ________.

The following overhead variances would result in a total-overhead variance of $15,000 favorable: spending variance $5,000 U,efficiency variance $20,000 F,and production-volume variance $30,000 U.

The production volume variance arises only for variable overhead costs.

When distribution costs are high,managers can use standard costing to analyze variances for spending and efficiency variances.

If the production planners set the budgeted machine hours standards too tight,one could anticipate there would be a favorable variable overhead efficiency variance.

An unfavorable production-volume variance indicates an overallocation of fixed overhead costs.

Explain two concerns when interpreting the production-volume variance as a measure of the economic cost of unused capacity.

Lazy Guy Corporation manufactured 4,000 chairs during June.The following variable overhead data relates to June: What is the variable overhead flexible-budget variance?

Mendel Company makes the following journal entry: Which of the following statements is true of the given journal entry?