Exam 11: Flexible Budgets and Overhead Analysis

Montgomery normally produces 15,000 units (each unit requires 0.30 direct labor hours); however this year 19,000 units were produced with the following actual costs: -Refer to Figure 11-3. Calculate the after-the-fact budget for the actual level of activity.

The ____________________ budget gives expected outcomes for a range of activity levels.

A static budget is a budget for a particular level of activity.

Crawford Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labor hours per unit. During 2011, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor. What is the activity level on which Crawford based its fixed overhead rate?

The standard fixed overhead rate is often calculated as

The major differences between functional and activity-based budgeting are found within which of the following categories?

The variable overhead variance is affected by input price changes only.

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

Before-the-fact flexible budgets give expected outcomes for a range of activity levels.

Gina Production Company uses a standard costing system. The following information pertains to 2011. The factory overhead rate is based on an activity level of 10,000 hours. Standard cost data for 5,000 units is as follows: What is the variable overhead efficiency variance for Gina Production Company?

Gina Production Company uses a standard costing system. The following information pertains to 2011: The overhead rate is based on an activity level of 10,000 hours. Standard cost data for 5,000 units is as follows: What is the fixed overhead volume variance for Gina Production Company?

If actual fixed overhead was $98,400 and there was a $2,880 favorable spending variance and a $600 unfavorable volume variance, budgeted fixed overhead must have been

The company expects to perform 25 setups in May. -Refer to Figure 11-6. Prepare a salary budget for the activity, moving materials. Assume that the labor market does not permit the hiring of part-time forklift operators.

The total variable overhead variance is the difference between

Littleton Company uses a standard costing system. The following monthly cost functions apply to its manufacturing overhead items: Information for the month of October is as follows: Littleton uses expected capacity to calculate standard overhead rates. The monthly expected capacity is 25,000 hours.

The total fixed overhead variance is calculated by the following formula:

A static budget is a budget for a particular level of activity. The master budget is an example of a static budget. It is developed in advance and is based on a single level of activity, embodied in the sales budget. The master budget is useful in planning so that the firm can determine its sales, production needs, costs, and potential financial statements. The static budget is less useful for control because the level of activity set in the master budget rarely matches the actual level achieved.A flexible budget can be based on various levels of activity, or it can be based on the actual level of activity. The before-the-fact the budget gives expected outcomes for a range of activity levels. A before-the-fact flexible budget allows managers to generate financial results for a number of potential scenarios. The after-the-fact the budget is based on the actual level of activity. An after-the-fact flexible budget is used to compute what costs should have been for the actual level of activity. As a result, the cost comparisons between the flexible budget amounts and the actual amounts are more meaningful.PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 11-1 NAT: BUSPROG: Communication STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation | ACBSP: APC-36-Budgeting and Responsibility KEY: Bloom's: Comprehension NOT: 10 min.You decide -Describe flexible budgeting, including the two types of flexible budgets.

Discuss the following statement: "Since fixed overhead is, by definition, not related to changes in activity level, then the fixed overhead spending variance is zero."

Activity-based budgeting supports continuous improvement and process management.

Markus, Inc. produces a specialized machine part used in forklifts. For last year's operations, the following data were gathered: Markus employs a standard costing system. During the year, a variable overhead rate of $5.00 was used. The labor standard requires 0.50 hours per unit produced. The variable overhead spending and efficiency variances are, respectively