Exam 11: Flexible Budgeting and Analysis of Overhead Costs

The budget variance arises from a comparison of actual variable overhead expenditures with budgeted variable overhead costs.

The difference between budgeted fixed manufacturing overhead and the fixed overhead applied to production is the:

The budget variance arises from a comparison of:

The difference between the total actual factory overhead and the total factory overhead applied to production is the:

The overhead cost performance report includes spending and efficiency variances for both variable and fixed items.

In an activity-based flexible budget, each overhead item has the same cost driver, identified by flexible overhead budget for that cost item.

Efficient or inefficient use of a specific component of variable overhead (e.g., electricity) will cause the firm to have a variable-overhead efficiency variance.

Use the following information to answer the following Questions Admac Technologies has a standard variable overhead rate of $4.50 per machine hour, and each unit produced has a standard time allowed of three hours. The company's static budget was based on 46,000 units. Actual results for the year follow. Actual units produced: 42,000 Actual machine hours worked: 120,000 Actual variable overhead incurred: $520,000 -Admac's variable-overhead efficiency variance is:

Use the following information to answer the following Questions Bannister Motors Corporation reported the following variances for the period just ended: Variable-overhead spending variance: $50,000U Variable-overhead efficiency variance: $28,000U Fixed-overhead budget variance: $70,000U Fixed-overhead volume variance: $30,000U -If Bannister desires to analyze variances that arose primarily from managers' expenditures in excess of anticipated amounts, the company should focus on variances that total:

The International Students Club at Eastern University recently held an end-of-year dinner and swim party, which the treasurer declared to be a financial success. "Attendance was an all-time high, 60 members, and the results were much better than expected." The treasurer presented the following performance report at the executive board's June meeting: The budget was based on the assumptions that follow. · Forty-five members would attend at a fixed ticket price of $35. · Food and beverage costs were anticipated to be $15 and $7 per attendee, respectively. · A disc jockey was hired via a written contract at $50 per hour. Required: A. Briefly evaluate the meaningfulness of the treasurer's performance report. B. Prepare a performance report by using flexible budgeting and determine whether the end-of-year party was as successful as originally reported. C. Based on your answer in requirement "B," present a possible explanation for the variances in revenue, food costs, beverage costs, and the disc jockey.

With respect to overhead, what is the difference between normal costing and standard costing?

Flexible budgets reflect a company's anticipated costs based on variations in:

Orlando Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 12,000 Actual variable overhead incurred: $77,700 Actual machine hours worked: 18,800 Standard variable overhead cost per machine hour: $4.50 If Orlando estimates 1.5 hours to manufacture a completed unit, the company's variable-overhead spending variance is:

Nerve Pain Innovations anticipated that 84,000 process hours would be worked during an upcoming accounting period when, in fact, 90,000 hours were actually worked. One of the company's cost functions is expressed as follows: Y = $16PH + $640,000 where PH is defined as process hours What is Nerve Pain's flexible budget (Y) for the preceding cost function?

Use the following information to answer the following Questions Seven Falls Cuisines has the following flexible-budget formula: Y = $13PH + $450,000 where PH is defined as process hours. -Dealer Enterprises (DE) anticipated that 84,000 process hours would be worked during an upcoming accounting period when, in fact, 92,000 hours were actually worked. One of the company's cost functions is expressed as follows: Y = $16PH + $640,000 where PH is defined as process hours What budgeted dollar amount would appear in DE's static budget and flexible budget for the preceding cost function?

The City Symphony Orchestra presents a series of concerts throughout the year. Budgeted fixed costs total $300,000 for the concert season; variable costs are expected to average $5 per patron. The orchestra uses flexible budgeting. Required: A. Prepare a flexible budget that shows the expected costs of 8,000, 8,500, and 9,000 patrons. B. Construct the orchestra's flexible budget formula. C. Assume that 8,700 patrons attended concerts during the year just ended, and actual costs were: variable, $42,000; fixed, $307,500. Evaluate the orchestra's financial performance by computing variances for variable costs and fixed costs.

From a traditional perspective, dollars of raw material have been a popular activity measure in manufacturing firms.

Which of the following should have the strongest cause and effect relationship with overhead costs?

Use the following information to answer Questions Match Point, Inc. has the following overhead standards: Variable overhead: 4 hours at $8 per hour Fixed overhead: 4 hours at $10 per hour The standards were based on a planned activity of 20,000 machine hours when 5,000 units were scheduled for production. Actual data follow. Variable overhead incurred: $167,750 Fixed overhead incurred: $210,000 Machine hours worked: 19,800 Actual units produced: 5,100 -Match Point's variable-overhead spending variance is:

Both normal- and standard-costing systems use a predetermined overhead rate.