Question 1

When variable overhead efficiency variance is favorable,it can be safely assumed that the ________.

Accepted Answer

A) actual rate per unit of the cost-allocation base is higher than the budgeted rate 
B) actual quantity of the cost-allocation base used is higher than the budgeted quantity 
C) actual rate per unit of the cost-allocation base is lower than the budgeted rate 
D) actual quantity of the cost-allocation base used is lower than the budgeted quantity 
A) actual rate per unit of the cost-allocation base is higher than the budgeted rate 
B) actual quantity of the cost-allocation base used is higher than the budgeted quantity 
C) actual rate per unit of the cost-allocation base is lower than the budgeted rate 
D) actual quantity of the cost-allocation base used is lower than the budgeted quantity

Question 2

The fixed setup overhead flexible-budget variance is calculated as actual costs - flexible-budget variance.

Accepted Answer

A) True 
 B)False

Question 3

If budgeted and actual machine hours are equal,spending variance will always be nil.

Accepted Answer

A) True 
 B)False

Question 4

Most of the decisions determining the level of fixed overhead costs to be incurred will be made ________.

Accepted Answer

A) by the end of a budget period 
B) by the middle of a budget period 
C) on a day-to-day ongoing basis 
D) at the start of a budget period 
A) by the end of a budget period 
B) by the middle of a budget period 
C) on a day-to-day ongoing basis 
D) at the start of a budget period

Question 5

Davidson Corporation manufactured 58,500 units during September.The following fixed overhead data relates to September:
$\begin{array}{lll}& \text { Actual } & \text { Static Buidget } \
\text { Production } & 58,500 \text { units } & 58,000 \text { units } \
\text { Machine-hours } & 3,320 \text { hours } & 3,480 \text { hours } \
\text { Fixed overhead costs for September } & \$ 170,220 & \$ 170,520
\end{array}$
What is the amount of fixed overhead allocated to production?

Accepted Answer

A) $171,990 
B) $170,220 
C) $170,520 
D) $58,500 
A) $171,990 
B) $170,220 
C) $170,520 
D) $58,500

Question 6

Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to allocate variable manufacturing overhead.The following information relates to the company's manufacturing overhead data:
 
$\begin{array}{ll}
\text { Actual output units produced } & 45,500 \text { units } \
\text { Actual machine-hours used } & 14,500 \text { hours } \
\text { Actual variable manufacturing overhead costs } & \$ 435,709
\end{array}$
What is the flexible-budget variance for variable manufacturing overhead?

Accepted Answer

A) $35,309 unfavorable 
B) $52,909 unfavorable 
C) $35,309 favorable 
D) $52,909 favorable 
A) $35,309 unfavorable 
B) $52,909 unfavorable 
C) $35,309 favorable 
D) $52,909 favorable

Question 7

Zitrik Corporation manufactured 110,000 buckets during February.The variable overhead cost-allocation base is $5.45 per machine-hour.The following variable overhead data pertain to February:
$\begin{array}{lll}&\text { Actual }&\text { Budgeted } \
\text { Production } & 110,000 \text { units } & 110,000 \text { units } \
\text { Machine-hours } & 10,500 \text { hours } & 10,000 \text { hours } \
\text { Variable overhead cost per machine-hour } & \$ 5.55 & \$ 5.45
\end{array}$
What is the variable overhead spending variance?

Accepted Answer

A) $1,050 favorable 
B) $1,000 unfavorable 
C) $1,050 unfavorable 
D) $1,000 favorable 
A) $1,050 favorable 
B) $1,000 unfavorable 
C) $1,050 unfavorable 
D) $1,000 favorable

Question 8

Which of the following is not true of the 3 level variance analysis of operating income?

Accepted Answer

A) Level 1 shows the static budget variance for operating income 
B) Level 2 shows the direct material price and efficiency variances 
C) Level 2 shows the sales-volume variance for operating income 
D) Level 3 shows the fixed overhead production volume variance as a component of the sales-volume variance for operating income 
A) Level 1 shows the static budget variance for operating income 
B) Level 2 shows the direct material price and efficiency variances 
C) Level 2 shows the sales-volume variance for operating income 
D) Level 3 shows the fixed overhead production volume variance as a component of the sales-volume variance for operating income

Question 9

Lancelot Corporation manufactures tennis gear and uses budgeted machine-hours to allocate variable manufacturing overhead.The following information relates to the company's manufacturing overhead data:
$\begin{array}{ll}
\text { Budgeted output units } & 3,000 \text { units } \
\text { Budgeted machine-hours } & 15,000 \text { hours } \
\text { Budgeted variable manufacturing overhead costs for 3,000 units } & \$ 180,000
\end{array}$
$\begin{array}{ll}
\text { Actual output units produced } & 3,350 \text { units } \
\text { Actual machine-hours used } & 14,700 \text { hours } \
\text { Actual variable manufacturing overhead costs } & \$ 250,000
\end{array}$
What is the flexible-budget variance for variable manufacturing overhead?

Accepted Answer

A) $49,000 unfavorable 
B) $49,000 favorable 
C) $70,000 unfavorable 
D) $70,000 favorable 
A) $49,000 unfavorable 
B) $49,000 favorable 
C) $70,000 unfavorable 
D) $70,000 favorable

Question 10

Variable overhead has no production-volume variance.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a true statement of energy costs?

Accepted Answer

A) Energy costs are not controllable 
B) Strategies to reduce energy costs will not impact variable cost budgets. 
C) Energy costs are a fixed cost of doing business for a manufacturer. 
D) Energy costs are a growing component of variable overhead costs. 
A) Energy costs are not controllable 
B) Strategies to reduce energy costs will not impact variable cost budgets. 
C) Energy costs are a fixed cost of doing business for a manufacturer. 
D) Energy costs are a growing component of variable overhead costs.

Question 12

Explain why managers of small businesses prefer 3-variance analysis over 4-variance analysis.

Accepted Answer

Managers of small businesses understand

Question 13

Zitrik Corporation manufactured 90,000 buckets during February.The variable overhead cost-allocation base is $5.10 per machine-hour.The following variable overhead data pertain to February:
$\begin{array}{lll}
&\text { Actual }&\text { Budgeted } \
\text { Production } & 90,000 \text { units } & 90,000 \text { units } \
\text { Machine-hours } & 9,800 \text { hours } & 9,000 \text { hours } \
\text { Variable overhead cost per machine-hour } & \$ 5.25 & \$ 5.10
\end{array}$
What is the actual variable overhead cost?

Accepted Answer

A) $472,500 
B) $459,000 
C) $51,450 
D) $49,980 
A) $472,500 
B) $459,000 
C) $51,450 
D) $49,980

Question 14

The costs related to buildings (such as rent and insurance),equipment (such as lease payments or straight-line depreciation),and salaried labor in a factory are all examples of cost items that would be part of the fixed overhead budget.

Accepted Answer

A) True 
 B)False

Question 15

A favorable fixed overhead flexible-budget variance indicates that actual fixed costs exceeded the lump-sum amount budgeted.

Accepted Answer

A) True 
 B)False

Question 16

Timely Products Company makes watches.The fixed overhead costs for 2017 total $648,000.The company uses direct labor-hours for fixed overhead allocation and anticipates 21,600 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 $52,000 was spent on fixed overhead.
Required:
a.Determine the fixed overhead rate for 2017 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 = ($648,000 ÷ 21,6

Question 17

In flexible budgets the costs that are not "flexed" because they remain the same within a relevant range of activity (such as sales or output)are called ________.

Accepted Answer

A) total overhead costs 
B) total budgeted costs 
C) fixed costs 
D) variable costs 
A) total overhead costs 
B) total budgeted costs 
C) fixed costs 
D) variable costs

Question 18

The production-volume variance is a component of the sales-volume variance.

Accepted Answer

A) True 
 B)False

Question 19

The variable overhead efficiency variance is the difference between actual quantity of the
cost-allocation base used and budgeted quantity of the cost-allocation base allowed for actual output,multiplied by the budgeted variable overhead cost per unit of the cost-allocation base.

Accepted Answer

A) True 
 B)False

Question 20

An unfavorable production-volume variance always infers that management made a bad planning decision regarding the plant capacity.

Accepted Answer

A) True 
 B)False

When variable overhead efficiency variance is favorable,it can be safely assumed that the ________.

The fixed setup overhead flexible-budget variance is calculated as actual costs - flexible-budget variance.

If budgeted and actual machine hours are equal,spending variance will always be nil.

Most of the decisions determining the level of fixed overhead costs to be incurred will be made ________.

Which of the following is not true of the 3 level variance analysis of operating income?

Variable overhead has no production-volume variance.

Which of the following is a true statement of energy costs?

Explain why managers of small businesses prefer 3-variance analysis over 4-variance analysis.

The costs related to buildings (such as rent and insurance),equipment (such as lease payments or straight-line depreciation),and salaried labor in a factory are all examples of cost items that would be part of the fixed overhead budget.

A favorable fixed overhead flexible-budget variance indicates that actual fixed costs exceeded the lump-sum amount budgeted.

In flexible budgets the costs that are not "flexed" because they remain the same within a relevant range of activity (such as sales or output)are called ________.

The production-volume variance is a component of the sales-volume variance.

The variable overhead efficiency variance is the difference between actual quantity of the cost-allocation base used and budgeted quantity of the cost-allocation base allowed for actual output,multiplied by the budgeted variable overhead cost per unit of the cost-allocation base.

An unfavorable production-volume variance always infers that management made a bad planning decision regarding the plant capacity.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 8: Flexible Budgets, overhead Cost Variances, and Management Control

When variable overhead efficiency variance is favorable,it can be safely assumed that the ________.

The fixed setup overhead flexible-budget variance is calculated as actual costs - flexible-budget variance.

If budgeted and actual machine hours are equal,spending variance will always be nil.

Most of the decisions determining the level of fixed overhead costs to be incurred will be made ________.

Which of the following is not true of the 3 level variance analysis of operating income?

Variable overhead has no production-volume variance.

Which of the following is a true statement of energy costs?

Explain why managers of small businesses prefer 3-variance analysis over 4-variance analysis.

The costs related to buildings (such as rent and insurance),equipment (such as lease payments or straight-line depreciation),and salaried labor in a factory are all examples of cost items that would be part of the fixed overhead budget.

A favorable fixed overhead flexible-budget variance indicates that actual fixed costs exceeded the lump-sum amount budgeted.

In flexible budgets the costs that are not "flexed" because they remain the same within a relevant range of activity (such as sales or output)are called ________.

The production-volume variance is a component of the sales-volume variance.

The variable overhead efficiency variance is the difference between actual quantity of the cost-allocation base used and budgeted quantity of the cost-allocation base allowed for actual output,multiplied by the budgeted variable overhead cost per unit of the cost-allocation base.

An unfavorable production-volume variance always infers that management made a bad planning decision regarding the plant capacity.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters