Question 1

A performance report using activity flexible budgeting compares

Accepted Answer

A) budgeted costs for actual activity usage levels with the actual activity costs. 
B) actual activity costs with budgeted overhead costs. 
C) actual overhead costs with the budgeted activity costs for actual activity usage levels. 
D) the static activity budget costs with the budgeted activity costs for the actual activity usage levels. 
E) none of these. 
A) budgeted costs for actual activity usage levels with the actual activity costs. 
B) actual activity costs with budgeted overhead costs. 
C) actual overhead costs with the budgeted activity costs for actual activity usage levels. 
D) the static activity budget costs with the budgeted activity costs for the actual activity usage levels. 
E) none of these.

Question 2

The volume variance is often interpreted as a measure of capacity utilization.

Accepted Answer

A) True 
 B)False

Question 3

The standard fixed overhead rate is often calculated as

Accepted Answer

A) budgeted fixed overhead divided by practical capacity measured in standard hours. 
B) actual fixed overhead divided by practical capacity measured in standard hours. 
C) budgeted fixed overhead divided by actual hours. 
D) budgeted fixed overhead divided by practical capacity measured in actual hours. 
E) none of these 
A) budgeted fixed overhead divided by practical capacity measured in standard hours. 
B) actual fixed overhead divided by practical capacity measured in standard hours. 
C) budgeted fixed overhead divided by actual hours. 
D) budgeted fixed overhead divided by practical capacity measured in actual hours. 
E) none of these

Question 4

The formula for the fixed overhead spending variance is

Accepted Answer

A) AFOH - SFOR ´ SH 
B) AFOH - SFOR ´ AH 
C) AFOH - BFOH 
D) AFOH - SFOR ´ SH. 
E) none of these 
A) AFOH - SFOR ´ SH 
B) AFOH - SFOR ´ AH 
C) AFOH - BFOH 
D) AFOH - SFOR ´ SH. 
E) none of these

Question 5

An after-the-fact flexible budget

Accepted Answer

A) is a budget for the actual level of activity. 
B) is used for performance reports. 
C) calculates what costs should have been for the actual level of activity. 
D) is used to compare expected costs with actual costs. 
E) all of these. 
A) is a budget for the actual level of activity. 
B) is used for performance reports. 
C) calculates what costs should have been for the actual level of activity. 
D) is used to compare expected costs with actual costs. 
E) all of these.

Question 6

Activity flexible budgeting provides a more accurate prediction of costs than a traditional flexible budgeting approach because

Accepted Answer

A) costs often vary with more than one driver. 
B) nonunit level drivers are often not highly correlated with direct labor hours. 
C) direct labor hours are often not measured correctly. 
D) costs often vary with more than one driver and nonunit level drivers are often not highly correlated with direct labor hours. 
E) costs often vary with more than one driver and direct labor hours are not correct. 
A) costs often vary with more than one driver. 
B) nonunit level drivers are often not highly correlated with direct labor hours. 
C) direct labor hours are often not measured correctly. 
D) costs often vary with more than one driver and nonunit level drivers are often not highly correlated with direct labor hours. 
E) costs often vary with more than one driver and direct labor hours are not correct.

Question 7

Figure 11-6. Kyle Company uses forklifts to move materials from the storage area to the production floor.There are five forklifts.They are fully used 20 hours per day (making 8 moves per hour).The company works 320 days per year,running two seven-hour shifts per day.Fork-lift operators work 1,800 hours per year and are paid an annual salary of $56,000.
Based on a recent study each forklift uses 0.45 gallons of fuel per move.The cost of fuel is $3.80 per gallon.
Refer to Figure 11-6.Calculate the fuel budget for the year for moving materials.

Accepted Answer

A) $436,090 
B) $228,300 
C) $496,050 
D) $312,100 
E) $437,760 
A) $436,090 
B) $228,300 
C) $496,050 
D) $312,100 
E) $437,760

Question 8

For activity flexible budgeting,a cost formula is developed for each

Accepted Answer

A) overhead item as a function of direct labor hours. 
B) activity as a function of activity drivers. 
C) activity as a function of resource drivers. 
D) overhead item as a function of resource drivers. 
E) each activity as a function of direct labor hours. 
A) overhead item as a function of direct labor hours. 
B) activity as a function of activity drivers. 
C) activity as a function of resource drivers. 
D) overhead item as a function of resource drivers. 
E) each activity as a function of direct labor hours.

Question 9

In an activity flexible budget,the fixed cost component typically corresponds to

Accepted Answer

A) resources that vary with direct labor hours. 
B) resources that vary as the activity output changes. 
C) resources acquired in advance of usage. 
D) resources acquired as needed. 
E) none of these. 
A) resources that vary with direct labor hours. 
B) resources that vary as the activity output changes. 
C) resources acquired in advance of usage. 
D) resources acquired as needed. 
E) none of these.

Question 10

Favor Company budgeted the following amounts:
     Required: Prepare a flexible budget for 1,500 units,1,800 units and 2,100 units.

Accepted Answer

The answer of Favor Company budgeted the following amounts:
 ...

Question 11

A performance report

Accepted Answer

A) always uses static budgets. 
B) compares actual costs with budgeted costs. 
C) uses a static or a flexible budget. 
D) both compares actual costs with budgeted costs and always uses static budget. 
E) both always uses static budgets and usually uses flexible budgets. 
A) always uses static budgets. 
B) compares actual costs with budgeted costs. 
C) uses a static or a flexible budget. 
D) both compares actual costs with budgeted costs and always uses static budget. 
E) both always uses static budgets and usually uses flexible budgets.

Question 12

Before-the-fact flexible budgets give expected outcomes for a range of activity levels.

Accepted Answer

A) True 
 B)False

Question 13

The two variances for fixed overhead are

Accepted Answer

A) budget and volume. 
B) spending and budget. 
C) volume and spending. 
D) efficiency and volume. 
E) volume and efficiency. 
A) budget and volume. 
B) spending and budget. 
C) volume and spending. 
D) efficiency and volume. 
E) volume and efficiency.

Question 14

Gallant Company uses standard costing.Overhead is applied to products on the basis of standard direct labor hours for actual production.Data for Gallant follows:

Accepted Answer

The answer of Gallant Company uses standard costing.Overhead is applied...

Question 15

Building an activity-based budget requires

Accepted Answer

A) the activities within an organization to be identified. 
B) the demand for each activity's output to be estimated. 
C) the cost of resources required to produce this activity output to be assessed. 
D) all of these. 
E) none of these 
A) the activities within an organization to be identified. 
B) the demand for each activity's output to be estimated. 
C) the cost of resources required to produce this activity output to be assessed. 
D) all of these. 
E) none of these

Question 16

The variable overhead spending variance measures the aggregate effect of differences between the

Accepted Answer

A) the total variable overhead and the applied variable overhead. 
B) the total variable overhead and total budgeted overhead costs. 
C) the total variable overhead and the budgeted overhead for the expected activity. 
D) the actual variable overhead rate and the standard variable overhead rate. 
E) none of these. 
A) the total variable overhead and the applied variable overhead. 
B) the total variable overhead and total budgeted overhead costs. 
C) the total variable overhead and the budgeted overhead for the expected activity. 
D) the actual variable overhead rate and the standard variable overhead rate. 
E) none of these.

Question 17

The formula for calculating the variable overhead efficiency variance is

Accepted Answer

A) (AVOR ´ AH)- (SVOR ´ AH) 
B) (AVOR - SVOR)SH 
C) (AH - SH)SVOR 
D) (AH - SH)AVOR 
E) none of these 
A) (AVOR ´ AH)- (SVOR ´ AH) 
B) (AVOR - SVOR)SH 
C) (AH - SH)SVOR 
D) (AH - SH)AVOR 
E) none of these

Question 18

The fixed overhead volume variance is a measure of

Accepted Answer

A) the cost of overspending on fixed overhead items. 
B) the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate. 
C) the cost of unused activity capacity acquired. 
D) both the cost of overspending on fixed overhead items and the effect of the actual output differing from the output used to calculate predetermined fixed overhead rate. 
E) both the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate and the cost of unused activity capacity. 
A) the cost of overspending on fixed overhead items. 
B) the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate. 
C) the cost of unused activity capacity acquired. 
D) both the cost of overspending on fixed overhead items and the effect of the actual output differing from the output used to calculate predetermined fixed overhead rate. 
E) both the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate and the cost of unused activity capacity.

Question 19

The fixed overhead spending variance

Accepted Answer

A) is usually not significant. 
B) is made up of many individual items. 
C) is the difference between actual costs and budgeted costs. 
D) merits investigation only if the variance is material. 
E) all of these. 
A) is usually not significant. 
B) is made up of many individual items. 
C) is the difference between actual costs and budgeted costs. 
D) merits investigation only if the variance is material. 
E) all of these.

Question 20

Figure 11-3. Montgomery Company has developed the following flexible budget formulas for its four overhead items:
  Montgomery normally produces 15,000 units (each unit requires 0.30 direct labor hours); however this year 19,000 units were produced with the following actual costs:
  Refer to Figure 11-3.Calculate the variance for maintenance using an after-the-fact flexible budget.

Accepted Answer

A) $13,000 U 
B) $13,100 F 
C) $11,000 U 
D) $1,000 F 
E) none of these 
A) $13,000 U 
B) $13,100 F 
C) $11,000 U 
D) $1,000 F 
E) none of these

A performance report using activity flexible budgeting compares

The volume variance is often interpreted as a measure of capacity utilization.

The standard fixed overhead rate is often calculated as

The formula for the fixed overhead spending variance is

An after-the-fact flexible budget

Activity flexible budgeting provides a more accurate prediction of costs than a traditional flexible budgeting approach because

For activity flexible budgeting,a cost formula is developed for each

In an activity flexible budget,the fixed cost component typically corresponds to

Favor Company budgeted the following amounts: Required: Prepare a flexible budget for 1,500 units,1,800 units and 2,100 units.

A performance report

Before-the-fact flexible budgets give expected outcomes for a range of activity levels.

The two variances for fixed overhead are

Gallant Company uses standard costing.Overhead is applied to products on the basis of standard direct labor hours for actual production.Data for Gallant follows:

Building an activity-based budget requires

The variable overhead spending variance measures the aggregate effect of differences between the

The formula for calculating the variable overhead efficiency variance is

The fixed overhead volume variance is a measure of

The fixed overhead spending variance

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

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

Profit Planning

Standard Costing: a Managerial Control Tool

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

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Exam 11: Flexible Budgets and Overhead Analysis

A performance report using activity flexible budgeting compares

The volume variance is often interpreted as a measure of capacity utilization.

The standard fixed overhead rate is often calculated as

The formula for the fixed overhead spending variance is

An after-the-fact flexible budget

Activity flexible budgeting provides a more accurate prediction of costs than a traditional flexible budgeting approach because

For activity flexible budgeting,a cost formula is developed for each

In an activity flexible budget,the fixed cost component typically corresponds to

Favor Company budgeted the following amounts: Required: Prepare a flexible budget for 1,500 units,1,800 units and 2,100 units.

A performance report

Before-the-fact flexible budgets give expected outcomes for a range of activity levels.

The two variances for fixed overhead are

Gallant Company uses standard costing.Overhead is applied to products on the basis of standard direct labor hours for actual production.Data for Gallant follows:

Building an activity-based budget requires

The variable overhead spending variance measures the aggregate effect of differences between the

The formula for calculating the variable overhead efficiency variance is

The fixed overhead volume variance is a measure of

The fixed overhead spending variance

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

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

Profit Planning

Standard Costing: a Managerial Control Tool

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters