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

Many firms feel a strong obligation to establish and use a standard rate for fixed factory overhead for all the following reasons except:

The difference between total variable overhead cost incurred and the standard variable overhead cost based on the actual quantity of the cost driver used to apply variable overhead is the:

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.The budgeted total factory overhead for the Machining Department is:

A manufacturing company that uses standard costs and flexible budgets can break the variable factory overhead flexible-budget variance down into:

Neptune Inc.uses a standard cost system and has the following information for April: The total underapplied or overapplied factory overhead is:

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 variable overhead spending variance in 2010 is:

A payoff table for variance investigation that measures the cost of two states of nature and possible alternative actions by management will have:

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.Under the assumption that the total budgeted fixed overhead for 2011 is the same as it was for 2010,what is the standard fixed overhead application rate per direct labor hour for 2011?

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

The following information is available from the Terry Company: The fixed overhead spending variance for the period is:

Eileen Bellows is controller at a new,rapidly growing company that produces replacement windows for existing houses or for initial installation in new houses.Competition is stiff in this industry,but the company for which Eileen works is aggressive in sales development,and just showed a modest profit for the first year since its founding four years ago.Howard Zeller is controller at Accents Incorporated,an established drapery and blinds manufacturer.Accent is an industry leader and has experienced sustained growth in both sales and profits for the past five years.Eileen: Our manufacturing support costs seem to be growing over time.For planning and control purposes we're using "currently attainable" standards in our standard cost system,including the costing of manufacturing overhead.But now that we're making profit,I've been thinking of a switch to tighter standards.Howard: We've always used ideal standards,although our enforcement of these goals hasn't been strict.It seems to work for us. Required: What does this conversation say about each company's expectations regarding their standard cost system and anticipated variances from each of the two different systems?

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: The factory overhead production-volume variance is:

Random variances are:

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

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

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 fixed overhead production-volume variance in 2010 is:

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: The variable factory overhead efficiency variance is:

Which one of the following standard cost variances is not available when analyzing batch-related manufacturing overhead costs using an activity-based cost (ABC)system?

In a standard cost system,an unfavorable production-volume variance would result if:

Ben Simon Corp.has the following information about its standards and production activity for the month of November: