Question 1

Flexible budgets are powerful control tools because

Accepted Answer

A)  they allow managers to deal with uncertainty. 
B)  they allow the calculation of what cost should be for the actual level of activity. 
C)  they allow the preparation of meaningful performance reports. 
D)  they help measure managerial efficiency. 
E)  All of these. 
A)  they allow managers to deal with uncertainty. 
B)  they allow the calculation of what cost should be for the actual level of activity. 
C)  they allow the preparation of meaningful performance reports. 
D)  they help measure managerial efficiency. 
E)  All of these. E

Question 2

In an activity framework, controlling costs is equivalent to managing activities.

Accepted Answer

A) True 
 B)False  True

Question 3

An activity-based budgetary approach can be used to emphasize cost reduction and process management.

Accepted Answer

A) True 
 B)False  True

Question 4

The fixed overhead spending variance

Accepted Answer

A)  is usually not significant. 
B)  is made up of many individual items. 
C)  is the difference between actual costs and budgeted costs. 
D)  merits investigation only if the variance is material. 
E)  All of these. 
A)  is usually not significant. 
B)  is made up of many individual items. 
C)  is the difference between actual costs and budgeted costs. 
D)  merits investigation only if the variance is material. 
E)  All of these.

Question 5

Responsibility for variable overhead spending and efficiency variances is generally assigned to production departments.

Accepted Answer

A) True 
 B)False

Question 6

The variable overhead spending variance measures the aggregate effect of differences between the

Accepted Answer

A)  the total variable overhead and the applied variable overhead. 
B)  the total variable overhead and total budgeted overhead costs. 
C)  the total variable overhead and the budgeted overhead for the expected activity. 
D)  the actual variable overhead rate and the standard variable overhead rate. 
E)  None of these. 
A)  the total variable overhead and the applied variable overhead. 
B)  the total variable overhead and total budgeted overhead costs. 
C)  the total variable overhead and the budgeted overhead for the expected activity. 
D)  the actual variable overhead rate and the standard variable overhead rate. 
E)  None of these.

Question 7

Practical capacity is always used to calculate fixed overhead rates

Accepted Answer

A) True 
 B)False

Question 8

To create a meaningful performance report,

Accepted Answer

A)  actual costs are compared with the expected costs found in the static budget. 
B)  actual costs are calculated as a percentage of sales. 
C)  actual costs are compared with the prior year's actual costs. 
D)  expected costs of the static budget are compared with the expected costs of the flexible budget. 
E)  actual costs are compared with the expected costs at the same level of activity. 
A)  actual costs are compared with the expected costs found in the static budget. 
B)  actual costs are calculated as a percentage of sales. 
C)  actual costs are compared with the prior year's actual costs. 
D)  expected costs of the static budget are compared with the expected costs of the flexible budget. 
E)  actual costs are compared with the expected costs at the same level of activity.

Question 9

Price changes of variable overhead items are easily controlled by production supervisors.

Accepted Answer

A) True 
 B)False

Question 10

An activity-based budgetary approach can be used to emphasize cost increases through the reduction of wasteful activities and improving the efficiency of necessary activities.

Accepted Answer

A) True 
 B)False

Question 11

Which budget is used to assess managerial efficiency?

Accepted Answer

A)  sales budget 
B)  production budget 
C)  static budget 
D)  flexible budget 
E)  cash budget 
A)  sales budget 
B)  production budget 
C)  static budget 
D)  flexible budget 
E)  cash budget

Question 12

The fixed overhead spending variance is affected primarily by changes in production levels.

Accepted Answer

A) True 
 B)False

Question 13

A difference between the actual amount and the flexible budget amount is known as the ____________________.

Accepted Answer

flexible b

Question 14

Match the following terms with the items below:
-Variable overhead efficiency variance

Accepted Answer

A) (Actual hours - Standard hours)SVOR 
B) Prediction of what activity costs will be as activity output changes 
C) A measure of capacity utilization 
D) Actual variable overhead - (SVOR * Actual hours) 
E) Difference between the actual amount and the flexible budget amount
F)A budget that specifies costs for a range of activity
G)A budget for a particular level of activity
H)Estimating activity output and then assessing the cost of resources to produce this output
I)A report that compares actual with planned costs
J)Difference between actual and budgeted fixed overhead 
A) (Actual hours - Standard hours)SVOR 
B) Prediction of what activity costs will be as activity output changes 
C) A measure of capacity utilization 
D) Actual variable overhead - (SVOR * Actual hours) 
E) Difference between the actual amount and the flexible budget amount
F)A budget that specifies costs for a range of activity
G)A budget for a particular level of activity
H)Estimating activity output and then assessing the cost of resources to produce this output
I)A report that compares actual with planned costs
J)Difference between actual and budgeted fixed overhead

Question 15

Vallo Pharmacy operates a home delivery service with more than 2,000 housebound clients. Vallo has a fleet of vehicles and has invested in a sophisticated computerized communications system to coordinate its deliveries. Vallo has gathered the following data on last year's operations:
   
Vallo uses a standard costing system. During the year, the following variable overhead rate was used: $8.10 per delivery hour. The labor standard requires 0.75 hours per delivery.
Compute the variable overhead spending variance and the variable overhead efficiency variance.

Accepted Answer

Variable overhead an

Question 16

-Refer to Figure 11-4. Calculate the applied fixed overhead.

Accepted Answer

A)  $973,080 
B)  $855,030 
C)  $964,000 
D)  $910,000 
E)  None of these. 
A)  $973,080 
B)  $855,030 
C)  $964,000 
D)  $910,000 
E)  None of these.

Question 17

_________________ are capacity costs acquired in advance of usage.

Accepted Answer

Fixed over

Question 18

Which of the following relationships is valid concerning fixed overhead budgeted at the beginning of the year?

Accepted Answer

A)  BFOH = SFOR * AH 
B)  BFOH = SFOR * SH for actual production 
C)  BFOH = SFOR * SH for planned production 
D)  BFOH = SFOR/SH for actual production 
E)  None of these. 
A)  BFOH = SFOR * AH 
B)  BFOH = SFOR * SH for actual production 
C)  BFOH = SFOR * SH for planned production 
D)  BFOH = SFOR/SH for actual production 
E)  None of these.

Question 19

The _____________________ is the difference between actual fixed overhead and applied fixed overhead.

Accepted Answer

total fixe

Question 20

For a static activity budget in a company already using an ABC or ABM system, the activities within the organization must be identified.

Accepted Answer

A) True 
 B)False

Flexible budgets are powerful control tools because

In an activity framework, controlling costs is equivalent to managing activities.

An activity-based budgetary approach can be used to emphasize cost reduction and process management.

The fixed overhead spending variance

Responsibility for variable overhead spending and efficiency variances is generally assigned to production departments.

The variable overhead spending variance measures the aggregate effect of differences between the

Practical capacity is always used to calculate fixed overhead rates

To create a meaningful performance report,

Price changes of variable overhead items are easily controlled by production supervisors.

An activity-based budgetary approach can be used to emphasize cost increases through the reduction of wasteful activities and improving the efficiency of necessary activities.

Which budget is used to assess managerial efficiency?

The fixed overhead spending variance is affected primarily by changes in production levels.

A difference between the actual amount and the flexible budget amount is known as the ____________________.

Match the following terms with the items below: -Variable overhead efficiency variance

-Refer to Figure 11-4. Calculate the applied fixed overhead.

_________________ are capacity costs acquired in advance of usage.

Which of the following relationships is valid concerning fixed overhead budgeted at the beginning of the year?

The _____________________ is the difference between actual fixed overhead and applied fixed overhead.

For a static activity budget in a company already using an ABC or ABM system, the activities within the organization must be identified.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

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Exam 11: Flexible Budgets and Overhead Analysis

Flexible budgets are powerful control tools because

In an activity framework, controlling costs is equivalent to managing activities.

An activity-based budgetary approach can be used to emphasize cost reduction and process management.

The fixed overhead spending variance

Responsibility for variable overhead spending and efficiency variances is generally assigned to production departments.

The variable overhead spending variance measures the aggregate effect of differences between the

Practical capacity is always used to calculate fixed overhead rates

To create a meaningful performance report,

Price changes of variable overhead items are easily controlled by production supervisors.

An activity-based budgetary approach can be used to emphasize cost increases through the reduction of wasteful activities and improving the efficiency of necessary activities.

Which budget is used to assess managerial efficiency?

The fixed overhead spending variance is affected primarily by changes in production levels.

A difference between the actual amount and the flexible budget amount is known as the ____________________.

Match the following terms with the items below: -Variable overhead efficiency variance

-Refer to Figure 11-4. Calculate the applied fixed overhead.

_________________ are capacity costs acquired in advance of usage.

Which of the following relationships is valid concerning fixed overhead budgeted at the beginning of the year?

The _____________________ is the difference between actual fixed overhead and applied fixed overhead.

For a static activity budget in a company already using an ABC or ABM system, the activities within the organization must be identified.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters