Exam 11: Flexible Budgets and Overhead Analysis

What is the formula for fixed overhead volume variance?

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: Overhead item Actual costs Maintenance \ 14,000 Power \ 3,600 Direct labour \ 16,000 Equipment lease \ 5,000 -Refer to the Figure.What is the variance for maintenance when using an after-the-fact flexible budget?

Fixed manufacturing overhead was budgeted at $250,000,and 25,000 direct labour hours were budgeted.Suppose the fixed overhead volume variance was $10,000 favourable and the fixed overhead spending variance was $6,000 unfavourable.What would be the fixed manufacturing overhead applied?

Optimum Company uses standard costing for direct materials and direct labour.Management would like to use standard costing for variable and fixed overhead. The following monthly cost functions were developed for manufacturing overhead items: The cost functions are considered reliable within a relevant range of 20,000 to 40,000 direct labour hours.The company expects to operate at 25,000 direct labour hours per month. Information for the month of June is as follows: Overhead Item Cost Function Indirect materials \ 1.00 per DLH Indirect labour \ 1.25 per DLH Utilities \ 0.50 per DLH Insurance \ 10,000 Depreciation \ 40,000 Required: Actual overhead costs incurred: Indirect materials \ 20,000 Indirect labour 30,000 Utilities 12,000 Insurance 11,000 Depreciation 40,000 Total \ 113,000 Actual direct labour hours worked: 24,000 Standard direct labour hours allowed for production achieved: 27,000 A. Calculate the following standard manufacturing overhead rates based upon expected capacity: 1. Variable manufacturing overhead 2. Fixed manufacturing overhead rate 3. Total manufacturing overhead rate B. Calculate the following variances: 1. Variable overhead spending variance 2. Variable overhead efficiency variance 3. Fixed overhead spending variance 4. Fixed overhead volume variance

Newby Company uses an activity-based costing system. Four activities have been identified. The setup activity uses the number of setups as its cost driver. The following budget information is available for this activity: The company expects to perform 25 setups in June. Fixed costs per month \ 240,000 Variable cost per setup \ 5,400 -Refer to the Figure.Actual costs incurred were $246,000 fixed and $144,000 variable.Suppose the actual number of setups in June was 30.What would be the activity-based flexible budget variance?

An activity-based budgetary approach can be used to emphasize cost increases through the reduction of wasteful activities and improving the efficiency of necessary activities.

Long,Inc.produces small engines.For last year's operations,the following data were gathered: Long,Inc.employs a standard costing system.During the year,a variable overhead rate of $8.00 per hour was used.The labour standard requires 1.5 hours per unit produced.What are the variable overhead spending and efficiency variances,respectively? Units produced: 100,000 Direct labour: 160,000 hours @\ 12.00 per hour Actual variable overhead: \ 1,300,000

Within which of the following categories are the major differences between functional and activity-based budgeting found?

How does activity flexible budgeting differ from functional-based flexible budgeting?

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

Which budget is used to assess managerial efficiency?

The following standard overhead costs were developed for one of the products of Windrun Company: The following information is available regarding the company's operations for the period: Variable overhead: 5 hours \times\ 4 per hour 20.00 Fixed overhead: 5 hours \times\ 15 per hour 75.00 Total standard overhead cost per unit \ 95.00 Budgeted fixed overhead for the period is $1,350,000,and the standard fixed overhead rate is based on expected capacity of 90,000 direct labour hours. Required: Units produced 20,000 Direct labour 115,000 hours Overhead incurred: Variable \ 437,500 Fixed \ 1,320,000 A. Calculate the variable overhead spending variance and indicate whether it is favourable or unfavourable. B. Calculate the variable overhead efficiency variance and indicate whether it is favourable or unfavourable. C. Calculate the fixed overhead spending variance and indicate whether it is favourable or unfavourable. D. Calculate the fixed overhead volume variance and indicate whether it is favourable or unfavourable.

In an activity framework,what do controlling costs translate into?

For what level of activity is a static budget prepared?

CarParts Company is planning to produce 3,200,000 carburetors for the coming year.Each carburetor requires 0.375 standard hours of labour for completion.The company uses direct labour hours to assign overhead to products.The total fixed overhead budgeted for the coming year is $1,980,000.Total budgeted overhead is $4,050,000.Predetermined overhead rates are calculated using expected production,measured in direct labour hours.Actual results for the year follow: Required: Actual production (units) 3,540,000 Actual direct labour hours 1,190,000 Actual fixed overhead \ 1,920,000 Actual variable overhead 2,150,000 A. Compute the applied fixed overhead. B. Compute the fixed overhead spending and volume vari ances. C. Compute the applied variable overhead. D. Compute the variable overhead spending and efficiency variances. Carry per hour computations out to three decimal places.

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

Jewel Company calculates its predetermined rates using practical volume, which is 300,000 units. The standard cost system allows two direct labour hours per unit produced. Overhead is applied using direct labour hours. The total budgeted overhead is $3,200,000 of which $900,000 is fixed overhead. The actual results for the year are as follows: Units produced: 280,000 Direct labour: 570,000 hours @\ 9 per hour Variable overhead: \ 2,320,000 Fixed overhead: \ 872,000 -Refer to the Figure.What is the predetermined fixed overhead rate?

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.Which of the following can be concluded when comparing the static budget to the actual costs?

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

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