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

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

Which one of the following reflects both price (rate) as well as efficiency (quantity) effects regarding variable overhead items?

You are provided with the following summary of overhead-related costs for the most recent accounting period: Required: Prepare the appropriate journal entries for each of the above events. Assume that the company uses a single account, Manufacturing Overhead. For entry (7), assume that any overhead variances are closed entirely to Cost of Goods Sold (CGS).

When a company uses absorption costing, there is the potential for income manipulation based on choice of the denominator volume for setting the fixed overhead allocation rate. In which case is this manipulation potential manifested?

In deciding whether to further investigate a variance, managers usually:

The difference between total factory overhead cost incurred during a period and the total standard factory overhead cost assigned to production of the period is the ______________

Which of the following statements about variable overhead costs is true?

A payoff table for variance investigation that measures the cost of two states of nature and possible alternative actions by management will have:

Intangible attributes often play dominant roles in determining the value of outputs from a service organization. These characteristics often lead service firms to rely on:

What is the overhead production volume variance for Terry Company for the period?

The fixed factory overhead application rate (for product-costing purposes) is equal to:

As was the case with the material presented in text Chapter 14, the cost variances covered in Chapter 15 are directed at what might be called short-term financial control. These variances are calculated on the basis of standard costs and the use of flexible budgets. Periodic reports containing these variances are but a part of a larger and more comprehensive management accounting and control system. Required: Explain some of the inherent limitations of short-term financial performance measures (such as standard cost variances) and how such measures might be supplemented to better meet the planning and control needs of management.

A deviation from standard that occurs during operations as a result of operator errors is an example of a(n):

The difference between the total factory overhead cost in the flexible budget for the actual units produced and the amount of factory overhead cost applied to products using the standard overhead rate is called the factory overhead ______________

The fixed overhead spending variance for Terry Company for the period is:

Ben Simon Corp. has the following information about its standards and production activity for the month of November: Required: Calculate and show supporting calculations for each of the following variances: 1. Variable overhead flexible-budget variance. 2. Fixed overhead spending variance. 3. Fixed overhead production volume variance.

The difference between the total actual overhead cost incurred during a period and budgeted total factory overhead for the actual quantity of the cost driver used to apply overhead is equal to the:

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

The variable overhead spending variance is:

Assuming the use of a four-way breakdown (decomposition) of the total overhead variance, what is the variable factory overhead efficiency variance for Zero Company in December?