Exam 11: Flexible Budgeting and the Management of Overhead and Support Activity Costs

The sales-volume variance equals:

The standard variable overhead rate for May is:

Benson's fixed-overhead volume variance is:

Which of the following is not an overhead variance?

If Rowe desires to analyze variances that arose primarily from managers' expenditures in excess of anticipated amounts,the company should focus on variances that total:

The company's sales-price variance is:

Enberg Company,which applies overhead to production on the basis of machine hours,reported the following data for the period just ended: Actual units produced: 14,800 Actual fixed overhead incurred: $791,000 Standard fixed overhead rate: $13 per hour Budgeted fixed overhead: $780,000 Planned level of machine-hour activity: 60,000 If Enberg estimates four hours to manufacture a completed unit,the company's fixed-overhead volume variance would be:

When actual variable cost per unit equals standard variable cost per unit,the difference between actual and budgeted contribution margin is explained by a combination of which two variances?

Martin Company,which applies overhead to production on the basis of machine hours,reported the following data for the period just ended: Actual units produced: 9,000 Actual variable overhead incurred: $54,400 Actual machine hours worked: 16,000 Standard variable overhead cost per machine hour: $3.50 If Martin estimates two hours to manufacture a completed unit,the company's variable-overhead efficiency variance is:

Which of the following mathematical expressions is found in a typical flexible-budget formula for overhead?

If Young operated at 35,000 hours,its total budgeted cost would be:

Trois Elles Corporation recently prepared a manufacturing cost budget for an output of 50,000 units,as follows: Actual units produced amounted to 60,000.Actual costs incurred were: direct materials,$110,000;direct labor,$60,000;variable overhead,$100,000;and fixed overhead,$97,000.If Trois Elles evaluated performance by the use of a flexible budget,a performance report would reveal a total variance of:

Hunters,Inc.uses a standard cost system when accounting for its sole product.Manufacturing overhead is applied to production on the basis of process hours.Planned activity is 60,000 process hours per month,which gives rise to the following per-unit standards: Variable overhead: 13 hours at $15 per hour Fixed overhead: 13 hours at $7 per hour During September,5,100 units were produced and the company incurred the following overhead costs: variable,$942,500;fixed,$429,000.Actual process hours totaled 65,000. Required: A.Calculate the spending and efficiency variances for variable overhead. A.Spending variance: $942,500 - (65,000 * $15)= $32,500F Efficiency variance: (65,000 * $15)- (5,100 * 13 * $15)= $19,500F B.Budget variance: $429,000 - (60,000 * $7)= $9,000U Volume variance: (60,000 * $7)- (5,100 * 13 * $7)= $44,100F* *Some accountants choose to label a negative volume variance as "favorable," while others prefer to omit the unfavorable/favorable label altogether. B.Calculate the budget and volume variances for fixed overheaD.

Del's Diner anticipated that 84,000 process hours would be worked during an upcoming accounting period when,in fact,90,000 hours were actually worked.One of the company's cost functions is expressed as follows: Y = $16PH + $640,000 where PH is defined as process hours What is Del's flexible budget for the preceding cost function?

Jackson Corporation uses a standard cost system,applying manufacturing overhead on the basis of machine hours.The company's overhead standards per unit are shown below. Variable overhead: 4 hours at $9 per hour Fixed overhead: 4 hours at $6* per hour *Based on planned monthly activity of 120,000 machine hours Actual data for May were: Number of units produced: 29,000 Number of machine hours worked: 125,000 Variable overhead costs incurred: $1,085,000 Fixed overhead costs incurred: $755,000 Required: A.Calculate the spending and efficiency variances for variable overhead. A.Spending variance: $1,085,000 - (125,000 * $9)= $40,000F Efficiency variance: (125,000 *$9)- (29,000 * 4 * $9)= $81,000U B.Budget variance: $755,000 - (120,000 * $6)= $35,000U Volume variance: (120,000* $6)- (29,000 * 4 * $6)= $24,000U* *Some accountants choose to label a positive volume variance as "unfavorable," while others prefer to omit the unfavorable/favorable label altogether. B.Calculate the budget and volume variances for fixed overheaD.

In an effort to reduce record-keeping,companies that sell perishable goods will often enter the standard cost of direct material,direct labor,and manufacturing overhead directly into what account?

A production manager was recently given a performance report that showed a sizable unfavorable variable-overhead efficiency variance.The manager was puzzled as to how the department could be inefficient in the use/incurrence of this cost. Required: Briefly explain the nature of this variance to the manager.Does the variance really have much to do with variable overhead efficiencies or inefficiencies? Discuss.

Draco's fixed-overhead volume variance is:

The activity measure selected for use in a variable- and fixed-overhead flexible budget:

Hempstead Corporation plans to manufacture 8,000 units over the next month at the following costs: direct materials,$480,000;direct labor,$60,000;variable manufacturing overhead,$150,000;straight-line depreciation,$24,000,and other fixed manufacturing overhead,$272,000.The result is total budgeted cost of $990,000. Shortly after the conclusion of the month,Hempstead reported the following costs: A. Budget calculations: Direct materials used: $480,000 / 8,000 units = $60.00 per unit Direct labor: $60,000 / 8,000 units = $7.50 per unit Variable manufacturing overhead: $150,000 / 8,000 units = $18.75 per unit A.Prepare a performance report that fairly compares budgeted and actual costs for the period just ended-namely,the report that the general manager likely used when assessing performance. B.Should Krueger be praised for "having met the budget" or is the general manager's unhappiness justified? Explain,citing any apparent problems for the firm. B.The general manager's unhappiness is appropriate because of the variances that have arisen.By comparing the original budget of $990,000 vs.actual costs of $988,100,Krueger appears to have met the budget.Bear in mind,though,that volume was below the original monthly expectation of 8,000 units-presumably because of the plant closure.A reduced volume will likely lead to lower variable costs than anticipated (and resulting favorable variances). When the volume differential is removed,variable cost variances turn unfavorable for direct materials and direct labor.These two amounts are,respectively,13.5% and 28.9% greater than budget.