Question 1

A performance report

Accepted Answer

A)  always uses static budgets. 
B)  compares actual costs with budgeted costs. 
C)  uses a static or a flexible budget. 
D)  both compares actual costs with budgeted costs and always uses static budget. 
E)  both always uses static budgets and usually uses flexible budgets. 
A)  always uses static budgets. 
B)  compares actual costs with budgeted costs. 
C)  uses a static or a flexible budget. 
D)  both compares actual costs with budgeted costs and always uses static budget. 
E)  both always uses static budgets and usually uses flexible budgets.

Question 2

An after-the-fact flexible budget

Accepted Answer

A)  is a budget for the actual level of activity. 
B)  is used for performance reports. 
C)  calculates what costs should have been for the actual level of activity. 
D)  is used to compare expected costs with actual costs. 
E)  All of these. 
A)  is a budget for the actual level of activity. 
B)  is used for performance reports. 
C)  calculates what costs should have been for the actual level of activity. 
D)  is used to compare expected costs with actual costs. 
E)  All of these.

Question 3

Figure 11-7.
Larry Miller, controller for Kipling Company, has been instructed to develop a flexible budget for overhead costs. The company produces two types of frozen desserts: Icey and Tasty. The two desserts use common raw materials in different proportions. The company expects to produce 200,000 gallons of each product during the coming year. Icey requires 0.25 direct labor hour per gallon and Tasty requires 0.30. Larry has developed the following fixed and variable costs for each of the four overhead items:
  
-Refer to Figure 11-7. Assume that Kipling actually produced 240,000 gallons of Icey and 200,000 of Tasty. The actual overhead costs incurred were:
   Required:

Accepted Answer

The answer of Figure 11-7.
Larry Miller, controller for Kipling Company,...

Question 4

Responsibility for the fixed overhead volume variance is

Accepted Answer

A)  not assigned because fixed overhead costs do not change with activity changes. 
B)  usually assigned to the production department. 
C)  usually assigned to top management. 
D)  usually assigned to the planning department. 
E)  None of these. 
A)  not assigned because fixed overhead costs do not change with activity changes. 
B)  usually assigned to the production department. 
C)  usually assigned to top management. 
D)  usually assigned to the planning department. 
E)  None of these.

Question 5

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-based budgeting

Accepted Answer

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

Question 6

To create a meaningful performance report,

Accepted Answer

A)  actual costs are compared with the expected costs found in the static budget. 
B)  actual costs are calculated as a percentage of sales. 
C)  actual costs are compared with the prior year's actual costs. 
D)  expected costs of the static budget are compared with the expected costs of the flexible budget. 
E)  actual costs are compared with the expected costs at the same level of activity. 
A)  actual costs are compared with the expected costs found in the static budget. 
B)  actual costs are calculated as a percentage of sales. 
C)  actual costs are compared with the prior year's actual costs. 
D)  expected costs of the static budget are compared with the expected costs of the flexible budget. 
E)  actual costs are compared with the expected costs at the same level of activity.

Question 7

Littleton Company uses a standard costing system. The following monthly cost functions apply to its manufacturing overhead items:
   Information for the month of October is as follows:
   Littleton uses expected capacity to calculate standard overhead rates. The monthly expected capacity is 25,000 hours.

Accepted Answer

The answer of Littleton Company uses a standard costing system....

Question 8

Figure 11-5.
Merric Company uses an activity-based costing system. Four activities have been identified. The setup activity uses the number of setups as its cost driver. The following budget information is available for this activity:
   The company expects to perform 25 setups in May.
-Refer to Figure 11-5. If the company expects 25 setups in the month of May, what would be the total budgeted costs of the setup activity?

Accepted Answer

A)  $240,000 
B)  $375,000 
C)  $135,000 
D)  $397,500 
E)  None of these. 
A)  $240,000 
B)  $375,000 
C)  $135,000 
D)  $397,500 
E)  None of these.

Question 9

Crawford Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows one direct labor hour 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 Crawford's fixed overhead spending variance for 2011?

Accepted Answer

A)  $60,000 F 
B)  $24,000 F 
C)  $36,000 U 
D)  $30,000 U 
A)  $60,000 F 
B)  $24,000 F 
C)  $36,000 U 
D)  $30,000 U

Question 10

A performance report using activity flexible budgeting compares

Accepted Answer

A)  budgeted costs for actual activity usage levels with the actual activity costs. 
B)  actual activity costs with budgeted overhead costs. 
C)  actual overhead costs with the budgeted activity costs for actual activity usage levels. 
D)  the static activity budget costs with the budgeted activity costs for the actual activity usage levels. 
E)  None of these. 
A)  budgeted costs for actual activity usage levels with the actual activity costs. 
B)  actual activity costs with budgeted overhead costs. 
C)  actual overhead costs with the budgeted activity costs for actual activity usage levels. 
D)  the static activity budget costs with the budgeted activity costs for the actual activity usage levels. 
E)  None of these.

Question 11

An after-the-fact flexible budget allows managers to generate financial results from a number of potential scenarios.

Accepted Answer

A) True 
 B)False

Question 12

Vallo Pharmacy operates a home delivery service with more than 2,000 housebound clients. Vallo has a fleet of vehicles and has invested in a sophisticated computerized communications system to coordinate its deliveries. Vallo has gathered the following data on last year's operations:
   Vallo uses a standard costing system. During the year, the following variable overhead rate was used: $8.10 per delivery hour. The labor standard requires 0.75 hours per delivery.
Compute the variable overhead spending variance and the variable overhead efficiency variance.

Accepted Answer

Variable overhead an

Question 13

Responsibility for variable overhead spending and efficiency variances is generally assigned to production departments.

Accepted Answer

A) True 
 B)False

Question 14

A budget prepared for a particular level of activity is a(n)

Accepted Answer

A)  operational budget. 
B)  ABB budget. 
C)  static budget. 
D)  flexible budget. 
E)  variable budget. 
A)  operational budget. 
B)  ABB budget. 
C)  static budget. 
D)  flexible budget. 
E)  variable budget.

Question 15

Figure 11-3.
Montgomery Company has developed the following flexible budget formulas for its four overhead items:
   Montgomery normally produces 15,000 units (each unit requires 0.30 direct labor hours); however this year 19,000 units were produced with the following actual costs:
  
-Refer to Figure 11-3. Using an after-the-fact flexible budget, calculate the variance for power.

Accepted Answer

A)  $1,000 F 
B)  $1,010 U 
C)  $3,000 U 
D)  $1,010 F 
E)  None of these. 
A)  $1,000 F 
B)  $1,010 U 
C)  $3,000 U 
D)  $1,010 F 
E)  None of these.

Question 16

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 variable overhead spending variance.

Accepted Answer

A)  $69,250 U 
B)  $69,250 F 
C)  $24,000 U 
D)  $40,000 F 
E)  None of these. 
A)  $69,250 U 
B)  $69,250 F 
C)  $24,000 U 
D)  $40,000 F 
E)  None of these.

Question 17

Building an activity-based budget requires

Accepted Answer

A)  the activities within an organization to be identified. 
B)  the demand for each activity's output to be estimated. 
C)  the cost of resources required to produce this activity output to be assessed. 
D)  All of these. 
E)  None of these. 
A)  the activities within an organization to be identified. 
B)  the demand for each activity's output to be estimated. 
C)  the cost of resources required to produce this activity output to be assessed. 
D)  All of these. 
E)  None of these.

Question 18

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. Prepare an annual budget for the activity, assuming that all of the capacity of the activity is used (use miles as the activity driver). Identify which resources you would treat as fixed costs and which would be viewed as variable costs.

Accepted Answer

@#IMG-DLM& Capacity is determi

Question 19

When overhead is applied on the basis of direct labor hours, the variable overhead efficiency variance always has the same sign as the labor efficiency variance.

Accepted Answer

A) True 
 B)False

Question 20

The total variable overhead variance is the difference between

Accepted Answer

A)  the actual overhead and the budgeted overhead. 
B)  the total actual variable overhead and the total budgeted variable overhead. 
C)  the total actual variable overhead and the total applied variable overhead. 
D)  the total actual variable overhead and the total applied overhead. 
E)  None of these. 
A)  the actual overhead and the budgeted overhead. 
B)  the total actual variable overhead and the total budgeted variable overhead. 
C)  the total actual variable overhead and the total applied variable overhead. 
D)  the total actual variable overhead and the total applied overhead. 
E)  None of these.

A performance report

An after-the-fact flexible budget

Responsibility for the fixed overhead volume variance is

To create a meaningful performance report,

Littleton Company uses a standard costing system. The following monthly cost functions apply to its manufacturing overhead items: Information for the month of October is as follows: Littleton uses expected capacity to calculate standard overhead rates. The monthly expected capacity is 25,000 hours.

A performance report using activity flexible budgeting compares

An after-the-fact flexible budget allows managers to generate financial results from a number of potential scenarios.

Responsibility for variable overhead spending and efficiency variances is generally assigned to production departments.

A budget prepared for a particular level of activity is a(n)

Building an activity-based budget requires

When overhead is applied on the basis of direct labor hours, the variable overhead efficiency variance always has the same sign as the labor efficiency variance.

The total variable overhead variance is the difference between

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

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Exam 11: Flexible Budgets and Overhead Analysis

A performance report

An after-the-fact flexible budget

Responsibility for the fixed overhead volume variance is

To create a meaningful performance report,

Littleton Company uses a standard costing system. The following monthly cost functions apply to its manufacturing overhead items: Information for the month of October is as follows: Littleton uses expected capacity to calculate standard overhead rates. The monthly expected capacity is 25,000 hours.

A performance report using activity flexible budgeting compares

An after-the-fact flexible budget allows managers to generate financial results from a number of potential scenarios.

Responsibility for variable overhead spending and efficiency variances is generally assigned to production departments.

A budget prepared for a particular level of activity is a(n)

Building an activity-based budget requires

When overhead is applied on the basis of direct labor hours, the variable overhead efficiency variance always has the same sign as the labor efficiency variance.

The total variable overhead variance is the difference between

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