Question 1

In an activity flexible budget,what does the variable cost component typically correspond to?

Accepted Answer

A)  those resources that vary with direct labour hours 
B)  resources acquired as needed 
C)  resources acquired in advance of usage 
D)  resources that do not change as the activity output changes 
A)  those resources that vary with direct labour hours 
B)  resources acquired as needed 
C)  resources acquired in advance of usage 
D)  resources that do not change as the activity output changes

Question 2

Which two costs are compared in a performance report that uses activity flexible budgeting?

Accepted Answer

A)  budgeted costs for actual activity-usage levels and the actual activity costs 
B)  actual activity costs and budgeted overhead costs 
C)  actual overhead costs and the budgeted activity costs for actual activity-usage levels 
D)  static activity budget costs and the budgeted activity costs for the actual activity-usage levels 
A)  budgeted costs for actual activity-usage levels and the actual activity costs 
B)  actual activity costs and budgeted overhead costs 
C)  actual overhead costs and the budgeted activity costs for actual activity-usage levels 
D)  static activity budget costs and the budgeted activity costs for the actual activity-usage levels

Question 3

How does one create a meaningful performance report?

Accepted Answer

A)  compare actual costs with the expected costs found in the static budget 
B)  calculate actual costs as a percentage of sales 
C)  compare actual costs with the prior year's actual costs 
D)  compare actual costs with the expected costs at the same level of activity 
A)  compare actual costs with the expected costs found in the static budget 
B)  calculate actual costs as a percentage of sales 
C)  compare actual costs with the prior year's actual costs 
D)  compare actual costs with the expected costs at the same level of activity

Question 4

What department is usually held responsible for the fixed overhead volume variance?

Accepted Answer

A)  the accounting department 
B)  the production department 
C)  top management 
D)  the planning department 
A)  the accounting department 
B)  the production department 
C)  top management 
D)  the planning department

Question 5

HyTech Production Company uses a standard costing system.The following information pertains to the current year. $\begin{array}{lr}
\text { Actual factory overhead costs }(\$ 16,500 \text { is }&\$40,125\\text { fixed) }\\text { Actual direct labour costs }(11,250 \text { hours })&\$131,625\\text { Standard direct labour for } 5,500 \text { units: }\\text { Standard hours allowed }&11,000\text { hours } \
\text { Labour rate }&\$12.00
\end{array}$
 The factory overhead rate is based on an activity level of 10,000 units.Standard cost data for 5,000 units is as follows: $\begin{array}{lr}
\text { Variable factory overhead } & \$ 22,500 \
\text { Fixed factory overhead } & 13,500 \
\text { Total factory overhead } & \$ 36,000 \
\end{array}$ What is the variable overhead efficiency variance for HyTech Production Company?

Accepted Answer

A)  $562.50 (U) 
B)  $562.50 (F) 
C)  $1,687.50 (F) 
D)  $3,000.00 (U) 
A)  $562.50 (U) 
B)  $562.50 (F) 
C)  $1,687.50 (F) 
D)  $3,000.00 (U)

Question 6

The variable overhead variance is affected by both input price changes and by how efficiently overhead is used.

Accepted Answer

A) True 
 B)False

Question 7

How is variable overhead applied in a standard cost system?

Accepted Answer

A)  using actual direct labour hours 
B)  using budgeted direct labour hours 
C)  using direct labour hours at practical capacity 
D)  using standard direct labour hours 
A)  using actual direct labour hours 
B)  using budgeted direct labour hours 
C)  using direct labour hours at practical capacity 
D)  using standard direct labour hours

Question 8

Which of the following is characteristic of activity-based budgeting?

Accepted Answer

A)  It builds a budget for each function. 
B)  It identifies only the overhead activity. 
C)  It classifies costs as variable or fixed with respect to the activity output measure. 
D)  It creates a budget after the fact. 
A)  It builds a budget for each function. 
B)  It identifies only the overhead activity. 
C)  It classifies costs as variable or fixed with respect to the activity output measure. 
D)  It creates a budget after the fact.

Question 9

Which of the following is a disadvantage of an activity-budgetary system?

Accepted Answer

A)  It supports continuous improvement. 
B)  It supports process management. 
C)  It emphasizes cost reduction assuming one unit-based driver. 
D)  It helps improve the efficiency of necessary activities. 
A)  It supports continuous improvement. 
B)  It supports process management. 
C)  It emphasizes cost reduction assuming one unit-based driver. 
D)  It helps improve the efficiency of necessary activities.

Question 10

Suppose an organization has implemented an ABC or ABM system.Which of the following has the organization already accomplished?

Accepted Answer

A)  It has identified the activities within an organization. 
B)  It has estimated the demand for each activity's output. 
C)  It has assessed the cost of resources required to produce this activity output. 
D)  It has calculated the variances for the activities. 
A)  It has identified the activities within an organization. 
B)  It has estimated the demand for each activity's output. 
C)  It has assessed the cost of resources required to produce this activity output. 
D)  It has calculated the variances for the activities.

Question 11

The following standard costs were developed for one of the products of the Miller Corporation: STANDARD COST CARD PER UNIT
$\begin{array}{lr}
\text { Variable overhead: } 9 \text { hours } \times \$ 9 \text { per hour } & 81.00 \
\text { Fixed overhead: } 9 \text { hours } \times \$ 13 \text { per hour } & 117.00
\end{array}$ The following information is available regarding the company's operations for the period: $\begin{array}{ll}
\text { Units produced: } & 12,000 \
\text { Direct labour: } & 85,000 \text { hours costing } \$ 850,000 \
& \
\text { Manufacturing overhead incurred: } &\
\text { Variable } & \$ 786,000  \
\text { Fixed } & \$ 1,100,000
\end{array}$ Budgeted fixed manufacturing overhead for the period is $1,000,000,and the standard fixed overhead rate is based on expected capacity of 100,000 direct labour hours.
Required: A. $\quad$Calculate the variable manufacturing overhead spending variance.
B. $\quad$Calculate the variable manufacturing overhead efficiency variance.
C. $\quad$Calculate the fixed manufacturing overhead spending variance.
D. $\quad$Calculate the fixed manufacturing overhead volume variance.

Accepted Answer

The answer of The following standard costs were developed for...

Question 12

What is the formula for fixed overhead volume variance?

Accepted Answer

A)  (AFOH − SFOR)× SH 
B)  (AFOH − SFOR)× AH 
C)  AFOH− (SH × SFOR) 
D)  (AFOH − SFOR)× SH. 
A)  (AFOH − SFOR)× SH 
B)  (AFOH − SFOR)× AH 
C)  AFOH− (SH × SFOR) 
D)  (AFOH − SFOR)× SH.

Question 13

Budgeted variable overhead for the year is $130,000.Expected activity is 20,000 standard direct labour hours.The actual hours worked were 18,250,and the standard hours allowed for actual production were 19,750.What was the variable overhead efficiency variance?

Accepted Answer

A)  $0 
B)  $1,500 F 
C)  $9,750 F 
D)  $12,000 F 
A)  $0 
B)  $1,500 F 
C)  $9,750 F 
D)  $12,000 F

Question 14

Define static budget and flexible budget.What is each type used for?

Accepted Answer

A static budget is a budget for a partic

Question 15

Which of the following is NOT a function of activity flexible budgeting?

Accepted Answer

A)  improving performance reporting 
B)  allowing the prediction of activity costs as activity output changes 
C)  estimating revenues and costs by organizational units 
D)  improving the ability to plan and monitor activity improvements 
A)  improving performance reporting 
B)  allowing the prediction of activity costs as activity output changes 
C)  estimating revenues and costs by organizational units 
D)  improving the ability to plan and monitor activity improvements

Question 16

Discuss the following statement: "Since fixed overhead is,by definition,not related to changes in activity level,then the fixed overhead spending variance is zero."

Accepted Answer

It is true that fixed overhead costs do

Question 17

Hyphen Corporation uses a standard costing system.Information for the month of June is as follows: $\begin{array}{lr}\text { Actual manufacturing overhead costs }(\$ 26,000 \text { is fixed) }&\$80,000\
\text { Direct labour: }\
\text { Actual hours worked } & 12,000 \text { hours } \
\text { Standard hours allowed for actual production } & 10,000 \text { hours } \
\text { Average actual labour cost per hour } & \$ 18
\end{array}$ The factory overhead rate is based on a normal volume of 12,000 direct labour hours.Standard cost data at 12,000 direct labour hours were as follows: $\begin{array}{lr}
\text { Variable factory overhead } & \$ 48,000 \
\text { Fixed factory overhead } & 24,000 \
\text { Total factory overhead } & \$ 72,000
\end{array}$
-Refer to the Figure.What is the variable overhead efficiency variance for Hyphen?

Accepted Answer

A)  $2,000 (U) 
B)  $4,000 (U) 
C)  $8,000 (U) 
D)  $20,000 (U) 
A)  $2,000 (U) 
B)  $4,000 (U) 
C)  $8,000 (U) 
D)  $20,000 (U)

Question 18

$\begin{array}{ll}
\text { Fixed costs per month } & \$ 240,000 \
\text { Variable cost per setup } & \$ 5,400
\end{array}$
-Refer to the Figure.Assume that the labour market does not permit the hiring of part-time forklift operators.What is the salary budget for moving materials?

Accepted Answer

A)  $135,000 
B)  $180,000 
C)  $360,000 
D)  $450,000 
A)  $135,000 
B)  $180,000 
C)  $360,000 
D)  $450,000

Question 19

Suppose a company had actual fixed manufacturing overhead of $60,000,a $1,500 unfavourable spending variance,and a $1,000 unfavourable volume variance.What would be the budgeted fixed manufacturing overhead?

Accepted Answer

A)  $50,300 
B)  $52,700 
C)  $53,000 
D)  $58,500 
A)  $50,300 
B)  $52,700 
C)  $53,000 
D)  $58,500

Question 20

Discuss the following statement: "As long as the total variable overhead variance is small,the managers can be assured that actual activity is proceeding as planned.No further action is necessary."

Accepted Answer

While it may be reassuring for managers

In an activity flexible budget,what does the variable cost component typically correspond to?

Which two costs are compared in a performance report that uses activity flexible budgeting?

How does one create a meaningful performance report?

What department is usually held responsible for the fixed overhead volume variance?

The variable overhead variance is affected by both input price changes and by how efficiently overhead is used.

How is variable overhead applied in a standard cost system?

Which of the following is characteristic of activity-based budgeting?

Which of the following is a disadvantage of an activity-budgetary system?

Suppose an organization has implemented an ABC or ABM system.Which of the following has the organization already accomplished?

What is the formula for fixed overhead volume variance?

Budgeted variable overhead for the year is $130,000.Expected activity is 20,000 standard direct labour hours.The actual hours worked were 18,250,and the standard hours allowed for actual production were 19,750.What was the variable overhead efficiency variance?

Define static budget and flexible budget.What is each type used for?

Which of the following is NOT a function of activity flexible budgeting?

Discuss the following statement: "Since fixed overhead is,by definition,not related to changes in activity level,then the fixed overhead spending variance is zero."

Fixed costs per month \ 240,000 Variable cost per setup \ 5,400 -Refer to the Figure.Assume that the labour market does not permit the hiring of part-time forklift operators.What is the salary budget for moving materials?

Suppose a company had actual fixed manufacturing overhead of $60,000,a $1,500 unfavourable spending variance,and a $1,000 unfavourable volume variance.What would be the budgeted fixed manufacturing overhead?

Discuss the following statement: "As long as the total variable overhead variance is small,the managers can be assured that actual activity is proceeding as planned.No further action is necessary."

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 flexible budget,what does the variable cost component typically correspond to?

Which two costs are compared in a performance report that uses activity flexible budgeting?

How does one create a meaningful performance report?

What department is usually held responsible for the fixed overhead volume variance?

The variable overhead variance is affected by both input price changes and by how efficiently overhead is used.

How is variable overhead applied in a standard cost system?

Which of the following is characteristic of activity-based budgeting?

Which of the following is a disadvantage of an activity-budgetary system?

Suppose an organization has implemented an ABC or ABM system.Which of the following has the organization already accomplished?

What is the formula for fixed overhead volume variance?

Budgeted variable overhead for the year is $130,000.Expected activity is 20,000 standard direct labour hours.The actual hours worked were 18,250,and the standard hours allowed for actual production were 19,750.What was the variable overhead efficiency variance?

Define static budget and flexible budget.What is each type used for?

Which of the following is NOT a function of activity flexible budgeting?

Discuss the following statement: "Since fixed overhead is,by definition,not related to changes in activity level,then the fixed overhead spending variance is zero."

Fixed costs per month \ 240,000 Variable cost per setup \ 5,400 -Refer to the Figure.Assume that the labour market does not permit the hiring of part-time forklift operators.What is the salary budget for moving materials?

Suppose a company had actual fixed manufacturing overhead of $60,000,a $1,500 unfavourable spending variance,and a $1,000 unfavourable volume variance.What would be the budgeted fixed manufacturing overhead?

Discuss the following statement: "As long as the total variable overhead variance is small,the managers can be assured that actual activity is proceeding as planned.No further action is necessary."

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