Exam 11: Flexible Budgeting and Analysis of Overhead Costs

Hope, Inc.has a standard variable overhead rate of $4 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: How many units did Hope actually produce during the period?

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

Commerce Corporation has a high probability of operating at 40,000 activity hours during the upcoming period, and lower probabilities of operating at 30,000 hours and 50,000 hours.The company's flexible budget revealed the following: Commerce's flexible-budget formula, where Y is defined as total cost and AH represents activity hours, is:

Auditory Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 13,000 Actual fixed overhead incurred: $742,000 Standard fixed overhead rate: $15 per hour Budgeted fixed overhead: $720,000 Planned level of machine-hour activity: 48,000 If Auditory estimates four hours to manufacture a completed unit, the company's fixed-overhead budget variance would be:

Panama Co.prepared the following flexible overhead budget where PH is process hour.Which of the answers provided correctly completes the table?

Which of the following is not an overhead variance?

The formula flexible budget is more general than the columnar flexible budget, because the formula allows managers to compute budgeted overhead costs at any activity level.

Theory Enterprises uses a standard cost system and prepared the following budget for May when 24,000 machine hours of activity were anticipated: variable overhead, $48,000; fixed overhead: $240,000.Actual data for May were: Standard machine hours allowed for output attained: 25,000 Actual machine hours worked: 24,000 Variable overhead incurred: $50,000 Fixed overhead incurred: $250,000 The fixed-overhead budget and volume variances for Theory are:

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: Sigmo's variable-overhead efficiency variance is:

In a standard-costing system, the standard costs are used for product costing as well as for cost control.

Award: 1.00 point

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

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

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:

What will cause the variable-overhead efficiency variance?

Riviera Beach Pink Flamingos has the following standards and flexible-budget data. Actual results for April are as follows: Required: 1.Use the variance formulas to compute the following variances.Indicate whether each vari¬ance is favorable or unfavorable, where appropriate. (a) Variable-overhead spending variance. (b) Variable-overhead efficiency variance. (c) Fixed-overhead budget variance. (d) Fixed-overhead volume variance. 2.Prepare journal entries to (a) Record the incurrence of actual variable overhead and actual fixed overhead. (b) Add variable and fixed overhead to Work-in-Process Inventory. (c) Close underapplied or overapplied overhead into Cost of Goods Sold.

The right (credit) side of the production-overhead account accumulates actual overhead costs incurred.

Pizzazz Pizza Inc.'s activity based flexible budget is as follows: Required: 1.Determine the flexible budgeted cost for each of the following: a.Indirect material b.Utilities c.Inspection d.Test kitchen e.Material handling

The budget variance arises from a comparison of: