Exam 8: Flexible Budgets, Overhead Cost Variances, and Management Control

The flexible budget highlights the differences between budgeted costs and budgeted quantities versus actual costs and actual quantities for the budgeted output level.

The balances in the variable overhead control account and the variable overhead control account are $120,000 and $125,000 respectively. The variable overhead spending variance is $6,000 and the variable overhead efficiency variance is $11,000. Which of the following entries would be required to record the variances in a standard costing system?

An effective plan for variable overhead costs will eliminate activities that do not add value.

The planning of fixed overhead costs differs from the planning of variable overhead costs in terms of timing.

Raposa, Inc., produces a special line of plastic toy racing cars. Raposa, Inc., produces the cars in batches. To manufacture a batch of the cars, Raposa, Inc., must set up the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of car. Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2015: Calculate the flexible-budget variance for variable overhead setup costs. (Round all intermediary calculations two decimal places and your final answer to the nearest whole number.)

Which of the following is the correct mathematical expression is used to calculate variable overhead efficiency variance?

Skizone Company's 4-Variance Analysis: Which of the following statements is true of Skizone's overhead variances?

Tightly budgeted machine time standards can lead to unfavorable variable overhead efficiency variance.

Lancelot Corporation manufactures tennis gear and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: What is the flexible-budget variance for variable manufacturing overhead?

What is a standard costing system?

Which of the following journal entries is used to record fixed overhead costs allocated?

For fixed manufacturing overhead, there is no ________.

Osium Company made the following journal entry: Which of the following statements is true of the given journal entry?

Causes of a favorable variable overhead efficiency variance might include using lower-skilled workers than expected.

Fixed overhead costs for March for a factory were Salaries of $44,000, depreciation of $10,000, and property taxes of $4,000. Which of the following journal entries would be correct?

The production volume variance arises only for variable overhead costs.

Which of the following is a true statement of energy costs?

Skytalk Company manufactures weathervanes. The 2015 operating budget is based on the production of 5,300 weathervanes with 1.25 machine-hour allowed per weathervane. Variable manufacturing overhead is anticipated to be $145,750. Actual production for 2015 was 5,250 weathervanes using 6,050 machine-hours. Actual variable costs were $21.75 per machine-hour. Required: Calculate the variable overhead spending and the efficiency variances.

'Managers should be wary of using the same unitized fixed overhead costs for planning and control purposes'. Do you agree with this argument? Give reasons for your answer.

Explain why there is no production-volume variance for variable manufacturing overhead costs.