Question 1

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 2

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

Question 3

When budgeting at the activity level,with respect to which of the following is the cost behaviour of each activity defined?

Accepted Answer

A) direct labour hours 
B) machine hours 
C) the activity output measure 
D) the activity's resource driver 
A) direct labour hours 
B) machine hours 
C) the activity output measure 
D) the activity's resource driver

Question 4

Hyphen Corporation uses a standard costing system. Information for the month of June is as follows:
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:
 $\begin{array}{lr}\text { Actual manufacturing overhead costs }(\$ 26,000 \text { is fixed) }&\$80,000\
\text { Direct labour: }\
\text { Actual hours worked } & 12,000 \text { hours } \
\text { Standard hours allowed for actual production } & 10,000 \text { hours } \
\text { Average actual labour cost per hour } & \$ 18
\end{array}$ $\begin{array}{lr}
\text { Variable factory overhead } & \$ 48,000 \
\text { Fixed factory overhead } & 24,000 \
\text { Total factory overhead } & \$ 72,000
\end{array}$
-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 5

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

Accepted Answer

A) It is usually significant. 
B) It is made up of a single item. 
C) It is the difference between actual costs and budgeted costs. 
D) It is investigated only if the variance is immaterial. 
A) It is usually significant. 
B) It is made up of a single item. 
C) It is the difference between actual costs and budgeted costs. 
D) It is investigated only if the variance is immaterial.

Question 6

Which of the following is the result of fixed overhead being made up of many items?

Accepted Answer

A) The fixed overhead spending variance is not meaningful. 
B) It is not possible to calculate a fixed overhead volume variance. 
C) The fixed overhead volume variance will always be unfavourable. 
D) A line-by-line comparison of budgeted costs with actual costs provides more information. 
A) The fixed overhead spending variance is not meaningful. 
B) It is not possible to calculate a fixed overhead volume variance. 
C) The fixed overhead volume variance will always be unfavourable. 
D) A line-by-line comparison of budgeted costs with actual costs provides more information.

Question 7

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 8

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

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 9

Match the following terms with the items below:
-Static 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 10

Match the following terms with the items below:
-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 11

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 12

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 13

Kelsey, Inc. produces plastic grocery bags. Kelsey has developed a static budget for the month of August, which is based on 8,000 direct labour hours. During the quarter, the actual activity was 9,000 direct labour hours. Data for August are summarized as follows:
  
-Refer to the Figure.What is the flexible budget variance for August?

Accepted Answer

A) $12,000 U 
B) $12,000 F 
C) $29,000 U 
D) $29,000 F 
A) $12,000 U 
B) $12,000 F 
C) $29,000 U 
D) $29,000 F

Question 14

Fixed overhead was budgeted at $85,000,and 10,000 direct labour hours were budgeted.Suppose the fixed overhead volume variance was $5,000 unfavourable and the fixed overhead spending variance was $1,200 favourable.What would be the fixed overhead applied?

Accepted Answer

A) $80,000 
B) $82,000 
C) $82,800 
D) $90,000 
A) $80,000 
B) $82,000 
C) $82,800 
D) $90,000

Question 15

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 16

Bridgestone Company has developed the following flexible budget formulas for its four overhead items:
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 variance for power?

Accepted Answer

A) $1,000 U 
B) $1,000 F 
C) $1,600 U 
D) $3,000 U 
A) $1,000 U 
B) $1,000 F 
C) $1,600 U 
D) $3,000 U

Question 17

Which of the following is NOT one of the three steps in building an activity-based budget?

Accepted Answer

A) identifying activities 
B) classifying activities as value-added or non-value-added 
C) estimating the demand for each activity's output 
D) estimating the cost of producing the output demanded by each activity 
A) identifying activities 
B) classifying activities as value-added or non-value-added 
C) estimating the demand for each activity's output 
D) estimating the cost of producing the output demanded by each activity

Question 18

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 19

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

Accepted Answer

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

Question 20

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

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

What is the formula for total fixed overhead variance?

When budgeting at the activity level,with respect to which of the following is the cost behaviour of each activity defined?

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

Which of the following is the result of fixed overhead being made up of many items?

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

Match the following terms with the items below: -Static budget

Match the following terms with the items below: -Flexible budget

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

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

Fixed overhead was budgeted at $85,000,and 10,000 direct labour hours were budgeted.Suppose the fixed overhead volume variance was $5,000 unfavourable and the fixed overhead spending variance was $1,200 favourable.What would be the fixed overhead applied?

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?

Which of the following is NOT one of the three steps in building an activity-based budget?

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

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?

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

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

What is the formula for total fixed overhead variance?

When budgeting at the activity level,with respect to which of the following is the cost behaviour of each activity defined?

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

Which of the following is the result of fixed overhead being made up of many items?

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

Match the following terms with the items below: -Static budget

Match the following terms with the items below: -Flexible budget

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

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

Fixed overhead was budgeted at $85,000,and 10,000 direct labour hours were budgeted.Suppose the fixed overhead volume variance was $5,000 unfavourable and the fixed overhead spending variance was $1,200 favourable.What would be the fixed overhead applied?

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?

Which of the following is NOT one of the three steps in building an activity-based budget?

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

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?

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