Question 1

Match the following terms with the items below:
-Variable overhead spending variance

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 2

$\begin{array}{ll}
\text { Fixed costs per month } & \$ 240,000 \
\text { Variable cost per setup } & \$ 5,400
\end{array}$
-Refer to the Figure.Suppose the company expects 25 setups in June.What would be the total budgeted costs of the setup activity?

Accepted Answer

A)  $135,000 
B)  $240,000 
C)  $375,000 
D)  $397,500 
A)  $135,000 
B)  $240,000 
C)  $375,000 
D)  $397,500

Question 3

Showcase Inc's standard variable overhead rate is $7 per direct labour hour,and each unit requires three standard direct labour hours.During April,Showcase recorded 7,000 actual direct labour hours,$65,000 actual variable overhead costs,and 2,950 units of product manufactured. What is Showcase's total variable overhead variance for April?

Accepted Answer

A)  $490 (U) 
B)  $1,000 (U) 
C)  $2,950 (U) 
D)  $3,050 (U) 
A)  $490 (U) 
B)  $1,000 (U) 
C)  $2,950 (U) 
D)  $3,050 (U)

Question 4

During the year,Plasticine produced 10,000 units,used 21,000 direct labour hours,and incurred variable overhead of $100,000.Budgeted variable overhead for the year was $88,000.The hours allowed per unit are 2.1.The standard variable overhead rate is $4.10 per direct labour hour.What was the variable overhead spending variance?

Accepted Answer

A)  $2,000 U 
B)  $2,900 F 
C)  $4,100 U 
D)  $13,900 U 
A)  $2,000 U 
B)  $2,900 F 
C)  $4,100 U 
D)  $13,900 U

Question 5

Why does activity flexible budgeting provide a more accurate prediction of costs than a traditional flexible budgeting approach?

Accepted Answer

A)  Costs often vary with more than one driver,and direct labour hours are not correct. 
B)  Unit-level drivers are often not highly correlated with direct labour hours. 
C)  Direct labour hours are often not measured correctly. 
D)  Costs often vary with more than one driver,and non-unit-level drivers are often not highly correlated with direct labour hours. 
A)  Costs often vary with more than one driver,and direct labour hours are not correct. 
B)  Unit-level drivers are often not highly correlated with direct labour hours. 
C)  Direct labour hours are often not measured correctly. 
D)  Costs often vary with more than one driver,and non-unit-level drivers are often not highly correlated with direct labour hours.

Question 6

Which of the following is the total fixed overhead variance?

Accepted Answer

A)  both AFOH − ApFOH and the sum of the spending and volume variances 
B)  AFOH - the sum of the spending and volume variances 
C)  ApFOH - the sum of the spending and efficiency variance 
D)  both AFOH − ApFOH and the sum of the spending and efficiency variances 
A)  both AFOH − ApFOH and the sum of the spending and volume variances 
B)  AFOH - the sum of the spending and volume variances 
C)  ApFOH - the sum of the spending and efficiency variance 
D)  both AFOH − ApFOH and the sum of the spending and efficiency variances

Question 7

For a static activity budget in a company already using an ABC or ABM system,the activities within the organization must be identified.

Accepted Answer

A) True 
 B)False

Question 8

A before-the-fact flexible budget is used to compute what cost should have been for the actual level of activity.

Accepted Answer

A) True 
 B)False

Question 9

A performance report compares actual costs with external benchmarks.

Accepted Answer

A) True 
 B)False

Question 10

$\begin{array}{ll}
\text { Fixed costs per month } & \$ 240,000 \
\text { Variable cost per setup } & \$ 5,400
\end{array}$
-Refer to the Figure.Which of the following is a flexible budget formula for the moving materials activity?

Accepted Answer

A)  $180,000 + $0.50 × moves 
B)  $405,000 + $0.50 × moves 
C)  $450,000 + $0.50 × moves 
D)  $450,000 + $2.00 × moves 
A)  $180,000 + $0.50 × moves 
B)  $405,000 + $0.50 × moves 
C)  $450,000 + $0.50 × moves 
D)  $450,000 + $2.00 × moves

Question 11

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 fixed overhead volume variance?

Accepted Answer

A)  $8,000 U 
B)  $24,000 U 
C)  $28,000 F 
D)  $32,000 F 
A)  $8,000 U 
B)  $24,000 U 
C)  $28,000 F 
D)  $32,000 F

Question 12

$\begin{array}{lrr}&\text { Static budget } & \text { Actual costs } \
&(20,000 \text { hours }) & (22,000 \text { hours })\
\text { Direct materials } & \$ 80,000 & \$ 87,000 \
\text { Direct labour } & 160,000 & 174,000 \
\text { Rent } & 48,000 & 50,000 \
\text { Total } & \$ 288,000 & \$ 311000
\end{array}$
-Refer to the Figure.What is the flexible budget amount for the first quarter?

Accepted Answer

A)  $261,000 
B)  $288,000 
C)  $311,000 
D)  $312,000 
A)  $261,000 
B)  $288,000 
C)  $311,000 
D)  $312,000

Question 13

Which budget allows the determination of expected costs for various levels of activity?

Accepted Answer

A)  operational budget 
B)  capital budget 
C)  static budget 
D)  flexible budget 
A)  operational budget 
B)  capital budget 
C)  static budget 
D)  flexible budget

Question 14

Which of the following tasks is NOT required when building an activity-based budget?

Accepted Answer

A)  identifying the activities within an organization 
B)  estimating the demand for each activity's output 
C)  assessing the cost of resources required to produce this activity output 
D)  using a single unit-based driver such as direct labour 
A)  identifying the activities within an organization 
B)  estimating the demand for each activity's output 
C)  assessing the cost of resources required to produce this activity output 
D)  using a single unit-based driver such as direct labour

Question 15

When overhead is applied on the basis of direct labour hours,the variable overhead efficiency variance always has the same sign as the labour efficiency variance.

Accepted Answer

A) True 
 B)False

Question 16

The difference between which two amounts is measured by the variable overhead spending variance?

Accepted Answer

A)  the total variable overhead and the applied variable overhead 
B)  the total variable overhead and total budgeted overhead costs 
C)  the total variable overhead and the budgeted overhead for the expected activity 
D)  the actual variable overhead rate and the standard variable overhead rate 
A)  the total variable overhead and the applied variable overhead 
B)  the total variable overhead and total budgeted overhead costs 
C)  the total variable overhead and the budgeted overhead for the expected activity 
D)  the actual variable overhead rate and the standard variable overhead rate

Question 17

Universal Forklifts,Inc.produces a specialized machine part used in forklifts.For last year's operations,the following data were gathered: $\begin{array}{ll}
\text { Units produced: } & 60,000 \
\text { Direct labour: } & 30,000 \text { hours } @ \$ 9.00 \text { per hour } \
\text { Actual variable overhead: } & \$ 150,000
\end{array}$ Universal Forklifts employs a standard costing system.During the year,a variable overhead rate of $4.50 per hour was used.The labour standard requires a half hour per unit produced.What are the variable overhead spending and efficiency variances,respectively?

Accepted Answer

A)  $7,500 U and $10,000 F 
B)  $10,000 U and $7,500 U 
C)  $15,000 U and $15,000 U 
D)  $15,000 F and $15,000 F 
A)  $7,500 U and $10,000 F 
B)  $10,000 U and $7,500 U 
C)  $15,000 U and $15,000 U 
D)  $15,000 F and $15,000 F

Question 18

What does a performance report for variable overhead reveal?

Accepted Answer

A)  both the volume and spending variances and the spending and efficiency variances for each variable overhead item 
B)  the volume and spending variances 
C)  the volume and efficiency variances for each variable overhead item 
D)  both the aggregate variable overhead spending and efficiency variances and the spending and efficiency variances for each variable overhead item 
A)  both the volume and spending variances and the spending and efficiency variances for each variable overhead item 
B)  the volume and spending variances 
C)  the volume and efficiency variances for each variable overhead item 
D)  both the aggregate variable overhead spending and efficiency variances and the spending and efficiency variances for each variable overhead item

Question 19

Fixed overhead costs are resources acquired as used and needed.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is characteristic of an after-the-fact flexible budget?

Accepted Answer

A)  It is a budget for the actual level of activity. 
B)  It allows managers to deal with uncertainty. 
C)  It can be used to generate results for a number of plausible scenarios. 
D)  It is a useful planning tool. 
A)  It is a budget for the actual level of activity. 
B)  It allows managers to deal with uncertainty. 
C)  It can be used to generate results for a number of plausible scenarios. 
D)  It is a useful planning tool.

Match the following terms with the items below: -Variable overhead spending variance

Fixed costs per month \ 240,000 Variable cost per setup \ 5,400 -Refer to the Figure.Suppose the company expects 25 setups in June.What would be the total budgeted costs of the setup activity?

Why does activity flexible budgeting provide a more accurate prediction of costs than a traditional flexible budgeting approach?

Which of the following is the total fixed overhead variance?

For a static activity budget in a company already using an ABC or ABM system,the activities within the organization must be identified.

A before-the-fact flexible budget is used to compute what cost should have been for the actual level of activity.

A performance report compares actual costs with external benchmarks.

Fixed costs per month \ 240,000 Variable cost per setup \ 5,400 -Refer to the Figure.Which of the following is a flexible budget formula for the moving materials activity?

Static budget Actual costs (20,000 hours ) (22,000 hours ) Direct materials \ 80,000 \ 87,000 Direct labour 160,000 174,000 Rent 48,000 50,000 Total \ 288,000 \ 311000 -Refer to the Figure.What is the flexible budget amount for the first quarter?

Which budget allows the determination of expected costs for various levels of activity?

Which of the following tasks is NOT required when building an activity-based budget?

When overhead is applied on the basis of direct labour hours,the variable overhead efficiency variance always has the same sign as the labour efficiency variance.

The difference between which two amounts is measured by the variable overhead spending variance?

What does a performance report for variable overhead reveal?

Fixed overhead costs are resources acquired as used and needed.

Which of the following is characteristic of an after-the-fact flexible budget?

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

Match the following terms with the items below: -Variable overhead spending variance

Fixed costs per month \ 240,000 Variable cost per setup \ 5,400 -Refer to the Figure.Suppose the company expects 25 setups in June.What would be the total budgeted costs of the setup activity?

Why does activity flexible budgeting provide a more accurate prediction of costs than a traditional flexible budgeting approach?

Which of the following is the total fixed overhead variance?

For a static activity budget in a company already using an ABC or ABM system,the activities within the organization must be identified.

A before-the-fact flexible budget is used to compute what cost should have been for the actual level of activity.

A performance report compares actual costs with external benchmarks.

Fixed costs per month \ 240,000 Variable cost per setup \ 5,400 -Refer to the Figure.Which of the following is a flexible budget formula for the moving materials activity?

Static budget Actual costs (20,000 hours ) (22,000 hours ) Direct materials \ 80,000 \ 87,000 Direct labour 160,000 174,000 Rent 48,000 50,000 Total \ 288,000 \ 311000 -Refer to the Figure.What is the flexible budget amount for the first quarter?

Which budget allows the determination of expected costs for various levels of activity?

Which of the following tasks is NOT required when building an activity-based budget?

When overhead is applied on the basis of direct labour hours,the variable overhead efficiency variance always has the same sign as the labour efficiency variance.

The difference between which two amounts is measured by the variable overhead spending variance?

What does a performance report for variable overhead reveal?

Fixed overhead costs are resources acquired as used and needed.

Which of the following is characteristic of an after-the-fact flexible budget?

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