Question 1

A static budget is a budget for a particular level of activity.

Accepted Answer

A) True 
 B)False

Question 2

In an activity framework, controlling costs is equivalent to managing activities.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Because fixed overhead is made up of many items

Accepted Answer

A)  the fixed overhead spending variance is not meaningful. 
B)  it is not possible to calculate a fixed overhead volume variance. 
C)  the fixed overhead volume variance will always be unfavorable. 
D)  a line by line comparison of budgeted costs with actual costs provides more information. 
E)  All of these. 
A)  the fixed overhead spending variance is not meaningful. 
B)  it is not possible to calculate a fixed overhead volume variance. 
C)  the fixed overhead volume variance will always be unfavorable. 
D)  a line by line comparison of budgeted costs with actual costs provides more information. 
E)  All of these.

Question 5

What is the fixed overhead volume variance? Suppose that the fixed overhead volume variance is unfavorable; what does that mean?

Accepted Answer

The fixed overhead volume variance is th

Question 6

The _____________________ measures the aggregate effect of differences between the actual variable overhead rate and the standard variable overhead rate.

Accepted Answer

variable o

Question 7

Which of the following relationships is valid concerning fixed overhead budgeted at the beginning of the year?

Accepted Answer

A)  BFOH = SFOR * AH 
B)  BFOH = SFOR * SH for actual production 
C)  BFOH = SFOR *SH for planned production 
D)  BFOH = SFOR/SH for actual production 
E)  None of these. 
A)  BFOH = SFOR * AH 
B)  BFOH = SFOR * SH for actual production 
C)  BFOH = SFOR *SH for planned production 
D)  BFOH = SFOR/SH for actual production 
E)  None of these.

Question 8

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 9

An activity-based budgetary approach can be used to emphasize cost increases through the reduction of wasteful activities and improving the efficiency of necessary activities.

Accepted Answer

A) True 
 B)False

Question 10

Because activities are what consume resources, activity-based budgeting may prove to be a much more powerful planning and control tool than the traditional approach.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Folson Company is planning to produce 4,250,000 speakers for the coming year. Actual production was 4,000,000 speakers. Each speaker requires 0.80 direct labor hours per unit. Predetermined overhead rates are calculated using expected production, measured in direct labor hours. The budgeted variable overhead for the coming year is $680,000. The actual variable overhead incurred was $714,000. The applied variable overhead for the year is

Accepted Answer

A)  $800,000. 
B)  $714,000. 
C)  $640,000. 
D)  $680,000. 
E)  None of these. 
A)  $800,000. 
B)  $714,000. 
C)  $640,000. 
D)  $680,000. 
E)  None of these.

Question 13

Markus, Inc. produces a specialized machine part used in forklifts. For last year's operations, the following data were gathered:   Markus employs a standard costing system. During the year, a variable overhead rate of $5.00 was used. The labor standard requires 0.50 hours per unit produced. The variable overhead spending and efficiency variances are, respectively

Accepted Answer

A)  $10,000 U and $7,500 U. 
B)  $10,000 F and $7,500 U. 
C)  $7,500 U and $10,000 F. 
D)  $10,000 F and $7,500 F. 
E)  None of these. 
A)  $10,000 U and $7,500 U. 
B)  $10,000 F and $7,500 U. 
C)  $7,500 U and $10,000 F. 
D)  $10,000 F and $7,500 F. 
E)  None of these.

Question 14

_______________________ is the difference between the actual variable overhead and applied variable overhead.

Accepted Answer

Total vari

Question 15

The ____________________ budget gives expected outcomes for a range of activity levels.

Accepted Answer

The answer of The ____________________ budget gives expected outcomes for...

Question 16

MATCHING
Match the following terms with the items below:
a.
(Actual hours -Standard hours)SVOR
b.
Prediction of what activity costs will be as activity output changes
c.
A measure of capacity utilization
d.
Actual variable overhead - (SVOR * Actual hours)
e.
Difference between the actual amount and the flexible budget amount
f.
A budget that specifies costs for a range of activity
g.
A budget for a particular level of activity
h.
Estimating activity output and then assessing the cost of resources to produce this output
i.
A report that compares actual with planned costs
j.
Difference between actual and budgeted fixed overhead
-Activity flexible budget

Accepted Answer

The answer of MATCHING
Match the following terms with the items...

Question 17

Figure 11-4.
Kris Company calculates its predetermined rates using practical volume, which is 325,000 units. The standard cost system allows 3 direct labor hours per unit produced. Overhead is applied using direct labor hours. The total budgeted overhead is $4,260,000, of which $994,000 is fixed overhead. The actual results for the year are as follows:
  
-Refer to Figure 11-4. Calculate the fixed overhead volume variance.

Accepted Answer

A)  $32,000 U 
B)  $20,000 F 
C)  $22,000 F 
D)  $4,000 U 
E)  None of these. 
A)  $32,000 U 
B)  $20,000 F 
C)  $22,000 F 
D)  $4,000 U 
E)  None of these.

Question 18

For a static activity budget in a company already using an ABC or ABM system, the activities within the organization must be identified.

Accepted Answer

A) True 
 B)False

Question 19

MATCHING
Match the following terms with the items below:
a.
(Actual hours -Standard hours)SVOR
b.
Prediction of what activity costs will be as activity output changes
c.
A measure of capacity utilization
d.
Actual variable overhead - (SVOR * Actual hours)
e.
Difference between the actual amount and the flexible budget amount
f.
A budget that specifies costs for a range of activity
g.
A budget for a particular level of activity
h.
Estimating activity output and then assessing the cost of resources to produce this output
i.
A report that compares actual with planned costs
j.
Difference between actual and budgeted fixed overhead
-Performance report

Accepted Answer

The answer of MATCHING
Match the following terms with the items...

Question 20

Discuss the following statement: "As long as the total variable overhead variance is small, the managers can be assured that actual activity is proceeding as planned. No further action is necessary."

Accepted Answer

While it may be reassuring for managers

A static budget is a budget for a particular level of activity.

In an activity framework, controlling costs is equivalent to managing activities.

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

Because fixed overhead is made up of many items

What is the fixed overhead volume variance? Suppose that the fixed overhead volume variance is unfavorable; what does that mean?

The _____________________ measures the aggregate effect of differences between the actual variable overhead rate and the standard variable overhead rate.

Which of the following relationships is valid concerning fixed overhead budgeted at the beginning of the year?

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

An activity-based budgetary approach can be used to emphasize cost increases through the reduction of wasteful activities and improving the efficiency of necessary activities.

Because activities are what consume resources, activity-based budgeting may prove to be a much more powerful planning and control tool than the traditional approach.

The fixed overhead spending variance

_______________________ is the difference between the actual variable overhead and applied variable overhead.

The ____________________ budget gives expected outcomes for a range of activity levels.

For a static activity budget in a company already using an ABC or ABM system, the activities within the organization must be identified.

Discuss the following statement: "As long as the total variable overhead variance is small, the managers can be assured that actual activity is proceeding as planned. No further action is necessary."

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

Exam 11: Flexible Budgets and Overhead Analysis

A static budget is a budget for a particular level of activity.

In an activity framework, controlling costs is equivalent to managing activities.

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

Because fixed overhead is made up of many items

What is the fixed overhead volume variance? Suppose that the fixed overhead volume variance is unfavorable; what does that mean?

The _____________________ measures the aggregate effect of differences between the actual variable overhead rate and the standard variable overhead rate.

Which of the following relationships is valid concerning fixed overhead budgeted at the beginning of the year?

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

An activity-based budgetary approach can be used to emphasize cost increases through the reduction of wasteful activities and improving the efficiency of necessary activities.

Because activities are what consume resources, activity-based budgeting may prove to be a much more powerful planning and control tool than the traditional approach.

The fixed overhead spending variance

_______________________ is the difference between the actual variable overhead and applied variable overhead.

The ____________________ budget gives expected outcomes for a range of activity levels.

For a static activity budget in a company already using an ABC or ABM system, the activities within the organization must be identified.

Discuss the following statement: "As long as the total variable overhead variance is small, the managers can be assured that actual activity is proceeding as planned. No further action is necessary."

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