Question 1

Explain the meaning of a favourable production-volume variance.

Accepted Answer

The production-volume variance is favour

Question 2

Brown Company makes watches. The budgeted fixed overhead costs for 2012 total $324,000. The company uses direct labour-hours for fixed overhead allocation and anticipates 10,800 hours during the year for 540,000 units. An equal number of units are budgeted for each month.
During October, 48,000 watches were produced and $28,000 was spent on fixed overhead.
Required:
a. Determine the fixed overhead rate for 2012 based on the units of input.
b. Determine the fixed overhead static-budget variance for October.
c. Determine the production-volume overhead variance for October.

Accepted Answer

a. Fixed overhead rate = $324,000/10,800

Question 3

Gibson Homes 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.

Accepted Answer

a.
 @#IMG-DLM& To record actual variable construct

Question 4

Leek Company predicted that the fixed overhead would be $200,000 in April 20X1. Production amounted to 60,000 actual and 50,000 budgeted decks of cards. Each deck takes approximately 0.20 machine hours to produce. The actual overhead costs per machine hour are $25. What is the production-volume overhead variance?

Accepted Answer

A)  $40,000 unfavourable 
B)  $40,000 favourable 
C)  $150,000 unfavourable 
D)  $150,000 favourable 
E)  $0 
A)  $40,000 unfavourable 
B)  $40,000 favourable 
C)  $150,000 unfavourable 
D)  $150,000 favourable 
E)  $0

Question 5

Explain why there is no efficiency variance for fixed manufacturing overhead costs.

Accepted Answer

There is no efficiency variance for fixe

Question 6

In variance analysis, fixed manufacturing overhead will have

Accepted Answer

A)  an efficiency variance. 
B)  a flexible-budget variance. 
C)  a rate variance. 
D)  a static-budget variance. 
E)  no variance, because it is fixed. 
A)  an efficiency variance. 
B)  a flexible-budget variance. 
C)  a rate variance. 
D)  a static-budget variance. 
E)  no variance, because it is fixed.

Question 7

During October 2012 Foxmore Inc. used $250,000 in manufacturing overhead costs, of which $66,500 was variable. Budgeted manufacturing overhead was $229,500, of which $75,000 was variable. Which of the following entries for manufacturing overhead could have been recorded?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 8

The rate and efficiency variances are subcomponents of

Accepted Answer

A)  a flexible-budget variance. 
B)  the fixed overhead static-budget variance. 
C)  a production-volume variance. 
D)  a variable overhead volume variance. 
E)  the fixed overhead rate variance. 
A)  a flexible-budget variance. 
B)  the fixed overhead static-budget variance. 
C)  a production-volume variance. 
D)  a variable overhead volume variance. 
E)  the fixed overhead rate variance.

Question 9

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

Accepted Answer

A)  Ferg would credit the Cost of Goods Sold account to write-off the variance. 
B)  Ferg used the variable overhead components more effectively than expected. 
C)  Ferg made efficient use of the cost driver. 
D)  Ferg used the variable overhead components and cost driver as expected. 
E)  Ferg did not use the cost driver efficiently. 
A)  Ferg would credit the Cost of Goods Sold account to write-off the variance. 
B)  Ferg used the variable overhead components more effectively than expected. 
C)  Ferg made efficient use of the cost driver. 
D)  Ferg used the variable overhead components and cost driver as expected. 
E)  Ferg did not use the cost driver efficiently.

Question 10

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 rate variance for fixed setup overhead costs.

Accepted Answer

A)  $114 unfavourable 
B)  $150 unfavourable 
C)  $250 unfavourable 
D)  $150 favourable 
E)  $250 favourable 
A)  $114 unfavourable 
B)  $150 unfavourable 
C)  $250 unfavourable 
D)  $150 favourable 
E)  $250 favourable

Question 11

Use the information below to answer the following question(s).
Michelle Inc. uses a level 4-variance analysis of its manufacturing overhead costs, and has the following results for April.
A. Budgeted direct labour-hours per unit is used to allocate variable manufacturing overhead.
   B. Budgeted amounts for April 2012 are:
   C. Actual amounts for April 2012 are:
  
-What is the variable production-volume variance?

Accepted Answer

A)  $13,500 unfavourable 
B)  $6,000 unfavourable 
C)  $6,000 favourable 
D)  $0 
E)  There is never a variable production-volume variance. 
A)  $13,500 unfavourable 
B)  $6,000 unfavourable 
C)  $6,000 favourable 
D)  $0 
E)  There is never a variable production-volume variance.

Question 12

The variable overhead flexible-budget variance can be further subdivided into the

Accepted Answer

A)  price variance and the efficiency variance. 
B)  static-budget variance and sales-volume variance. 
C)  rate variance and production-volume variance. 
D)  sales-volume variance and the rate variance. 
E)  rate variance and the efficiency variance. 
A)  price variance and the efficiency variance. 
B)  static-budget variance and sales-volume variance. 
C)  rate variance and production-volume variance. 
D)  sales-volume variance and the rate variance. 
E)  rate variance and the efficiency variance.

Question 13

Which of the following journal entries is correct with respect to actual variable overhead costs?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 14

Fixed overhead costs must be unitized for

Accepted Answer

A)  financial reporting purposes. 
B)  planning purposes. 
C)  for utilization in activity-based-costing. 
D)  to calculate the static-budget variance. 
E)  to analyze the efficiency variance. 
A)  financial reporting purposes. 
B)  planning purposes. 
C)  for utilization in activity-based-costing. 
D)  to calculate the static-budget variance. 
E)  to analyze the efficiency variance.

Question 15

Use the information below to answer the following question(s).
Michelle Inc. uses a level 4-variance analysis of its manufacturing overhead costs, and has the following results for April.
A. Budgeted direct labour-hours per unit is used to allocate variable manufacturing overhead.
   B. Budgeted amounts for April 2012 are:
   C. Actual amounts for April 2012 are:
  
-What is the variable manufacturing overhead efficiency variance?

Accepted Answer

A)  $80,000 favourable 
B)  $80,000 unfavourable 
C)  $101,200 favourable 
D)  $101,200 unfavourable 
E)  $181,200 favourable 
A)  $80,000 favourable 
B)  $80,000 unfavourable 
C)  $101,200 favourable 
D)  $101,200 unfavourable 
E)  $181,200 favourable

Question 16

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

Accepted Answer

The first concern would be the fact that

Question 17

Briefly explain the meaning of the variable overhead efficiency variance and the variable overhead rate variance.

Accepted Answer

The variable overhead efficiency varianc

Explain the meaning of a favourable production-volume variance.

Explain why there is no efficiency variance for fixed manufacturing overhead costs.

In variance analysis, fixed manufacturing overhead will have

During October 2012 Foxmore Inc. used $250,000 in manufacturing overhead costs, of which $66,500 was variable. Budgeted manufacturing overhead was $229,500, of which $75,000 was variable. Which of the following entries for manufacturing overhead could have been recorded?

The rate and efficiency variances are subcomponents of

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

The variable overhead flexible-budget variance can be further subdivided into the

Which of the following journal entries is correct with respect to actual variable overhead costs?

Fixed overhead costs must be unitized for

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

Briefly explain the meaning of the variable overhead efficiency variance and the variable overhead rate variance.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

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

Explain the meaning of a favourable production-volume variance.

Explain why there is no efficiency variance for fixed manufacturing overhead costs.

In variance analysis, fixed manufacturing overhead will have

During October 2012 Foxmore Inc. used $250,000 in manufacturing overhead costs, of which $66,500 was variable. Budgeted manufacturing overhead was $229,500, of which $75,000 was variable. Which of the following entries for manufacturing overhead could have been recorded?

The rate and efficiency variances are subcomponents of

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

The variable overhead flexible-budget variance can be further subdivided into the

Which of the following journal entries is correct with respect to actual variable overhead costs?

Fixed overhead costs must be unitized for

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

Briefly explain the meaning of the variable overhead efficiency variance and the variable overhead rate variance.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters