Exam 8: Flexible Budgets, Variances, and Management Control: II

Jensen Ltd.delivers shoes in batches.The following information pertains to shipping soccer shoes in May: Required: a.Calculate the efficiency variance for variable shipping overhead costs. b.Calculate the rate variance for variable shipping overhead costs. c.Calculate the rate variance for fixed shipping overhead costs. d.Calculate the production-volume variance for fixed shipping overhead costs.

Heather's Pillow Company manufactures pillows.The current year operating budget is based on production of 20,000 pillows with 0.5 machine-hour allowed per pillow.Variable manufacturing overhead is anticipated to be $220,000.Actual production was 18,000 pillows using 9,500 machine-hours.Actual variable costs were $20 per machine-hour.Required: Calculate the variable overhead rate and efficiency variances.

A leased factory building has a fixed monthly rental payment, and a variable overhead cost of energy and indirect labour.Which of the following is TRUE, assuming that all activity levels are within the relevant range?

Use the information below to answer the following question(s).Moeller Electric manufactures light fixtures.The following information pertains to the company's manufacturing overhead data. -What is Moeller Electric's variable manufacturing overhead sales-volume variance?

The production-volume variance may also be referred to as the

If a manager views the proration approach as not being cost-effective, then adjusting cost of goods sold is acceptable provide the amount is material.

Answer the following question(s)using the information below.Jenny's Corporation manufactured 25,000 grooming kits for horses during March.The fixed-overhead cost allocation rate is $20.00 per machine-hour.The following fixed overhead data pertain to March: -What is the fixed overhead rate variance?

What is the variable manufacturing overhead static-budget variance given the following information?

How can a standard costing system be useful in negotiating new sales?

If Ferg Company has a $12,000 unfavourable variable overhead efficiency variance, which of the following statements would be TRUE?

Trilite Windows manufactures windows.The current year operating budget is based on production of 56,000 windows with 1.0 machine hours allowed per window.Variable manufacturing overhead is anticipated to be $896,000.Actual production for was 58,000 windows using 60,000 machine hours.Actual variable costs were $15 per machine hour.Required: Determine the variable overhead rate and efficiency variances.

Sam's Furniture uses variance analysis to evaluate manufacturing overhead in its' factory.The information for the June overhead expenditures is as follows: Required: a.Calculate the variable manufacturing overhead rate and efficiency variances; and, the fixed manufacturing overhead rate and production-volume variances. b.Prepare all necessary journal entries to record the actual costs, allocated costs, and variances.Keep variable and fixed entries separate.

An unfavourable production volume variance (a result of lower-than-budgeted output)should be expensed (to COGS)in the period it arises rather than be allocated to inventory.

Brown Dental Equipment uses a flexible budget for its indirect manufacturing costs.For 2019 the company anticipated that it would produce 36,000 components with 7,000 machine hours and 14,400 employee days.The costs and cost drivers were to be as follows: During the year the company processed 40,000 units, worked 15,000 employee days, and had 8,000 machine hours.The actual costs for 2019 were: Required: a.Prepare an overhead static budget for 2019 with variances. b.Prepare an overhead flexible budget for 2019 with variances.

Batch-level costs are resources sacrificed on activities that are related to individual units of product(s)or service(s).

The Saskatchewan division of a Canadian farm machinery company uses a standard cost system for its machine-based production of grain drying equipment.Data regarding production for April are as follows: Required: 1.Prepare the necessary journal entries to account for the variable manufacturing overhead incurred and allocated to production.2.Prepare the journal entry to close the variable overhead variance accounts under the assumption that the amount is immaterial.

Explain two concerns when interpreting the production-volume variance as a measure of the economic cost of unused capacity.

When the actual output is more than expected and the volume is unusually high then the production volume variance is

Answer the following question(s)using the information below.Lukehart Industries Inc.produces air purifiers in batches.To manufacture a batch of the purifiers Lukehart Inc.must setup the machines and assembly line tooling.Setup costs are batch-level costs because they are associated with batches rather than individual units of products.A separate Setup Department is responsible for setting up machines and tooling for different models of the air purifiers.Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup hours.The following information pertains to June 2012: -Calculate the flexible-budget variance for variable setup overhead costs.

Lungren has allocated budgeted construction overhead for August of $260,000 for variable costs and $440,000 for fixed costs.Actual costs for the month totalled $275,000 for variable and $445,000 for fixed.Allocated fixed overhead totalled $440,000.The company tracks each item in an overhead control account before allocations are made to individual jobs.Rate variances for August were $10,000 unfavourable for variable and $10,000 unfavourable for fixed.The production-volume overhead variance was $5,000 favourable.Required: a.Prepare journal entries for the actual costs incurred. b.Prepare journal entries to record the variances for August.