Exam 11: Flexible Budgeting and Analysis of Overhead Costs

Bannister Motors Corporation reported the following variances for the period just ended: 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 overhead cost performance report includes spending and efficiency variances for both variable and fixed items.

Chong Corporation recently prepared a flexible budget for water usage at its manufacturing plant.Budgeted water cost at various projected production levels is as follows: Actual units produced amounted to 60,000.Actual cost incurred for water usage was $4,500.What was Chong's cost variance for water?

The Step Company has the following information for the year just ended: The Step Company's sales-price variance is:

When actual variable cost per unit equals standard variable cost per unit, the difference between actual and budgeted contribution margin is explained by a combination of which two variances?

A flexible budget for 15,000 hours revealed variable manufacturing overhead of $90,000 and fixed manufacturing overhead of $120,000.The budget for 20,000 hours would reveal total overhead costs of:

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

Pocono Co.uses a standard costing system and a standard overhead rate of $12 per process hour.Pocono's Production Overhead account shows a debit of $365,780 for the month.The company produced 7,900 products and used 30,800 process hours.The standard for each product is 4 process hours.What amount did Pocono Co. credit to the Production Overhead account for the month?

Seven Falls Cuisines has the following flexible-budget formula: Y = $13PH + $450,000 where PH is defined as process hours. What is Seven Falls' budgeted total cost if its process hours equal 25,000?

The units of output are meaningful measures in multiproduct firms.

A flexible budget:

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.

The activity measure selected for use in a variable- and fixed-overhead flexible budget:

Institute Technologies is choosing new cost drivers for its accounting system.One driver is labor hours; the other is a combination of machine hours for unit variable costs and number of setups for a pool of batch-level costs.Data for the past year follow.

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

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:

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:

Approach Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 14,800 Actual fixed overhead incurred: $791,000 Standard fixed overhead rate: $13 per hour Budgeted fixed overhead: $780,000 Planned level of machine-hour activity: 60,000 If Approach estimates four hours to manufacture a completed unit, the company's fixed-overhead volume variance would be:

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

Barrington Industries anticipated selling 29,000 units of a major product and paying sales commissions of $6 per unit.Actual sales and sales commissions totaled 31,500 units and $182,700, respectively.If the company used a static budget for performance evaluations, Barrington would report a cost variance of: