Question 1

The fixed portion of the predetermined overhead rate is used for product costing purposes and has no significance in terms of cost control.

Accepted Answer

A) True 
 B)False

Question 2

One cause of an unfavorable overhead volume variance would be increases in cost for fixed manufacturing overhead items.

Accepted Answer

A) True 
 B)False

Question 3

A decrease in denominator level of activity will:

Accepted Answer

A)  decrease the fixed portion of the predetermined overhead rate. 
B)  increase the fixed portion of the predetermined overhead rate. 
C)  decrease the variable portion of the predetermined overhead rate. 
D)  increase the variable portion of the predetermined overhead rate. 
A)  decrease the fixed portion of the predetermined overhead rate. 
B)  increase the fixed portion of the predetermined overhead rate. 
C)  decrease the variable portion of the predetermined overhead rate. 
D)  increase the variable portion of the predetermined overhead rate.

Question 4

Hart Company's labor standards call for 500 direct labor-hours to produce 250 units of product. During October the company worked 625 direct labor-hours and produced 300 units. The standard hours allowed for October would be:

Accepted Answer

A)  625 hours 
B)  500 hours 
C)  600 hours 
D)  250 hours 
A)  625 hours 
B)  500 hours 
C)  600 hours 
D)  250 hours

Question 5

If the standard hours allowed for the actual output of the period is greater than the denominator level of activity (in hours), then the overhead budget variance will be unfavorable.

Accepted Answer

A) True 
 B)False

Question 6

A manufacturing company uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:   The following data pertain to operations for the most recent period:  
-What was the variable overhead rate variance for the period to the nearest dollar?

Accepted Answer

A)  $1,875 U 
B)  $900 F 
C)  $900 U 
D)  $1,875 F 
A)  $1,875 U 
B)  $900 F 
C)  $900 U 
D)  $1,875 F

Question 7

Wriphoff Company uses a standard cost system to collect costs related to the production of its clay bud vases. Manufacturing overhead at Wriphoff is applied to production on the basis of standard direct labor-hours. The overhead standards used at Wriphoff are as follows:   The standards above were based on an expected annual volume of 40,000 bud vases or 36,000 direct labor-hours. The actual results for last year were as follows:  
-What total amount of manufacturing overhead cost (variable and fixed) did Wriphoff apply to the 35,600 vases produced during last year?

Accepted Answer

A)  $512,640 
B)  $548,000 
C)  $564,800 
D)  $569,600 
A)  $512,640 
B)  $548,000 
C)  $564,800 
D)  $569,600

Question 8

Wriphoff Company uses a standard cost system to collect costs related to the production of its clay bud vases. Manufacturing overhead at Wriphoff is applied to production on the basis of standard direct labor-hours. The overhead standards used at Wriphoff are as follows:   The standards above were based on an expected annual volume of 40,000 bud vases or 36,000 direct labor-hours. The actual results for last year were as follows:  
-What was Wriphoff's variable overhead rate variance for last year?

Accepted Answer

A)  $6,850 favorable 
B)  $7,294 unfavorable 
C)  $14,144 unfavorable 
D)  $15,070 unfavorable 
A)  $6,850 favorable 
B)  $7,294 unfavorable 
C)  $14,144 unfavorable 
D)  $15,070 unfavorable

Question 9

A manufacturer of playground equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:   The following data pertain to operations for the most recent period:  
-What was the fixed manufacturing overhead volume variance for the period to the nearest dollar?

Accepted Answer

A)  $1,910 F 
B)  $697 F 
C)  $676 F 
D)  $1,213 U 
A)  $1,910 F 
B)  $697 F 
C)  $676 F 
D)  $1,213 U

Question 10

Wiley Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $13.90 per machine-hour and fixed manufacturing overhead cost of $944,300 per period. If the denominator level of activity is 7,100 machine-hours, the predetermined overhead rate would be:

Accepted Answer

A)  $1,390.00 
B)  $146.90 
C)  $13.90 
D)  $133.00 
A)  $1,390.00 
B)  $146.90 
C)  $13.90 
D)  $133.00

Question 11

An outdoor barbecue grill manufacturer has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:   The following data pertain to operations for the most recent period:  
-What was the fixed manufacturing overhead volume variance for the period to the nearest dollar?

Accepted Answer

A)  $507 U 
B)  $775 F 
C)  $495 U 
D)  $1,270 U 
A)  $507 U 
B)  $775 F 
C)  $495 U 
D)  $1,270 U

Question 12

A furniture manufacturer has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:   The following data pertain to operations for the most recent period:  
-What was the fixed manufacturing overhead budget variance for the period to the nearest dollar?

Accepted Answer

A)  $1,050 F 
B)  $257 F 
C)  $1,657 U 
D)  $1,970 U 
A)  $1,050 F 
B)  $257 F 
C)  $1,657 U 
D)  $1,970 U

Question 13

A manufacturer of industrial equipment uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:   The following data pertain to operations for the most recent period:  
-How much overhead was applied to products during the period to the nearest dollar?

Accepted Answer

A)  $77,645 
B)  $73,255 
C)  $74,715 
D)  $75,594 
A)  $77,645 
B)  $73,255 
C)  $74,715 
D)  $75,594

Question 14

Felux Corporation has provided the following data for October.   
Required:
a. Compute the budget variance for October. Show your work!
b. Compute the volume variance for October. Show your work!

Accepted Answer

a. Budget variance = Actual fixed manufa

Question 15

Wolle Corporation estimates that its variable manufacturing overhead is $11.60 per machine-hour and its fixed manufacturing overhead is $298,936 per period.
-If the denominator level of activity is 4,300 machine-hours, the variable element in the predetermined overhead rate would be:

Accepted Answer

A)  $11.60 
B)  $79.54 
C)  $69.52 
D)  $81.12 
A)  $11.60 
B)  $79.54 
C)  $69.52 
D)  $81.12

Question 16

Web Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard machine-hours. During February, the company used a denominator activity of 80,000 machine-hours in computing its predetermined overhead rate. However, only 75,000 standard machine-hours were allowed for the month's actual production. If the fixed manufacturing overhead volume variance for February was $6,400 unfavorable, then the total budgeted fixed manufacturing overhead cost for the month was:

Accepted Answer

A)  $96,000 
B)  $102,400 
C)  $100,000 
D)  $98,600 
A)  $96,000 
B)  $102,400 
C)  $100,000 
D)  $98,600

Question 17

A manufacturing company uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:   The following data pertain to operations for the most recent period:  
-What was the fixed manufacturing overhead budget variance for the period to the nearest dollar?

Accepted Answer

A)  $1,100 F 
B)  $350 F 
C)  $2,294 U 
D)  $2,650 U 
A)  $1,100 F 
B)  $350 F 
C)  $2,294 U 
D)  $2,650 U

Question 18

Which of the following variances is caused by a difference between the denominator activity in the predetermined overhead rate and the standard hours allowed for the actual production of the period?

Accepted Answer

A)  variable overhead rate variance. 
B)  variable overhead efficiency variance. 
C)  fixed manufacturing overhead budget variance. 
D)  fixed manufacturing overhead volume variance. 
A)  variable overhead rate variance. 
B)  variable overhead efficiency variance. 
C)  fixed manufacturing overhead budget variance. 
D)  fixed manufacturing overhead volume variance.

Question 19

Wolle Corporation estimates that its variable manufacturing overhead is $11.60 per machine-hour and its fixed manufacturing overhead is $298,936 per period.
-If the denominator level of activity is 4,400 machine-hours, the predetermined overhead rate would be:

Accepted Answer

A)  $67.94 
B)  $79.54 
C)  $1,160.00 
D)  $11.60 
A)  $67.94 
B)  $79.54 
C)  $1,160.00 
D)  $11.60

Question 20

Macdowell Corporation's manufacturing overhead includes $2.50 per machine-hour for supplies; $3.50 per machine-hour for indirect labor; $214,200 per period for salaries; and $307,020 per period for depreciation.
Required:
Determine the predetermined overhead rate if the denominator level of activity is 8,500 machine-hours. Show your work!

Accepted Answer

Estimated total manufacturing overhead c

Exam 27: Predetermined Overhead Rates and Overhead Analysis

The fixed portion of the predetermined overhead rate is used for product costing purposes and has no significance in terms of cost control.

One cause of an unfavorable overhead volume variance would be increases in cost for fixed manufacturing overhead items.

A decrease in denominator level of activity will:

Hart Company's labor standards call for 500 direct labor-hours to produce 250 units of product. During October the company worked 625 direct labor-hours and produced 300 units. The standard hours allowed for October would be:

If the standard hours allowed for the actual output of the period is greater than the denominator level of activity (in hours), then the overhead budget variance will be unfavorable.

Wiley Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $13.90 per machine-hour and fixed manufacturing overhead cost of $944,300 per period. If the denominator level of activity is 7,100 machine-hours, the predetermined overhead rate would be:

Felux Corporation has provided the following data for October. Required: a. Compute the budget variance for October. Show your work! b. Compute the volume variance for October. Show your work!

Wolle Corporation estimates that its variable manufacturing overhead is $11.60 per machine-hour and its fixed manufacturing overhead is $298,936 per period. -If the denominator level of activity is 4,300 machine-hours, the variable element in the predetermined overhead rate would be:

Which of the following variances is caused by a difference between the denominator activity in the predetermined overhead rate and the standard hours allowed for the actual production of the period?

Wolle Corporation estimates that its variable manufacturing overhead is $11.60 per machine-hour and its fixed manufacturing overhead is $298,936 per period. -If the denominator level of activity is 4,400 machine-hours, the predetermined overhead rate would be:

Managerial Accounting and the Business Environment

Managerial Accounting and Cost Concepts

Systems Design: Job-Order Costing

Systems Design: Process Costing

Cost Behavior Analysis and Use

Cost-Volume-Profit Relationship

Variable Costing: a Tool for Management

Activity Based Costing: a Tool to Aid Decision-Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Operating Performance Measures

Segment Reporting, Decentralization, and the Balanced Scorecard

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

Pricing Products and Services

Profitability Analysis

Further Classification of Labor Costs

Cost of Quality

the Predetermined Overhead Rate and Capacity

Fifo Method

Service Department Allocations

Least-Squares Regression Computations

Abc Action Analysis

Using a Modified Form of Activity-Based Costing to

Journal Entries to Record Variances

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

The Direct Method of Determining the Net Cash Provided by

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