Exam 15: Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Under a two-variance breakdown (decomposition) of the total factory overhead variance, the factory overhead efficiency variance is:

The total underapplied or overapplied factory overhead for Bonehead Co. for the period is:

Under a three-variance breakdown (decomposition) of the total factory overhead variance, the factory overhead production volume variance is:

McAllister Company's master budget for the year just completed was based on 100% capacity and included 40,000 machine hours and $240,000 total factory overhead. The budgeted fixed overhead at 75% of factory capacity would be $160,000 (and 30,000 machine hours). The company actually operated at 90% capacity for the year, and incurred $252,000 total factory overhead. Required: 1. Determine the factory overhead flexible-budget variance for the year. Show calculations. 2. Calculate the factory overhead production volume variance for the year. Show calculations.

The "death-spiral" effect refers to:

What is the total overhead spending variance for Terry Company for the period?

What were the total actual direct hours worked by Oslund Company during the past month?

The variable factory overhead efficiency variance for Megan, Inc. for the month is:

The factory overhead production volume variance is:

What is the variable factory overhead spending variance in May, assuming Gerhan uses a four-variance breakdown (decomposition) of the total overhead variance?

The total factory overhead variance for Norland Co. is:

What is the factory overhead production-volume variance for Gerhan Company in May?

Causes of random variances are beyond the control of management, and are most often found in:

The difference between total variable overhead cost incurred and the standard variable overhead cost based on the actual quantity of the cost driver used to apply variable overhead is the:

A deviation from standard because of the failure to include one or more relevant variables, or the inclusion of the wrong or irrelevant variables in the standard-setting process is an example of a(n):

What were the total standard hours for the units manufactured by Oslund Company during the past month?

If I = the cost of conducting an investigation, C = the estimated cost to correct the cause of a variance, and L = loss associated with not investigating a variance, what is the formula for determining the indifference probability, p?

The total under or over applied overhead for Terry Company for the period is:

It can be argued that manufacturing overhead analysis under an ABC system is more informative or useful to management because of the associated richness of the analysis and therefore increased potential for cost control. Of particular interest under an ABC system is the flexible-budget analysis that can be performed when there is a standard batch size for production activity. Required: Explain how the conventional analysis of overhead variances through the use of flexible budgets can be expanded when production is characterized by a standard batch size. Focus specifically on the analysis of batch-related costs, for example, production-related set-up costs. Discuss separately the analysis of fixed setup-related costs and variable setup-related manufacturing support costs.

Dillard, Inc., has developed the following standard cost data based on a denominator volume of 60,000 direct labor hours (DLHs). Budgeted fixed overhead is $360,000 and budgeted variable overhead is $180,000 at this level of activity. During the last period, the company used 48,000 DLHs to produce 128,000 units. It incurred the following manufacturing costs: Required: Determine all variances for direct materials, direct labor, and factory overhead. Use a 4-variance breakdown (decomposition) of the total overhead variance for the period. Note: this problem requires knowledge from Chapter 14.