Exam 11: Flexible Budgeting and Analysis of Overhead Costs

Which of the following elements is (are) needed in a straightforward calculation of the variable-overhead spending variance?

What is the most common treatment of the fixed-overhead budget variance at the end of the accounting period?

Use the following information to answer the following Questions Sigmo Company, which uses a standard cost system, budgeted $800,000 of fixed overhead when 50,000 machine hours were anticipated. Other data for the period were: Actual units produced: 10,600 Actual machine hours worked: 51,800 Actual variable overhead incurred: $475,000 Actual fixed overhead incurred: $790,100 Standard variable overhead rate per machine hour: $8.50 Standard production time per unit: 5 hours -Sigmo's fixed-overhead budget variance is:

The manufacturing overhead applied to Work-in-Process Inventory by a company that uses standard costing would be computed as:

The advantage of dollar measures as a basis for flexible overhead budgeting is that they are relatively stable over time.

Use the following information to answer the following Questions Forward Venture Company, which uses a standard cost system, budgeted $600,000 of fixed overhead when 40,000 machine hours were anticipated. Other data for the period were: Actual units produced: 10,000 Standard production time per unit: 3.9 machine hours Fixed overhead incurred: $620,000 Actual machine hours worked: 42,000 -Forward Venture Company's fixed-overhead budget variance is:

The following data pertain to Auxilary Backup Computers for the month of April. Required: Compute the sales-price and sales-volume variances for April.

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. -Which of the following statements is (are) true?

Use the following information to answer the following Questions The Step Company has the following information for the year just ended: -The Step Company's sales-volume variance is:

Super Fast Insurance uses budgets to forecast and monitor overhead throughout the organization. The following budget formula relates to the processing of applications for automobile policies in any given month: Total overhead = $6.80APH + $13,500 where APH = application processing hours The typical automobile insurance policy has an estimated processing time of 1.5 hours. During June, management originally anticipated that 320 applications would be processed. Activity was lower than expected, with only 280 applications completed by month-end, and the following costs were incurred: variable overhead, $2,950; fixed overhead, $13,700. Required: A. What volume level of applications and processing hours would have been used if Super Fast had constructed a static budget? B. Construct a flexible budget that shows the expected monthly variable and fixed overhead costs of processing 270, 300, and 330 applications. C. From a cost perspective, did the company perform better or worse than anticipated in June? Show calculations to support your answer.

Priority Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 9,000 Actual variable overhead incurred: $54,400 Actual machine hours worked: 16,000 Standard variable overhead cost per machine hour: $3.50 If Priority estimates two hours to manufacture a completed unit, the company's variable-overhead efficiency variance is:

A static budget:

Messenger, Inc. has a standard variable overhead rate of $5 per machine hour, with each completed unit expected to take three machine hours to produce. A review of the company's accounting records found the following: Actual production: 19,500 units Variable-overhead efficiency variance: $9,000U Variable-overhead spending variance: $21,000F What was Messenger's actual variable overhead during the period?

Solution Enterprises incurred $828,000 of fixed overhead during the period. During that same period, the company applied $845,000 of fixed overhead to production and reported an unfavorable budget variance of $41,000. How much was Solution's budgeted fixed overhead?

A fixed-overhead volume variance would normally arise when:

Tyrant Enterprises, Inc. uses a standard cost system when accounting for its sole product. Manufacturing overhead is applied to production on the basis of process hours. Planned activity is 60,000 process hours per month, which gives rise to the following per-unit standards: Variable overhead: 13 hours at $15 per hour Fixed overhead: 13 hours at $7 per hour During September, 5,100 units were produced and the company incurred the following overhead costs: variable, $942,500; fixed, $429,000. Actual process hours totaled 65,000. Required: A. Calculate the spending and efficiency variances for variable overhead. B. Calculate the budget and volume variances for fixed overhead.

The units of output are meaningful measures in multiproduct firms.

The activity-based flexible budget provides a more accurate benchmark against which to compare actual costs than does a conventional flexible budget.

Which of the following is not an overhead variance?

Use the following information to answer the following Questions Forward Venture Company, which uses a standard cost system, budgeted $600,000 of fixed overhead when 40,000 machine hours were anticipated. Other data for the period were: Actual units produced: 10,000 Standard production time per unit: 3.9 machine hours Fixed overhead incurred: $620,000 Actual machine hours worked: 42,000 -Forward Venture Company's fixed-overhead volume variance is: