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

Atlanta Enterprises incurred $828,000 of fixed overhead during the period.During that same period,the company applied $845,000 of fixed overhead to production and reported an unfavorable budget variance of $41,000.How much was Atlanta's budgeted fixed overhead?

Assume that both cost pools are combined into a single pool,and labor hours is the driver.The total flexible budget for the actual level of labor hours and the total variance for the combined pool are:

The fixed-overhead budget and volume variances are:

What is the most common treatment of the fixed-overhead budget variance at the end of the accounting period?

Zin,Inc.is planning its cash needs for an upcoming period when 85,000 machine hours are expected to be worked.Activity may drop as low as 78,000 hours if some overdue equipment maintenance procedures are performed;on the other hand,activity could jump to 94,000 hours if one of Zin's major competitors likely goes bankrupt.A flexible cash budget to determine cash needs would best be based on:

Assume that machine hours is the cost driver for overhead.The difference between the actual variable overhead incurred and the applied variable overhead is the:

A flexible budget for 15,000 hours revealed variable manufacturing overhead of $90,000 and fixed manufacturing overhead of $120,000.The budget for 20,000 hours would reveal total overhead costs of:

A static budget:

Flexible budgets reflect a company's anticipated costs based on variations in:

The budget variance arises from a comparison of actual variable overhead expenditures with budgeted variable overhead costs.

Luke,Inc.has a standard variable overhead rate of $5 per machine hour,with each completed unit expected to take three machine hours to produce.A review of the company's accounting records found the following: Actual production: 19,500 units Variable-overhead efficiency variance: $9,000U Variable-overhead spending variance: $21,000F What was Luke's actual variable overhead during the period?

A flexible budget for 15,000 hours revealed variable manufacturing overhead of $90,000 and fixed manufacturing overhead of $120,000.The budget for 25,000 hours would reveal total overhead costs of $210,000.

Gridiron Merchandising anticipated selling 27,000 units of a major product and paying sales commissions of $6 per unit.Actual sales and sales commissions totaled 27,500 units and $171,400,respectively.If the company used a flexible budget for performance evaluations,Gridiron would report a cost variance of:

The manufacturing overhead applied to Work-in-Process Inventory by a company that uses standard costing would be computed as:

Briefly explain the nature of the fixed-overhead volume variance.Be sure to address the issue of capacity utilization in your response.

With respect to overhead,what is the difference between normal costing and standard costing?

The amount of variable overhead that Draco applied to production is:

Smithville uses labor hours to apply variable overhead to production.If the company's workers were very inefficient during the period,which of the following statements would be true about the variable-overhead efficiency variance?

What will cause the variable-overhead efficiency variance?

The Houston Chamber Orchestra presents a series of concerts throughout the year.Budgeted fixed costs total $300,000 for the concert season;variable costs are expected to average $5 per patron.The orchestra uses flexible budgeting. Required: A.Prepare a flexible budget that shows the expected costs of 8,000,8,500,and 9,000 patrons. B.Construct the orchestra's flexible budget formula. C.Assume that 8,700 patrons attended concerts during the year just ended,and actual costs were: variable,$42,000;fixed,$307,500.Evaluate the orchestra's financial performance by computing variances for variable costs and fixed costs.