Question 1

An activity-based budgetary approach can be used to emphasize cost reduction and process management.

Accepted Answer

A) True 
 B)False

Question 2

The first step of building an activity-based budget is to identify the activities within an organization.

Accepted Answer

A) True 
 B)False

Question 3

Activity-based budgeting

Accepted Answer

A)  builds a budget for each function. 
B)  identifies only the overhead activity. 
C)  classifies costs as variable or fixed with respect to the activity output measure. 
D)  All of these. 
E)  None of these. 
A)  builds a budget for each function. 
B)  identifies only the overhead activity. 
C)  classifies costs as variable or fixed with respect to the activity output measure. 
D)  All of these. 
E)  None of these.

Question 4

Figure 11-2.
Lawson, Inc. produces plastic grocery bags. Lawson has developed a static budget for the month of July based on 8,000 direct labor hours. During the quarter, the actual activity was 9,000 direct labor hours. Data for July are summarized as follows:
  
-Refer to Figure 11-2. What is the flexible budget for July?

Accepted Answer

A)  $142,000 
B)  $159,000 
C)  $171,000 
D)  $165,000 
E)  None of these. 
A)  $142,000 
B)  $159,000 
C)  $171,000 
D)  $165,000 
E)  None of these.

Question 5

The formula for the variable overhead spending variance can be expressed as follows:

Accepted Answer

A)  (AH - SH)SVOR. 
B)  (AVOR -SVOR)SH. 
C)  (AVOR - SVOR)AH. 
D)  (AH -SH)AVOR. 
E)  None of these. 
A)  (AH - SH)SVOR. 
B)  (AVOR -SVOR)SH. 
C)  (AVOR - SVOR)AH. 
D)  (AH -SH)AVOR. 
E)  None of these.

Question 6

A performance report for variable overhead reveals

Accepted Answer

A)  the aggregate variable overhead spending and efficiency variances. 
B)  the volume and spending variances. 
C)  the spending and efficiency variances for each variable overhead item. 
D)  both the aggregate variable overhead spending and efficiency variances and the spending and efficiency variances for each variable overhead item. 
E)  both the volume and spending variances and the spending and efficiency variances for each variable overhead item. 
A)  the aggregate variable overhead spending and efficiency variances. 
B)  the volume and spending variances. 
C)  the spending and efficiency variances for each variable overhead item. 
D)  both the aggregate variable overhead spending and efficiency variances and the spending and efficiency variances for each variable overhead item. 
E)  both the volume and spending variances and the spending and efficiency variances for each variable overhead item.

Question 7

The variable overhead spending variance is conceptually identical to the price variances of materials and labor.

Accepted Answer

A) True 
 B)False

Question 8

Figure 11-8.
Booth Inc. uses three delivery trucks to transport finished parts from its plant to the plants of its customers. The delivery trucks are obtained through a 5-year operating lease that costs $12,000 per year per truck. Booth employs 6 drivers who receive an average salary of $36,000 per year, including benefits. Parts are placed in boxes and placed in the trucks. Each truck holds 20 boxes. The average round-trip distance for a delivery is 40 miles. The boxes are retained by the customers. Each box costs $2.00. Fuel for the trucks costs $1.80 per gallon. A gallon of gas is used every 20 miles. A driver can travel 160 miles in an eight-hour shift. Each driver works 40 hours per week and 50 weeks per year.
-Refer to Figure 11-8. Assume that the company uses only 90% of the activity capacity. The actual costs incurred at this level were:

Accepted Answer

The answer of Figure 11-8.
Booth Inc. uses three delivery trucks...

Question 9

How does activity flexible budgeting differ from traditional-based flexible budgeting?

Accepted Answer

Activity flexible budgeting is the predi

Question 10

Figure 11-6.
Kyle Company uses forklifts to move materials from the storage area to the production floor. There are five forklifts. They are fully used 20 hours per day (making 8 moves per hour). The company works 320 days per year, running two 7-hour shifts per day. Fork-lift operators work 1,800 hours per year and are paid an annual salary of $56,000.
Based on a recent study each forklift uses 0.45 gallons of fuel per move. The cost of fuel is $3.80 per gallon.
-Refer to Figure 11-6. Prepare a salary budget for the activity, moving materials. Assume that the labor market does not permit the hiring of part-time forklift operators.

Accepted Answer

A)  $980,000 
B)  $1,008,000 
C)  $905,000 
D)  $1,135,000 
E)  $760,000 
A)  $980,000 
B)  $1,008,000 
C)  $905,000 
D)  $1,135,000 
E)  $760,000

Question 11

Griffen Corporation uses a standard costing system. Information for the month of May is as follows:   The factory overhead rate is based on a normal volume of 12,000 direct labor hours. Standard cost data at 12,000 direct labor hours were as follows:
  What is the variable overhead efficiency variance for Griffen?

Accepted Answer

A)  $2,000 U 
B)  $8,000 U 
C)  $4,000 U 
D)  $20,000 U 
A)  $2,000 U 
B)  $8,000 U 
C)  $4,000 U 
D)  $20,000 U

Question 12

Gallant Company uses standard costing. Overhead is applied to products on the basis of standard direct labor hours for actual production. Data for Gallant follows:

Accepted Answer

The answer of Gallant Company uses standard costing. Overhead is...

Question 13

The total fixed overhead variance is calculated by the following formula:

Accepted Answer

A)  Total actual overhead- Total applied overhead. 
B)  AFOH - Standard overhead rate * SH. 
C)  AFOH -SFOR *SH. 
D)  AFOH -SFOR * AH. 
E)  Total actual overhead - SFOR * SH. 
A)  Total actual overhead- Total applied overhead. 
B)  AFOH - Standard overhead rate * SH. 
C)  AFOH -SFOR *SH. 
D)  AFOH -SFOR * AH. 
E)  Total actual overhead - SFOR * SH.

Question 14

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
-Fixed overhead spending variance

Accepted Answer

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

Question 15

At the beginning of the year, Folsom Company had the following standard cost sheet for one of its food products:
   Folsom computes its overhead rates using practical capacity, which is 72,000 units. The actual results for the year are:

Accepted Answer

The answer of At the beginning of the year, Folsom...

Question 16

Before-the-fact flexible budgets give expected outcomes for a range of activity levels.

Accepted Answer

A) True 
 B)False

Question 17

Gina Production Company uses a standard costing system. The following information pertains to 2011.   The factory overhead rate is based on an activity level of 10,000 hours. Standard cost data for 5,000 units is as follows:
  What is the variable overhead efficiency variance for Gina Production Company?

Accepted Answer

A)  $562.50 F 
B)  $3,000.00 U 
C)  $562.50 U 
D)  $1,687.50 F 
A)  $562.50 F 
B)  $3,000.00 U 
C)  $562.50 U 
D)  $1,687.50 F

Question 18

The variable overhead spending variance measures the aggregate effect of differences between the

Accepted Answer

A)  the total variable overhead and the applied variable overhead. 
B)  the total variable overhead and total budgeted overhead costs. 
C)  the total variable overhead and the budgeted overhead for the expected activity. 
D)  the actual variable overhead rate and the standard variable overhead rate. 
E)  None of these. 
A)  the total variable overhead and the applied variable overhead. 
B)  the total variable overhead and total budgeted overhead costs. 
C)  the total variable overhead and the budgeted overhead for the expected activity. 
D)  the actual variable overhead rate and the standard variable overhead rate. 
E)  None of these.

Question 19

Budgeted costs change because total variable costs go up as output increases, therefore flexible budgets are sometimes referred to as _______________.

Accepted Answer

The answer of Budgeted costs change because total variable costs...

Question 20

Crawford Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labor hours per unit. During 2011, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor. What is the activity level on which Crawford based its fixed overhead rate?

Accepted Answer

A)  110,000 direct labor hours 
B)  105,000 direct labor hours 
C)  100,000 direct labor hours 
D)  50,000 direct labor hours 
A)  110,000 direct labor hours 
B)  105,000 direct labor hours 
C)  100,000 direct labor hours 
D)  50,000 direct labor hours

An activity-based budgetary approach can be used to emphasize cost reduction and process management.

The first step of building an activity-based budget is to identify the activities within an organization.

Activity-based budgeting

The formula for the variable overhead spending variance can be expressed as follows:

A performance report for variable overhead reveals

The variable overhead spending variance is conceptually identical to the price variances of materials and labor.

How does activity flexible budgeting differ from traditional-based flexible budgeting?

Gallant Company uses standard costing. Overhead is applied to products on the basis of standard direct labor hours for actual production. Data for Gallant follows:

The total fixed overhead variance is calculated by the following formula:

At the beginning of the year, Folsom Company had the following standard cost sheet for one of its food products: Folsom computes its overhead rates using practical capacity, which is 72,000 units. The actual results for the year are:

Before-the-fact flexible budgets give expected outcomes for a range of activity levels.

The variable overhead spending variance measures the aggregate effect of differences between the

Budgeted costs change because total variable costs go up as output increases, therefore flexible budgets are sometimes referred to as _______________.

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

An activity-based budgetary approach can be used to emphasize cost reduction and process management.

The first step of building an activity-based budget is to identify the activities within an organization.

Activity-based budgeting

The formula for the variable overhead spending variance can be expressed as follows:

A performance report for variable overhead reveals

The variable overhead spending variance is conceptually identical to the price variances of materials and labor.

How does activity flexible budgeting differ from traditional-based flexible budgeting?

Gallant Company uses standard costing. Overhead is applied to products on the basis of standard direct labor hours for actual production. Data for Gallant follows:

The total fixed overhead variance is calculated by the following formula:

At the beginning of the year, Folsom Company had the following standard cost sheet for one of its food products: Folsom computes its overhead rates using practical capacity, which is 72,000 units. The actual results for the year are:

Before-the-fact flexible budgets give expected outcomes for a range of activity levels.

The variable overhead spending variance measures the aggregate effect of differences between the

Budgeted costs change because total variable costs go up as output increases, therefore flexible budgets are sometimes referred to as _______________.

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