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

Manufacturing companies using a standard cost system often can achieve more effective control when factory overhead variance analysis is done with:

Because fixed factory overhead does not vary with changes in output:

Finding a single cost driver that changes in the same proportion as variable factory overhead costs is:

The overhead production volume variance for Megan, Inc. for the month is:

The total factory overhead spending variance in April for Neptune, Inc. is:

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

If there is a 90 percent chance that an observed variance is random, the cost of conducting an investigation is $1,000, the cost to correct a variance if the investigation reveals a nonrandom cause, and the amount of loss a company expects to incur if it does not investigate a variance that had a nonrandom cause is $30,000, what is the expected cost of not investigating the variance?

Which of the following statements about the standard variable factory overhead application rate is true?

In terms of the variance-investigation decision, an "indifference probability," p, of 10%

The difference between actual overhead costs incurred during the period and the overhead in the flexible budget based on the output for the period is called the:

Given this information, what is the expected cost of the decision to investigate the observed variance?

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

An activity-based cost (ABC) driver applies factory overhead to products or services according to the:

Which one of the following characteristics is associated with standard cost variance analysis for manufacturing overhead under a traditional versus an activity-based cost (ABC) system?

The difference between variable overhead cost incurred and total standard variable overhead cost for the output of the period is called the:

What are the steps in establishing the standard application rate for variable factory overhead cost? Does the procedure differ for product-costing versus cost control purposes?

Gerhan Company's flexible budget for the units actually manufactured in May shows $15,640 of total factory overhead; this output level represents 70% of available capacity. During May the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 6,120 DLHs, which represents 90% of available capacity. The company worked 5,000 DLHs and incurred $16,500 of total factory overhead cost during May, including $6,800 for fixed factory overhead. Under a three-variance breakdown (decomposition) of the total overhead variance, what is the total factory overhead spending variance for May?

The total underapplied or overapplied factory overhead in April for Neptune, Inc. is:

The fixed factory overhead production-volume variance represents:

Using an activity-based costing system (ABC) enables a firm to calculate overhead variances for: