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

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: -What is the amount of fixed overhead allocated to production?

Answer the following questions using the information below: Christine Corporation manufactures baseball uniforms and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data: -What is the flexible-budget variance for variable manufacturing overhead?

Tara Company makes the following journal entry:

The major challenge when planning fixed overhead is:

The variable overhead efficiency variance is computed in a different way than the efficiency variance for direct-cost items.

A favorable variable overhead spending variance can be the result of paying lower prices than budgeted for variable overhead items such as energy.

Explain why there is no efficiency variance for fixed 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 spending variance for variable setup overhead costs.

McKenna Company manufactured 1,000 units during April with a total overhead budget of $12,400. However, while manufacturing the 1,000 units the microcomputer that contained the month's cost information broke down. With the computer out of commission, the accountant has been unable to complete the variance analysis report. The information missing from the report is lettered in the following set of data: Variable overhead: Fixed overhead: Required: Compute the missing elements in the report represented by the lettered items.

Answer the following questions 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 production-volume variance?

The budget period for variable-overhead costs is typically less than 3 months.

Answer the following questions using the information below: Roberts Corporation manufactured 100,000 buckets during February. The overhead cost-allocation base is $5.00 per machine-hour. The following variable overhead data pertain to February: -What is the variable overhead spending variance?

Answer the following questions using the information below: Munoz, Inc., produces a special line of plastic toy racing cars. Munoz, Inc., produces the cars in batches. To manufacture a batch of the cars, Munoz, Inc., must set up the machines and molds. 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 molds for different styles of car. 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 variable setup overhead costs.

How is a budgeted fixed overhead cost rate calculated?

Answer the following questions using the information below: Roberts Corporation manufactured 100,000 buckets during February. The overhead cost-allocation base is $5.00 per machine-hour. The following variable overhead data pertain to February: -What is the flexible-budget amount?

The fixed overhead flexible-budget variance is the difference between actual fixed overhead costs and the fixed overhead costs in the flexible budget.

When machine-hours are used as a cost-allocation base, the item most likely to contribute to a favorable production-volume variance is:

Answer the following questions using the information below: -In the above chart, the amounts for (A)and (B), respectively, are:

Explain why sales-volume variance could be helpful to managers.

Fixed overhead costs: