Question 1

In an activity framework,recording costs is equivalent to managing activities.

Accepted Answer

A) True 
 B)False

Question 2

Suppose a company had actual fixed overhead of $99,500,a $3,100 favourable spending variance,and a $700 unfavourable volume variance.What would be the budgeted fixed overhead?

Accepted Answer

A)  $96,400 
B)  $99,700 
C)  $100,680 
D)  $102,600 
A)  $96,400 
B)  $99,700 
C)  $100,680 
D)  $102,600

Question 3

The variable overhead spending variance is conceptually identical to the price variances of materials and labour.

Accepted Answer

A) True 
 B)False

Question 4

items: $\begin{array}{llr}\text { Overhead item } & \text { Fixed cost } & \text { Variable rate per } \
&&\text { direct labour hour }\
\text { Maintenance } & \$ 8,000 & \$ 2.00 \
\text { Power } & \$ 2,000 & \$ 0.40 \
\text { Direct labour } & & \$ 10.00 \
\text { Equipment lease } & \$ 5,000 &
\end{array}$ Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however,this year 15,000 units were produced with the following actual costs: $\begin{array}{ll}\text { Overhead item }&\text { Actual costs }\
\text { Maintenance } & \$ 14,000 \
\text { Power } & \$ 3,600 \
\text { Direct labour } & \$ 16,000 \
\text { Equipment lease } & \$ 5,000
\end{array}$
-Refer to the Figure.Prepare an overhead budget for the expected activity level of 10,000 units.What is the total budgeted overhead?

Accepted Answer

A)  $12,400 
B)  $27,400 
C)  $124,000 
D)  $139,400 
A)  $12,400 
B)  $27,400 
C)  $124,000 
D)  $139,400

Question 5

Before-the-fact flexible budgets are especially useful for comparing expected costs with actual costs.

Accepted Answer

A) True 
 B)False

Question 6

Although general responsibility for the volume variance is usually assigned to the purchasing department,responsibility on occasion may be assigned to the production department.

Accepted Answer

A) True 
 B)False

Question 7

How does activity flexible budgeting differ from functional-based flexible budgeting?

Accepted Answer

Activity flexible budgeting is the predi

Question 8

What is the best use of a static budget?

Accepted Answer

A)  to measure whether a manager accomplishes his or her goals 
B)  to compare expected costs at the actual level of activity with the actual costs 
C)  to assess how well costs were controlled during the year 
D)  to determine managerial efficiency 
A)  to measure whether a manager accomplishes his or her goals 
B)  to compare expected costs at the actual level of activity with the actual costs 
C)  to assess how well costs were controlled during the year 
D)  to determine managerial efficiency

Question 9

items: $\begin{array}{llr}\text { Overhead item } & \text { Fixed cost } & \text { Variable rate per } \
&&\text { direct labour hour }\
\text { Maintenance } & \$ 8,000 & \$ 2.00 \
\text { Power } & \$ 2,000 & \$ 0.40 \
\text { Direct labour } & & \$ 10.00 \
\text { Equipment lease } & \$ 5,000 &
\end{array}$ Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however,this year 15,000 units were produced with the following actual costs: $\begin{array}{ll}\text { Overhead item }&\text { Actual costs }\
\text { Maintenance } & \$ 14,000 \
\text { Power } & \$ 3,600 \
\text { Direct labour } & \$ 16,000 \
\text { Equipment lease } & \$ 5,000
\end{array}$
-Refer to the Figure.What is the variable overhead efficiency variance?

Accepted Answer

A)  $8,300 U 
B)  $32,000 U 
C)  $38,300 U 
D)  $80,000 U 
A)  $8,300 U 
B)  $32,000 U 
C)  $38,300 U 
D)  $80,000 U

Question 10

Match the following terms with the items below:
-Activity-based budgeting

Accepted Answer

A) (Actual hours − standard hours)SVOR 
B) Prediction of what activity costs will be as activity output changes 
C) A measure of capacity utilization 
D) Actual variable overhead − (SVOR × actual hours) 
E) Difference between the actual amount and the flexible budget amount
F)A budget that specifies costs for a range of activity
G)A budget for a particular level of activity
H)Estimating activity output and then assessing the cost of resources to produce this output
I)A report that compares actual with planned costs
J)Difference between actual and budgeted fixed overhead 
A) (Actual hours − standard hours)SVOR 
B) Prediction of what activity costs will be as activity output changes 
C) A measure of capacity utilization 
D) Actual variable overhead − (SVOR × actual hours) 
E) Difference between the actual amount and the flexible budget amount
F)A budget that specifies costs for a range of activity
G)A budget for a particular level of activity
H)Estimating activity output and then assessing the cost of resources to produce this output
I)A report that compares actual with planned costs
J)Difference between actual and budgeted fixed overhead

Question 11

CarParts Company is planning to produce 3,200,000 carburetors for the coming year.Each carburetor requires 0.375 standard hours of labour for completion.The company uses direct labour hours to assign overhead to products.The total fixed overhead budgeted for the coming year is $1,980,000.Total budgeted overhead is $4,050,000.Predetermined overhead rates are calculated using expected production,measured in direct labour hours.Actual results for the year follow: $$\begin{array} { l r } 
\text { Actual production (units) } & 3,540,000 \
\text { Actual direct labour hours } & 1,190,000 \
\text { Actual fixed overhead } & \$ 1,920,000 \
\text { Actual variable overhead } & 2,150,000
\end{array}$$ Required: A. Compute the applied fixed overhead.
B. Compute the fixed overhead spending and volume vari ances.
C. Compute the applied variable overhead.
D. Compute the variable overhead spending and efficiency variances. Carry per hour 
computations out to three decimal places.

Accepted Answer

The answer of CarParts Company is planning to produce 3,200,000...

Question 12

Within which of the following categories are the major differences between functional and activity-based budgeting found?

Accepted Answer

A)  overhead and selling and administration 
B)  direct materials and selling and administration 
C)  direct labour and overhead 
D)  direct materials and overhead 
A)  overhead and selling and administration 
B)  direct materials and selling and administration 
C)  direct labour and overhead 
D)  direct materials and overhead

Question 13

Activity-based budgeting builds a budget for each activity based on the resources needed to provide the required activity output levels.

Accepted Answer

A) True 
 B)False

Question 14

Discuss why activity-based flexible budgeting provide a more accurate prediction of costs than a traditional flexible budget.

Accepted Answer

Activity-based flexible budgeting is mor

Question 15

Fixed manufacturing overhead was budgeted at $250,000,and 25,000 direct labour hours were budgeted.Suppose the fixed overhead volume variance was $10,000 favourable and the fixed overhead spending variance was $6,000 unfavourable.What would be the fixed manufacturing overhead applied?

Accepted Answer

A)  $194,000 
B)  $202,000 
C)  $206,000 
D)  $260,000 
A)  $194,000 
B)  $202,000 
C)  $206,000 
D)  $260,000

Question 16

Match the following terms with the items below:
-Activity flexible budget

Accepted Answer

A) (Actual hours − standard hours)SVOR 
B) Prediction of what activity costs will be as activity output changes 
C) A measure of capacity utilization 
D) Actual variable overhead − (SVOR × actual hours) 
E) Difference between the actual amount and the flexible budget amount
F)A budget that specifies costs for a range of activity
G)A budget for a particular level of activity
H)Estimating activity output and then assessing the cost of resources to produce this output
I)A report that compares actual with planned costs
J)Difference between actual and budgeted fixed overhead 
A) (Actual hours − standard hours)SVOR 
B) Prediction of what activity costs will be as activity output changes 
C) A measure of capacity utilization 
D) Actual variable overhead − (SVOR × actual hours) 
E) Difference between the actual amount and the flexible budget amount
F)A budget that specifies costs for a range of activity
G)A budget for a particular level of activity
H)Estimating activity output and then assessing the cost of resources to produce this output
I)A report that compares actual with planned costs
J)Difference between actual and budgeted fixed overhead

Question 17

items: $\begin{array}{llr}\text { Overhead item } & \text { Fixed cost } & \text { Variable rate per } \
&&\text { direct labour hour }\
\text { Maintenance } & \$ 8,000 & \$ 2.00 \
\text { Power } & \$ 2,000 & \$ 0.40 \
\text { Direct labour } & & \$ 10.00 \
\text { Equipment lease } & \$ 5,000 &
\end{array}$ Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however,this year 15,000 units were produced with the following actual costs: $\begin{array}{ll}\text { Overhead item }&\text { Actual costs }\
\text { Maintenance } & \$ 14,000 \
\text { Power } & \$ 3,600 \
\text { Direct labour } & \$ 16,000 \
\text { Equipment lease } & \$ 5,000
\end{array}$
-Refer to the Figure.What is the predetermined fixed overhead rate?

Accepted Answer

A)  $1.50 per direct labour hour 
B)  $3 per direct labour hour 
C)  $4 per direct labour hour 
D)  $5.50 per direct labour hour 
A)  $1.50 per direct labour hour 
B)  $3 per direct labour hour 
C)  $4 per direct labour hour 
D)  $5.50 per direct labour hour

Question 18

items: $\begin{array}{llr}\text { Overhead item } & \text { Fixed cost } & \text { Variable rate per } \
&&\text { direct labour hour }\
\text { Maintenance } & \$ 8,000 & \$ 2.00 \
\text { Power } & \$ 2,000 & \$ 0.40 \
\text { Direct labour } & & \$ 10.00 \
\text { Equipment lease } & \$ 5,000 &
\end{array}$ Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however,this year 15,000 units were produced with the following actual costs: $\begin{array}{ll}\text { Overhead item }&\text { Actual costs }\
\text { Maintenance } & \$ 14,000 \
\text { Power } & \$ 3,600 \
\text { Direct labour } & \$ 16,000 \
\text { Equipment lease } & \$ 5,000
\end{array}$
-Refer to the Figure.When using an after-the-fact flexible budget,what is the total budget variance?

Accepted Answer

A)  $3,600 U 
B)  $3,600 F 
C)  $5,000 U 
D)  $5,000 F 
A)  $3,600 U 
B)  $3,600 F 
C)  $5,000 U 
D)  $5,000 F

Question 19

An activity-based budgetary approach can be used to emphasize cost increases through the reduction of wasteful activities and improving the efficiency of necessary activities.

Accepted Answer

A) True 
 B)False

Question 20

What is the formula for total fixed overhead variance?

Accepted Answer

A)  total actual overhead − total applied overhead 
B)  AFOH − standard overhead rate × SH 
C)  AFOH − SFOR × SH 
D)  AFOH − SFOR × AH 
A)  total actual overhead − total applied overhead 
B)  AFOH − standard overhead rate × SH 
C)  AFOH − SFOR × SH 
D)  AFOH − SFOR × AH

In an activity framework,recording costs is equivalent to managing activities.

Suppose a company had actual fixed overhead of $99,500,a $3,100 favourable spending variance,and a $700 unfavourable volume variance.What would be the budgeted fixed overhead?

The variable overhead spending variance is conceptually identical to the price variances of materials and labour.

Before-the-fact flexible budgets are especially useful for comparing expected costs with actual costs.

Although general responsibility for the volume variance is usually assigned to the purchasing department,responsibility on occasion may be assigned to the production department.

How does activity flexible budgeting differ from functional-based flexible budgeting?

What is the best use of a static budget?

Match the following terms with the items below: -Activity-based budgeting

Within which of the following categories are the major differences between functional and activity-based budgeting found?

Activity-based budgeting builds a budget for each activity based on the resources needed to provide the required activity output levels.

Discuss why activity-based flexible budgeting provide a more accurate prediction of costs than a traditional flexible budget.

Fixed manufacturing overhead was budgeted at $250,000,and 25,000 direct labour hours were budgeted.Suppose the fixed overhead volume variance was $10,000 favourable and the fixed overhead spending variance was $6,000 unfavourable.What would be the fixed manufacturing overhead applied?

Match the following terms with the items below: -Activity flexible budget

An activity-based budgetary approach can be used to emphasize cost increases through the reduction of wasteful activities and improving the efficiency of necessary activities.

What is the formula for total fixed overhead variance?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 11: Flexible Budgets and Overhead Analysis

In an activity framework,recording costs is equivalent to managing activities.

Suppose a company had actual fixed overhead of $99,500,a $3,100 favourable spending variance,and a $700 unfavourable volume variance.What would be the budgeted fixed overhead?

The variable overhead spending variance is conceptually identical to the price variances of materials and labour.

Before-the-fact flexible budgets are especially useful for comparing expected costs with actual costs.

Although general responsibility for the volume variance is usually assigned to the purchasing department,responsibility on occasion may be assigned to the production department.

How does activity flexible budgeting differ from functional-based flexible budgeting?

What is the best use of a static budget?

Match the following terms with the items below: -Activity-based budgeting

Within which of the following categories are the major differences between functional and activity-based budgeting found?

Activity-based budgeting builds a budget for each activity based on the resources needed to provide the required activity output levels.

Discuss why activity-based flexible budgeting provide a more accurate prediction of costs than a traditional flexible budget.

Fixed manufacturing overhead was budgeted at $250,000,and 25,000 direct labour hours were budgeted.Suppose the fixed overhead volume variance was $10,000 favourable and the fixed overhead spending variance was $6,000 unfavourable.What would be the fixed manufacturing overhead applied?

Match the following terms with the items below: -Activity flexible budget

An activity-based budgetary approach can be used to emphasize cost increases through the reduction of wasteful activities and improving the efficiency of necessary activities.

What is the formula for total fixed overhead variance?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters