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

What is the factory overhead efficiency variance for May under the assumption that Gerhan uses a four-variance breakdown (decomposition) of the total overhead variance?

In deciding whether to further investigate a variance, an organization needs to weigh the costs of investigation against the:

Redtop Co. uses a standard cost system and flexible budgets. The following flexible budget was prepared at the 80% operating level for the year: However, for purposes of calculating the fixed overhead application rate, the company defined the denominator volume as the 90% capacity level. The standard calls for four DLHs per unit manufactured. During the year, Redtop worked 33,600 DLHs to manufacture 8,500 units. The actual factory overhead was $12,000 greater than the flexible-budget amount for the units produced, of which $5,000 was due to fixed factory overhead. Required: Calculate (and provide supporting details for) each of the following variances: 1. The standard variable overhead application rate. 2. The variable overhead efficiency variance. 3. The factory overhead spending variance. 4. The factory overhead production volume variance. 5. The variable overhead spending variance. 6. Provide an interpretation for each of the above variances you calculated

Assuming a four-variance breakdown (decomposition) of the total overhead variance, what is the fixed factory overhead efficiency variance for the period?

The difference between the standard variable overhead cost for the actual quantity of the cost driver used for applying variable overhead and the standard variable overhead cost for the units manufactured during the period is the:

Under a three-way breakdown (decomposition) of the total overhead variance, what is the total factory overhead spending variance for Zero Company in December?

When implementing a standard cost system, one of the system-design choices that management must make is choice of the denominator volume level for the purpose of calculating the fixed overhead application rate, which is used to determine product costs. Various alternatives exist for the denominator volume. Required: 1. List and briefly describe the various alternatives that exist for defining the denominator activity level for product-costing purposes. 2. What provisions of generally accepted accounting principles (GAAP) and current income tax requirements affect the decision as to choice of the denominator volume level when developing the standard fixed overhead application rate? Provide an overview of the requirements in this regard.

The difference between the actual fixed overhead cost incurred during a period and the budgeted fixed overhead cost for the period is the:

During the year the Machining Department produced 50,000 units, consuming 127,500 machine hours and incurring $433,500 of fixed overhead. For the current year the department has a production volume variance of:

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

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

In firms using activity-based costing (ABC), budgeted total factory overhead varies with changes in:

The variable overhead efficiency variance in 2013 for Bluecap Co. is:

Which of the following is not a cost system proposed as an extension to ABC systems, with the overall goal of more accurately allocating manufacturing overhead costs to outputs?

Systematic variances, as this term is used in the text, are persistent and most likely:

What is the fixed factory overhead spending variance in December for Gerhan Company?

If Zero Company uses a two-way breakdown (decomposition) of the total overhead variance, what is the total factory overhead flexible-budget variance for December?

The variable factory overhead efficiency variance is:

The standard fixed overhead application rate is:

In terms of allocating fixed overhead cost to products, generally accepted accounting principles: