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

Megan,Inc.uses the following standard costs per unit for one of its products: Direct labor (2 hrs @ $5/hr)= $10;overhead (2 hrs @ $2.50/hr)= $5.The flexible budget for overhead is $120,000 plus $1 per direct labor hour (DLH).Actual data for the month show total overhead costs of $225,000,total fixed overhead of $123,000,85,000 hours worked,and 40,000 units produced.The variable overhead spending variance is:

The following information is available from the Taro Company: What is the fixed overhead spending variance for the period?

Cost behavior for variable overhead is more difficult to predict than for direct material or direct labor cost for all the following reasons except:

The difference between budgeted fixed factory overhead for a period and the amount of the fixed factory overhead applied to production during the period is the:

Determining the standard fixed factory overhead applied to production for a period involves all of the following essential elements except:

Xero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH),calculated at 90% capacity = 900 standard DLHs.In December,the company operated at 80% of capacity,or 800 standard DLHs.Budgeted factory overhead at 80% of capacity is $3,150,of which $1,350 is fixed overhead.For December,the actual factory overhead cost was $3,800 for 840 actual DLHs,of which $1,300 was for fixed factory overhead.What is the factory overhead production-volume variance for December?

Xero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH),calculated at 90% capacity = 900 standard DLHs.In December,the company operated at 80% of capacity,or 800 standard DLHs.Budgeted factory overhead at 80% of capacity is $3,150,of which $1,350 is fixed overhead.For December,the actual factory overhead cost was $3,800 for 840 actual DLHs,of which $1,300 was for fixed factory overhead.Under a four-way breakdown (decomposition)of the total overhead variance,what is the variable factory overhead spending variance for December?

Which one of the following journal entries in a standard cost system is needed at the end of the period to close out to Cost of Goods Sold an unfavorable production-volume variance?

The following budget data pertain to the Machining Department of Yolkenverst Co.: The company prepared the budget at 85% of the maximum capacity level.The department uses machine hours as the basis for applying standard factory overhead costs to production.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:

Which one of the following journal entries in a standard cost system is needed to record the completion of production for the period?

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?

For which one of the following reasons is the calculation of overhead variances in conjunction with an activity-based cost (ABC)system desirable from the standpoint of management?

Bluecap Co.uses a standard cost system and flexible budgets for control purposes.The following budgeted information pertains to 2010: During 2010,Bluecap worked 28,000 direct labor hours and manufactured 9,600 units.The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced,of which $6,000 was due to fixed factory overhead.In preparing a budget for 2011 Bluecap decided to raise the level of operation to 90% of capacity,to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours.The total budget for fixed factory overhead in 2010 was:

Air Inc.uses a standard cost system.Overhead cost information for Product CX10 for the month of October is as follows: What is the total overhead spending variance for the month?

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

The following information is available from the Terry Company: What is the variable overhead efficiency variance for the period?

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

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 spent 5,000 DLHs and incurred $16,500 of total factory overhead cost during May,including $6,800 for fixed factory overhead.What is the factory overhead production-volume variance for May?

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:

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 spent 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?