Question 1

Fixed overhead costs are resources acquired as used and needed.

Accepted Answer

A) True 
 B)False

Question 2

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

Question 3

Suppose a company's variable manufacturing overhead is applied on the basis of direct labour hours,and the company has an unfavourable direct labour efficiency variance.Which of the following is most likely to result?

Accepted Answer

A) The direct materials usage variance will be unfavourable. 
B) The direct labour rate variance will be favourable. 
C) The variable manufacturing overhead efficiency variance will be unfavourable. 
D) The variable manufacturing overhead spending variance will be unfavourable. 
A) The direct materials usage variance will be unfavourable. 
B) The direct labour rate variance will be favourable. 
C) The variable manufacturing overhead efficiency variance will be unfavourable. 
D) The variable manufacturing overhead spending variance will be unfavourable.

Question 4

What is the formula for the variable overhead spending variance?

Accepted Answer

A) (AH − SH)SVOR 
B) (AVOR − SVOR)SH 
C) (AVOR − SVOR)AH 
D) (AH − SH)AVOR 
A) (AH − SH)SVOR 
B) (AVOR − SVOR)SH 
C) (AVOR − SVOR)AH 
D) (AH − SH)AVOR

Question 5

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

Accepted Answer

A) (AVOR × AH) − (SVOR × AH) 
B) (AVOR − SVOR)SH 
C) (AH − SH)SVOR 
D) (AH − SH)AVOR 
A) (AVOR × AH) − (SVOR × AH) 
B) (AVOR − SVOR)SH 
C) (AH − SH)SVOR 
D) (AH − SH)AVOR

Question 6

Assume that the expectations on the static budget were met.What can be concluded?

Accepted Answer

A) The static budget was ill conceived. 
B) The effectiveness of the manager is not in question. 
C) The manager is very efficient. 
D) There is no need for a flexible budget. 
A) The static budget was ill conceived. 
B) The effectiveness of the manager is not in question. 
C) The manager is very efficient. 
D) There is no need for a flexible budget.

Question 7

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:
 $\begin{array}{ll}
\text { Units produced: } & 280,000 \
\text { Direct labour: } & 570,000 \text { hours }@\$ 9 \text { per hour } \
\text { Variable overhead: } & \$ 2,320,000 \
\text { Fixed overhead: } & \$ 872,000
\end{array}$
-Refer to the Figure.What is the predetermined variable overhead rate?

Accepted Answer

A) $1.50 per direct labour hour 
B) $3.00 per direct labour hour 
C) $3.83 per direct labour hour 
D) $5.50 per direct labour hour 
A) $1.50 per direct labour hour 
B) $3.00 per direct labour hour 
C) $3.83 per direct labour hour 
D) $5.50 per direct labour hour

Question 8

What does a performance report for variable overhead reveal?

Accepted Answer

A) both the volume and spending variances and the spending and efficiency variances for each variable overhead item 
B) the volume and spending variances 
C) the volume and efficiency variances for each variable overhead item 
D) both the aggregate variable overhead spending and efficiency variances and the spending and efficiency variances for each variable overhead item 
A) both the volume and spending variances and the spending and efficiency variances for each variable overhead item 
B) the volume and spending variances 
C) the volume and efficiency variances for each variable overhead item 
D) both the aggregate variable overhead spending and efficiency variances and the spending and efficiency variances for each variable overhead item

Question 9

Which budget should be used to determine managerial effectiveness?

Accepted Answer

A) operational budget 
B) capital budget 
C) static budget 
D) flexible budget 
A) operational budget 
B) capital budget 
C) static budget 
D) flexible budget

Fixed overhead costs are resources acquired as used and needed.

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."

Suppose a company's variable manufacturing overhead is applied on the basis of direct labour hours,and the company has an unfavourable direct labour efficiency variance.Which of the following is most likely to result?

What is the formula for the variable overhead spending variance?

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

Assume that the expectations on the static budget were met.What can be concluded?

What does a performance report for variable overhead reveal?

Which budget should be used to determine managerial effectiveness?

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

Fixed overhead costs are resources acquired as used and needed.

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."

Suppose a company's variable manufacturing overhead is applied on the basis of direct labour hours,and the company has an unfavourable direct labour efficiency variance.Which of the following is most likely to result?

What is the formula for the variable overhead spending variance?

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

Assume that the expectations on the static budget were met.What can be concluded?

What does a performance report for variable overhead reveal?

Which budget should be used to determine managerial effectiveness?

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