Question 1

A nonfinancial measure of performance evaluation is:

Accepted Answer

A) increased sales 
B) reducing distribution costs 
C) energy used per machine-hour 
D) All of these answers are correct. 
A) increased sales 
B) reducing distribution costs 
C) energy used per machine-hour 
D) All of these answers are correct.

Question 2

For calculating the costs of products and services, a standard costing system:

Accepted Answer

A) only requires a simple recording system 
B) uses standard costs to determine the cost of products 
C) does not have to keep track of actual costs 
D) All of these answers are correct. 
A) only requires a simple recording system 
B) uses standard costs to determine the cost of products 
C) does not have to keep track of actual costs 
D) All of these answers are correct.

Question 3

Answer the following questions using the information below:
Patel Corporation manufactured 1,000 coolers during October. The following variable overhead data pertain to October:
  
-What is the variable overhead flexible-budget variance?

Accepted Answer

A) $600 favorable 
B) $420 unfavorable 
C) $780 favorable 
D) $600 unfavorable 
A) $600 favorable 
B) $420 unfavorable 
C) $780 favorable 
D) $600 unfavorable

Question 4

At the start of the budget period, management will have made most decisions regarding the level of fixed overhead costs to be incurred.

Accepted Answer

A) True 
 B)False

Question 5

Favorable overhead variances are always recorded with credits in a standard cost system.

Accepted Answer

A) True 
 B)False

Question 6

Effective planning of variable overhead costs means that a company performs those variable overhead costs that primarily add value for:

Accepted Answer

A) the current shareholders 
B) the customer using the products or services 
C) plant employees 
D) major suppliers of component parts 
A) the current shareholders 
B) the customer using the products or services 
C) plant employees 
D) major suppliers of component parts

Question 7

Can the variable overhead efficiency variance
a. be computed the same way as the efficiency variance for direct-cost items?
b. be interpreted the same way as the efficiency variance for direct-cost items? Explain.

Accepted Answer

a. Yes, the variable overhead efficiency

Question 8

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 total variable overhead variance

Accepted Answer

A) $7,875 unfavorable 
B) $3,937.50 f unfavorable 
C) $7,875 favorable 
D) $3,937.50 f favorable 
A) $7,875 unfavorable 
B) $3,937.50 f unfavorable 
C) $7,875 favorable 
D) $3,937.50 f favorable

Question 9

All unfavorable overhead variances decrease operating income compared to the budget.

Accepted Answer

A) True 
 B)False

Question 10

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:
    
-An unfavorable variable overhead spending variance indicates that:

Accepted Answer

A) variable overhead items were not used efficiently 
B) the price of variable overhead items was more than budgeted 
C) the variable overhead cost-allocation base was not used efficiently 
D) the denominator level was not accurately determined 
A) variable overhead items were not used efficiently 
B) the price of variable overhead items was more than budgeted 
C) the variable overhead cost-allocation base was not used efficiently 
D) the denominator level was not accurately determined

Question 11

Excess capacity is a sign:

Accepted Answer

A) that capacity should be reduced 
B) that capacity may need to be re-evaluated 
C) that the company is suffering a significant economic loss 
D) of good management decisions 
A) that capacity should be reduced 
B) that capacity may need to be re-evaluated 
C) that the company is suffering a significant economic loss 
D) of good management decisions

Question 12

Answer the following questions using the information below:
  
-Above is a:

Accepted Answer

A) 4-variance analysis 
B) 3-variance analysis 
C) 2-variance analysis 
D) 1-variance analysis 
A) 4-variance analysis 
B) 3-variance analysis 
C) 2-variance analysis 
D) 1-variance analysis

Question 13

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:
  
-An unfavorable production-volume variance:

Accepted Answer

A) is not a good measure of a lost production opportunity 
B) measures the total economic gain or loss due to unused capacity 
C) measures the amount of extra fixed costs planned for but not used 
D) takes into account the effect of additional revenues due to maintaining higher prices 
A) is not a good measure of a lost production opportunity 
B) measures the total economic gain or loss due to unused capacity 
C) measures the amount of extra fixed costs planned for but not used 
D) takes into account the effect of additional revenues due to maintaining higher prices

Question 14

In a standard costing system, a cost-allocation base would most likely be:

Accepted Answer

A) actual machine-hours 
B) normal machine-hours 
C) standard machine-hours 
D) Any of these answers is correct. 
A) actual machine-hours 
B) normal machine-hours 
C) standard machine-hours 
D) Any of these answers is correct.

Question 15

The variable overhead efficiency variance can be interpreted the same way as the efficiency variance for direct-cost items.

Accepted Answer

A) True 
 B)False

Question 16

If the production planners set the budgeted machine hours standards too tight, one could anticipate there would be a favorable variable overhead efficiency variance.

Accepted Answer

A) True 
 B)False

Question 17

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 actual variable overhead cost?

Accepted Answer

A) $121,500 
B) $151,875 
C) $165,000 
D) $168,750 
A) $121,500 
B) $151,875 
C) $165,000 
D) $168,750

Question 18

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 flexible-budget amount for variable manufacturing overhead?

Accepted Answer

A) $330,000 
B) $473,000 
C) $484,000 
D) None of these answers is correct. 
A) $330,000 
B) $473,000 
C) $484,000 
D) None of these answers is correct.

Question 19

For calculating the cost of products and services, a standard costing system must track actual costs.

Accepted Answer

A) True 
 B)False

Question 20

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 efficiency variance for variable setup overhead costs.

Accepted Answer

A) $150 favorable 
B) $114 favorable 
C) $264 unfavorable 
D) $264 favorable 
A) $150 favorable 
B) $114 favorable 
C) $264 unfavorable 
D) $264 favorable

A nonfinancial measure of performance evaluation is:

For calculating the costs of products and services, a standard costing system:

Answer the following questions using the information below: Patel Corporation manufactured 1,000 coolers during October. The following variable overhead data pertain to October: -What is the variable overhead flexible-budget variance?

At the start of the budget period, management will have made most decisions regarding the level of fixed overhead costs to be incurred.

Favorable overhead variances are always recorded with credits in a standard cost system.

Effective planning of variable overhead costs means that a company performs those variable overhead costs that primarily add value for:

Can the variable overhead efficiency variance a. be computed the same way as the efficiency variance for direct-cost items? b. be interpreted the same way as the efficiency variance for direct-cost items? Explain.

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 total variable overhead variance

All unfavorable overhead variances decrease operating income compared to the budget.

Excess capacity is a sign:

Answer the following questions using the information below: -Above is a:

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: -An unfavorable production-volume variance:

In a standard costing system, a cost-allocation base would most likely be:

The variable overhead efficiency variance can be interpreted the same way as the efficiency variance for direct-cost items.

If the production planners set the budgeted machine hours standards too tight, one could anticipate there would be a favorable variable overhead efficiency variance.

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 actual variable overhead cost?

For calculating the cost of products and services, a standard costing system must track actual costs.

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

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

A nonfinancial measure of performance evaluation is:

For calculating the costs of products and services, a standard costing system:

Answer the following questions using the information below: Patel Corporation manufactured 1,000 coolers during October. The following variable overhead data pertain to October: -What is the variable overhead flexible-budget variance?

At the start of the budget period, management will have made most decisions regarding the level of fixed overhead costs to be incurred.

Favorable overhead variances are always recorded with credits in a standard cost system.

Effective planning of variable overhead costs means that a company performs those variable overhead costs that primarily add value for:

Can the variable overhead efficiency variance a. be computed the same way as the efficiency variance for direct-cost items? b. be interpreted the same way as the efficiency variance for direct-cost items? Explain.

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 total variable overhead variance

All unfavorable overhead variances decrease operating income compared to the budget.

Excess capacity is a sign:

Answer the following questions using the information below: -Above is a:

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: -An unfavorable production-volume variance:

In a standard costing system, a cost-allocation base would most likely be:

The variable overhead efficiency variance can be interpreted the same way as the efficiency variance for direct-cost items.

If the production planners set the budgeted machine hours standards too tight, one could anticipate there would be a favorable variable overhead efficiency variance.

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 actual variable overhead cost?

For calculating the cost of products and services, a standard costing system must track actual costs.

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters