Exam 3: Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

A short-run measure of activity that represents a firm's anticipated activity level for an upcoming period based upon expected demand is referred to as:

Rosewood Corporation Rosewood Corporation produces a single product.The following cost structure applied to its first year of operations:

Variable costs:
SG&A	$2 per unit
Production	$4 per unit
Fixed costs (total cost incurred for the year):
SG&A	$14,000
Production	$20,000

Refer to Rosewood Corporation.Assume for this question only that during the current year Rosewood Corporation manufactured 5,000 units and sold 3,800.There was no beginning or ending work-in-process inventory.How much larger or smaller would Rosewood Corporation's income be if it uses absorption rather than variable costing?

When using the high-low method,the variable component is computed before computing the fixed component.

In a(n)____________________ cost system,factory overhead is assigned directly to products and services.

Another name for variable costing is

A functional classification of costs would classify "depreciation on office equipment" as a

When variable costing is used,

Landon Corporation wishes to develop a single predetermined overhead rate.The company's expected annual fixed overhead is $340,000 and its variable overhead cost per machine hour is $2.The company's relevant range is from 200,000 to 600,000 machine hours.Landon expects to operate at 425,000 machine hours for the coming year.The plant's theoretical capacity is 850,000.The predetermined overhead rate per machine hour should be

A basic concept of variable costing is that period costs should be currently expensed.What is the rationale behind this procedure?

Which of the following is not a reason to use predetermined overhead rates?

Applied overhead consists of which of the following?

The Internal Revenue Service allows the use of both variable and absorption costing.

How do differences in sales and production level affect net income computed under absorption costing and variable costing?

Discuss underapplied and overapplied overhead and its disposition at the end of the period.

The variable costing format is often more useful to managers than the absorption costing format because

Thibodeaux Tailors has gathered information on utility costs for the past year.The controller has decided that utilities are a function of the hours worked during the month.The following information is available and representative of the company's utility costs:

	Hours worked	Utility cost incurred
Low point	1,300	$ 903
High point	1,680	1,074

If 1,425 hours are worked in a month,total utility cost (rounded to the nearest dollar)using the high-low method should be

When a manufacturing company has a highly automated manufacturing plant producing many different products,which of the following is the more appropriate basis of applying manufacturing overhead costs to work in process?

Practical capacity is the capacity that can be achieved during normal working hours.

The performance measure that considers routine interruptions is known as ____________________ capacity.

The costing technique that treats fixed manufacturing overhead as a period cost is referred to as ______________ or ____________ costing. or