Exam 11: Flexible Budgets and Overhead Analysis

Which of the following may cause an unfavourable variable overhead spending variance?

The variable cost component for each activity should correspond to the committed resources.

What does inefficient use of labour imply?

Static budget Actual costs (9,000 hours ) (10,000 hours ) Direct materials \ 117,000 \ 120,000 Power 45,000 50,000 Sal ary of plant supervisor 5,000 5,000 Total \ 167,000 \ 175,000 -Refer to the Figure.What is the flexible budget for August?

What is a performance report?

Which of the following is characteristic of the fixed overhead spending variance?

Where are the major differences found between activity-based budgeting and traditional budgeting?

What is the formula for the fixed overhead spending variance?

Which budget is used to assess managerial efficiency?

Which department is usually assigned responsibility for the variable overhead spending variance?

What is the formula for calculating the variable overhead efficiency variance?

What does the variable overhead efficiency variance claim to measure?

Bigton Company uses a standard costing system.The following monthly cost functions apply to its manufacturing overhead items: Overhead Item Cost Function Indirect materials \ 0.80 per DLH Indirect labour \ 1.00 per DLH Utilities \ 0.40 per DLH Insurance \ 8,000 Depreciation \ 32,000 Information for the month of November is as follows: Actual overhead costs incurred: Indirect materials \ 20,800 Indirect labour 24,000 Utilities 9,600 Insurance 8,800 Depreciation 32,000 Total \ 95,200 Actual direct labour hours worked 24,000 Standard direct labour hours allowed for production achieved 27,000 Bigton uses expected capacity to calculate standard overhead rates.The monthly expected capacity is 25,000 hours. A. Calculate the following standard overhead rates based upon expected capacity: Variable overhead rate Fixed overhead rate Total overhead rate B. Calculate the following variances: Variable overhead spending variance Variable overhead efficiency variance Fixed overhead spending variance Fixed overhead volume variance

Overhead Item Fixed Cost Variable Rate per DLH Maintenance \ 52,000 \ 1.20 Power 1.50 Indirect labour 79,500 4.80 Rent 54,000 -Refer to the Figure. Required: A. $\text { Prepare an overhead budget for the expected activity level for the coming year. }$ B. Prepare an overhead budget that reflects production that is $10 \%$ higher than expected (for both products). C. Prepare an overhead budget that reflects production that is $10 \%$ lower than expected (for both products).

Match the following terms with the items below: -Performance report

For which of the following is a cost formula developed for activity flexible budgeting?

Fixed costs per month \ 240,000 Variable cost per setup \ 5,400 -Refer to the Figure.Suppose that the actual moves made are 80% of the forklifts' capacity.What is the after-the-fact budgeted fuel cost?

What does the fixed overhead volume variance measure?

Price changes of variable overhead items are easily controlled by production supervisors.

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