Question 1

Fixed overhead costs ________.

Accepted Answer

A)  never have any unused capacity 
B)  have no spending variance 
C)  have no efficiency variance 
D)  have no production-volume variance 
A)  never have any unused capacity 
B)  have no spending variance 
C)  have no efficiency variance 
D)  have no production-volume variance

Question 2

Time and Again Company makes clocks. The fixed overhead costs for 2017 total $900,000. The company uses direct labor-hours for fixed overhead allocation and anticipates 200,000 hours during the year for 330,000 units. An equal number of units are budgeted for each month.
During June, 32,000 clocks were produced and $72,000 was spent on fixed overhead.
Required:
a.Determine the fixed overhead rate for 2017 based on units of input.
b.Determine the fixed overhead static-budget variance for June.
c.Determine the production-volume overhead variance for June.

Accepted Answer

a.Fixed overhead rate = ($900,000 ÷ 200,

Question 3

Wainwright has budgeted construction overhead for August of $435,000 for fixed costs. Actual costs for the month totaled for $450,000 for fixed. Allocated fixed overhead totaled $430,000. The company tracks each item in an overhead control account before allocations are made to individual jobs. The fixed overhead spending variance for August was $15,000 unfavorable for fixed.
Required:
a.Make journal entries for the actual costs incurred.
b.Make journal entries to record the variances for August.

Accepted Answer

a.11ecb4c0_9efc_2d5f_8164_818d

Question 4

The total overhead variance should be ________.

Accepted Answer

A)  $154,000 F 
B)  $139,000 U 
C)  $154,000 U 
D)  $139,000 F 
A)  $154,000 F 
B)  $139,000 U 
C)  $154,000 U 
D)  $139,000 F

Question 5

Fixed costs for the period are by definition a lump sum of costs that remain unchanged and therefore the fixed overhead spending variance is always zero.

Accepted Answer

A) True 
 B)False

Question 6

An unfavorable production-volume variance ________.

Accepted Answer

A)  is not a good measure of a lost production opportunity 
B)  indicates that the company had reduced its per unit fixed overhead cost to improve sales 
C)  measures the amount of extra fixed costs planned for but not used 
D)  takes into account the effect of additional revenues due to maintaining higher prices 
A)  is not a good measure of a lost production opportunity 
B)  indicates that the company had reduced its per unit fixed overhead cost to improve sales 
C)  measures the amount of extra fixed costs planned for but not used 
D)  takes into account the effect of additional revenues due to maintaining higher prices

Question 7

Explain how service-sector companies can benefit from variance analysis.

Accepted Answer

Service-sector companies such as airline

Question 8

Davidson Corporation manufactured 58,500 units during September. The following fixed overhead data relates to September:
 
What is the amount of fixed overhead allocated to production?

Accepted Answer

A)  $171,990 
B)  $170,220 
C)  $170,520 
D)  $58,500 
A)  $171,990 
B)  $170,220 
C)  $170,520 
D)  $58,500

Question 9

Briefly explain the meaning of the variable overhead efficiency variance and the variable overhead spending variance.

Accepted Answer

The variable overhead efficiency varianc

Question 10

Timely Products Company makes watches. The fixed overhead costs for 2017 total $648,000. The company uses direct labor-hours for fixed overhead allocation and anticipates 21,600 hours during the year for 540,000 units. An equal number of units are budgeted for each month.
During October, 48,000 watches were produced and $52,000 was spent on fixed overhead.
Required:
a.Determine the fixed overhead rate for 2017 based on the units of input.
b.Determine the fixed overhead static-budget variance for October.
c.Determine the production-volume overhead variance for October.

Accepted Answer

a.Fixed overhead rate = ($648,000 ÷ 21,6

Question 11

If fixed overhead cost variances are always written off to Cost of Goods Sold, operating income can be manipulated for either financial reporting or income tax purposes.

Accepted Answer

A) True 
 B)False

Question 12

Lazy Guy Corporation manufactured 4,000 chairs during June. The following variable overhead data relates to June:
 
What is the variable overhead flexible-budget variance?

Accepted Answer

A)  $2,200 favorable 
B)  $1,480 favorable 
C)  $2,200 unfavorable 
D)  $1,480 unfavorable 
A)  $2,200 favorable 
B)  $1,480 favorable 
C)  $2,200 unfavorable 
D)  $1,480 unfavorable

Question 13

An unfavorable production-volume variance indicates an overallocation of fixed overhead costs.

Accepted Answer

A) True 
 B)False

Question 14

The costs related to buildings (such as rent and insurance), equipment (such as lease payments or straight-line depreciation), and salaried labor in a factory are all examples of cost items that would be part of the fixed overhead budget.

Accepted Answer

A) True 
 B)False

Question 15

A favorable production-volume variance arises when manufacturing capacity planned for is NOT used.

Accepted Answer

A) True 
 B)False

Question 16

Majestic Corporation manufactures wheel barrows 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?

Accepted Answer

A)  $35,309 unfavorable 
B)  $52,909 unfavorable 
C)  $35,309 favorable 
D)  $52,909 favorable 
A)  $35,309 unfavorable 
B)  $52,909 unfavorable 
C)  $35,309 favorable 
D)  $52,909 favorable

Question 17

Cold Products Corporation manufactured 32,000 ice chests during September. The variable overhead cost-allocation base is $13.45 per machine-hour. The following variable overhead data pertain to September:
 
What is the variable overhead spending variance?

Accepted Answer

A)  $3,040 favorable 
B)  $25,658 unfavorable 
C)  $22,618 unfavorable 
D)  $59,180 unfavorable 
A)  $3,040 favorable 
B)  $25,658 unfavorable 
C)  $22,618 unfavorable 
D)  $59,180 unfavorable

Question 18

Variable overhead has no production-volume variance.

Accepted Answer

A) True 
 B)False

Question 19

Managers can use variance analysis to make decisions about the mix of products to make.

Accepted Answer

A) True 
 B)False

Question 20

Russo Corporation manufactured 15,000 air conditioners during November. The overhead cost-allocation base is $33.25 per machine-hour. The following variable overhead data pertain to November:
 
What is the flexible-budget amount?

Accepted Answer

A)  $441,394 
B)  $399,000 
C)  $396,000 
D)  $475,200 
A)  $441,394 
B)  $399,000 
C)  $396,000 
D)  $475,200

Fixed overhead costs ________.

The total overhead variance should be ________.

Fixed costs for the period are by definition a lump sum of costs that remain unchanged and therefore the fixed overhead spending variance is always zero.

An unfavorable production-volume variance ________.

Explain how service-sector companies can benefit from variance analysis.

Davidson Corporation manufactured 58,500 units during September. The following fixed overhead data relates to September: What is the amount of fixed overhead allocated to production?

Briefly explain the meaning of the variable overhead efficiency variance and the variable overhead spending variance.

If fixed overhead cost variances are always written off to Cost of Goods Sold, operating income can be manipulated for either financial reporting or income tax purposes.

Lazy Guy Corporation manufactured 4,000 chairs during June. The following variable overhead data relates to June: What is the variable overhead flexible-budget variance?

An unfavorable production-volume variance indicates an overallocation of fixed overhead costs.

The costs related to buildings (such as rent and insurance), equipment (such as lease payments or straight-line depreciation), and salaried labor in a factory are all examples of cost items that would be part of the fixed overhead budget.

A favorable production-volume variance arises when manufacturing capacity planned for is NOT used.

Majestic Corporation manufactures wheel barrows 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?

Cold Products Corporation manufactured 32,000 ice chests during September. The variable overhead cost-allocation base is $13.45 per machine-hour. The following variable overhead data pertain to September: What is the variable overhead spending variance?

Variable overhead has no production-volume variance.

Managers can use variance analysis to make decisions about the mix of products to make.

Russo Corporation manufactured 15,000 air conditioners during November. The overhead cost-allocation base is $33.25 per machine-hour. The following variable overhead data pertain to November: What is the flexible-budget amount?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

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

Fixed overhead costs ________.

The total overhead variance should be ________.

Fixed costs for the period are by definition a lump sum of costs that remain unchanged and therefore the fixed overhead spending variance is always zero.

An unfavorable production-volume variance ________.

Explain how service-sector companies can benefit from variance analysis.

Davidson Corporation manufactured 58,500 units during September. The following fixed overhead data relates to September: What is the amount of fixed overhead allocated to production?

Briefly explain the meaning of the variable overhead efficiency variance and the variable overhead spending variance.

If fixed overhead cost variances are always written off to Cost of Goods Sold, operating income can be manipulated for either financial reporting or income tax purposes.

Lazy Guy Corporation manufactured 4,000 chairs during June. The following variable overhead data relates to June: What is the variable overhead flexible-budget variance?

An unfavorable production-volume variance indicates an overallocation of fixed overhead costs.

The costs related to buildings (such as rent and insurance), equipment (such as lease payments or straight-line depreciation), and salaried labor in a factory are all examples of cost items that would be part of the fixed overhead budget.

A favorable production-volume variance arises when manufacturing capacity planned for is NOT used.

Majestic Corporation manufactures wheel barrows 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?

Cold Products Corporation manufactured 32,000 ice chests during September. The variable overhead cost-allocation base is $13.45 per machine-hour. The following variable overhead data pertain to September: What is the variable overhead spending variance?

Variable overhead has no production-volume variance.

Managers can use variance analysis to make decisions about the mix of products to make.

Russo Corporation manufactured 15,000 air conditioners during November. The overhead cost-allocation base is $33.25 per machine-hour. The following variable overhead data pertain to November: What is the flexible-budget amount?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters