Exam 11: Flexible Budgets and Overhead Analysis

Gallant Company uses standard costing. Overhead is applied to products on the basis of standard direct labor hours for actual production. Data for Gallant follows:

The ________________ budget is based on the actual level of activity.

Griffen Corporation uses a standard costing system. Information for the month of May is as follows: The overhead rate is based on a normal volume of 12,000 direct labor hours. Standard cost data at 12,000 direct labor hours were as follows: What is the fixed overhead spending variance for Griffen?

Activity-based budgeting

Match the following terms with the items below: -Fixed overhead spending variance

The company expects to perform 25 setups in May. -Refer to Figure 11-5. If the company expects 25 setups in the month of May, what would be the total budgeted costs of the setup activity?

How does activity flexible budgeting differ from traditional-based flexible budgeting?

Activity flexible budgeting provides a more accurate prediction of costs than a traditional flexible budgeting approach because

McCordy Company provided information on the following three overhead activities: McCordy has found that the following driver levels are associated with two different levels of production:

Responsibility for the variable overhead spending variance is usually assigned to

The formula for the fixed overhead volume variance is

Mills Company uses standard costing for direct materials and direct labor. Management would like to use standard costing for variable and fixed overhead. The following monthly cost functions were developed for overhead items: The cost functions are considered reliable within a relevant range of 20,000 to 40,000 direct labor hours. The company expects to operate at 25,000 direct labor hours per month. Information for the month of June is as follows: Required:

Match the following terms with the items below: -Flexible budget variance

The ________________________ measures the change in the actual variable overhead cost that occurs because of efficient (or inefficient) use of direct labor

Discuss why activity flexible budgeting provides a more accurate prediction of costs than a traditional flexible budget.

Although general responsibility for the volume variance is usually assigned to the purchasing department, responsibility on occasion may be assigned to the production department.

Activity-based budgeting begins with the _____________ and _______________ budgets.

Match the following terms with the items below: -Static budget

A company provided the following data: Required:

The major differences between activity-based budgeting and traditional budgeting are found in