Exam 8: Flexible Budgets, Overhead Cost Variances, and Management Control

Fixed and variable cost variances can ________ be applied to activity-based costing systems.

An unfavorable fixed overhead spending variance indicates that:

Answer the following questions using the information below: Fearless Frank's Fertilizer Farm produces fertilizer and distributes the product by using his tanker trucks. Frank's uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data: -For variable manufacturing overhead, there is no:

Generally Accepted Accounting Principles require that unitized fixed manufacturing costs be used for:

Answer the following questions using the information below: Roberson Corporation manufactured 30,000 ice chests during September. The overhead cost-allocation base is $11.25 per machine-hour. The following variable overhead data pertain to September: -What is the variable overhead efficiency variance?

Answer the following questions using the information below: Lukehart Industries, Inc., produces air purifiers. Lukehart, Inc., produces the air purifiers in batches. To manufacture a batch of the purifiers, Lukehart, Inc., must set up 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 2011: -Calculate the spending variance for fixed setup overhead costs.

Answer the following questions using the information below: Russo Corporation manufactured 16,000 air conditioners during November. The overhead cost-allocation base is $31.50 per machine-hour. The following variable overhead data pertain to November: -What is the flexible-budget amount?

Answer the following questions using the information below: Gus Corporation manufactured 10,000 golf bags during April. The fixed overhead cost-allocation rate is $40.00 per machine-hour. The following fixed overhead data pertain to March: -The production-volume variance may also be referred to as the:

Jael Equipment uses a flexible budget for its indirect manufacturing costs. For 20X5, the company anticipated that it would produce 18,000 units with 3,500 machine-hours and 7,200 employee days. The costs and cost drivers were to be as follows: During the year, the company processed 20,000 units, worked 7,500 employee days, and had 4,000 machine-hours. The actual costs for 20X5 were: Required: a. Prepare the static budget using the overhead items above and then compute the static-budget variances. b. Prepare the flexible budget using the overhead items above and then compute the flexible-budget variances.

Answer the following questions using the information below: Fearless Frank's Fertilizer Farm produces fertilizer and distributes the product by using his tanker trucks. Frank's uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data: -When machine-hours are used as an overhead cost-allocation base and the unexpected purchase of a new machine results in fewer expenditures for machine maintenance, the most likely result would be to report a(n):

Different management levels in Bates, Inc., require varying degrees of managerial accounting information. Because of the need to comply with the managers' requests, four different variances for manufacturing overhead are computed each month. The information for the September overhead expenditures is as follows: Required: a. Compute a 4-variance analysis for the plant controller. b. Compute a 3-variance analysis for the plant manager. c. Compute a 2-variance analysis for the corporate controller. d. Compute the flexible-budget variance for the manufacturing vice president.

Answer the following questions using the information below: Lukehart Industries, Inc., produces air purifiers. Lukehart, Inc., produces the air purifiers in batches. To manufacture a batch of the purifiers, Lukehart, Inc., must set up 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 2011: -Calculate the production-volume variance for fixed setup overhead costs.

Amy's Weathervane Company manufactures weathervanes. The 2011 operating budget is based on the production of 5,000 weathervanes with 1.25 machine-hour allowed per weathervane. Variable manufacturing overhead is anticipated to be $150,000. Actual production for 2011 was 5,500 weathervanes using 6,050 machine-hours. Actual variable costs were $23.75 per machine-hour. Required: Calculate the variable overhead spending and the efficiency variances.

Everjoice Company makes clocks. The fixed overhead costs for 20X5 total $720,000. The company uses direct labor-hours for fixed overhead allocation and anticipates 240,000 hours during the year for 480,000 units. An equal number of units are budgeted for each month. During June, 42,000 clocks were produced and $63,000 were spent on fixed overhead. Required: a. Determine the fixed overhead rate for 20X5 based on units of input. b. Determine the fixed overhead static-budget variance for June. c. Determine the production-volume overhead variance for June.

Standard costing is a costing system that allocates overhead costs on the basis of the standard overhead-cost rates times the standard quantities of the allocation bases allowed for the actual outputs produced.

Answer the following questions using the information below: Gus Corporation manufactured 10,000 golf bags during April. The fixed overhead cost-allocation rate is $40.00 per machine-hour. The following fixed overhead data pertain to March: -A favorable production-volume variance indicates that the company:

The variable overhead flexible-budget variance measures the difference between:

Answer the following questions using the information below: Willis Corporation manufactures industrial-sized gas furnaces and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data: -What is the budgeted variable overhead cost rate per output unit?

Explain why there is no production-volume variance for variable manufacturing overhead costs.

Answer the following questions using the information below: Lukehart Industries, Inc., produces air purifiers. Lukehart, Inc., produces the air purifiers in batches. To manufacture a batch of the purifiers, Lukehart, Inc., must set up 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 2011: -Calculate the flexible-budget variance for variable setup overhead costs.