Deck 13: Overhead and Marketing Variances

Question 1

Humphrey Manufacturing has the following standards for its production department: $\begin{array}{c}\begin{array}{lll}\\\\ \text { Materials}\\ \text { Direct labor }\\ \text { Variable overhead }\\ \text { Fixed overhead }\\ \text { Total cost per lot}\end{array}\begin{array}{lll}\\\\ \text {10 pounds at \$ 2.40 / 1b}\\ \text {0.5 hour at\$ 16.00 / hr }\\ \text {0.5 hour at \$ 24.00 / hr }\\ \text {0.5 hour at\$ 43.20 / hr} \\\\\end{array}\begin{array}{lll} \text {Per finished}\\ \text {lot of product}\\\$ 24.00 \\8.00 \\12.00 \\\underline{21.60} \\\underline{\$ 65.60} \\\end{array}\end{array}$
Overhead is assigned to products based on standard direct labor hours.Humphrey budgeted 10,000 finished lots for the period,9,810 were actually produced.Actual overhead was $340,000 and actual direct labor hours were 3,950.What is Humphrey's overhead spending variance?

A)$4,000 favorable
B)$4,000 unfavorable
C)$22,920 favorable
D)$29,200 unfavorable
E)$33,304 favorable

Answer 1

$29,200 unfavorable

Question 2

Karpoff Kremes (KK)planned to sell 40,000 Kings at $20 each and 20,000 Kweens at $15 each.Actual sales of the former were 45,000 and 25,000 of the latter,at $19 and $16 respectively. Which is true of KK's sales variance?

A)$183,334 favorable
B)$155,000 favorable
C)$163,334 favorable
D)$175,000 favorable
E)None of the choices are correct

Answer 2

A

Question 3

Wendy Wall (WW)makes wall units.For the year,the following details have been budgeted.Output,10,000 units;factory overhead $1,250,000,of which 60% is variable.Each wall unit should take 2.5 hours of direct labor to produce.WW produced 9,500 units with 24,000 DLH used and $1,175,000 actual overhead was incurred.Overhead is allocated based on direct labor hours (DLH). What is true of Wendy's overhead variances?

A)Overhead spending variance is $45,000 fav
B)Overhead efficiency variance is $7,500 fav
C)Overhead volume variance is $25,000 fav
D)Overhead spending variance is $37,500 fav
E)None of the choices are correct

Answer 3

A

Question 4

Wendy Wall (WW)makes wall units.For the year,the following details have been budgeted.Output,10,000 units;factory overhead $1,250,000,of which 60% is variable.Each wall unit should take 2.5 hours of direct labor to produce.WW produced 9,500 units with 24,000 DLH used and $1,175,000 actual overhead was incurred.Overhead is allocated based on direct labor hours (DLH). What is the correct overhead absorption rate (to nearest cent)?

A)$52.63
B)$50.00
C)$49.47
D)$47.00
E)None of the choices are correct

Question 5

Which of these is true?

A)Budgeted volume = Actual output × units allowed
B)Actual volume = Budgeted output × actual units allowed
C)Expected volume = Standard volume
D)Standard volume = Actual output × # cost driver units allowed
E)None of the choices are correct

Question 6

Wendy Wall (WW)makes wall units.For the year,the following details have been budgeted.Output,10,000 units;factory overhead $1,250,000,of which 60% is variable.Each wall unit should take 2.5 hours of direct labor to produce.WW produced 9,500 units with 24,000 DLH used and $1,175,000 actual overhead was incurred.Overhead is allocated based on direct labor hours (DLH). What is Wendy's total overhead variance?

A)$75,000 over absorbed
B)$12,500 over absorbed
C)$12,500 under absorbed
D)$25,000 over absorbed
E)None of the choices are correct

Question 7

Boris Bangles planned to sell 280,000 banjos at $400 each,but actually sold 250,000 at $425 each.Which is true of BB's quantity variances?

A)$12 million unfavorable
B)$5.75 million favorable
C)$5.75 million unfavorable
D)$6.25 million unfavorable
E)None of the choices are correct

Question 8

Karpoff Kremes (KK)planned to sell 40,000 Kings at $20 each and 20,000 Kweens at $15 each.Actual sales of the former were 45,000 and 25,000 of the latter,at $19 and $16 respectively. Which is true of KK?

A)The price variance is $20,000 favorable
B)The quantity variance is $175,000 unfavorable
C)The price variance is $20,000 unfavorable
D)The quantity variance is $20,000 unfavorable
E)None of the choices are correct

Question 9

Wendy Wall (WW)makes wall units.For the year,the following details have been budgeted.Output,10,000 units;factory overhead $1,250,000,of which 60% is variable.Each wall unit should take 2.5 hours of direct labor to produce.WW produced 9,500 units with 24,000 DLH used and $1,175,000 actual overhead was incurred.Overhead is allocated based on direct labor hours (DLH). What is Wendy's total overhead absorbed?

A)$1,175,000
B)$1,200,000
C)$1,187,500
D)$1,250,000
E)None of the choices are correct

Question 10

The overhead volume variance:

A)captures the difference between planned overheads and actual overheads
B)measures underutilized capacity
C)measures the opportunity cost of actual capacity utilization differing from planned capacity utilization
D)as a performance measure encourages overproduction
E)All of the choices are correct

Question 11

Which of these is true?

A)Budgeted fixed factory overhead = Budgeted overhead per unit × actual volume
B)Budgeted fixed factory overhead = Budgeted overhead per unit × standard volume
C)Budgeted factory overhead = (Budgeted fixed overhead per unit × budgeted volume)+ actual variable overhead
D)Budgeted factory overhead = (Budgeted fixed overhead per unit × standard volume)+ budgeted variable overhead
E)None of the choices are correct

Question 12

Boris Bangles planned to sell 280,000 banjos at $400 each,but actually sold 250,000 at $425 each.Which is true of BB's price variances?

A)$6.25 million unfavorable
B)$12 million favorable
C)$6.25 million favorable
D)$5.75 million favorable
E)None of the choices are correct

Question 13

Humphrey Manufacturing has the following standards for its production department: $\begin{array}{c}\begin{array}{lll}\\\\ \text { Materials}\\ \text { Direct labor }\\ \text { Variable overhead }\\ \text { Fixed overhead }\\ \text { Total cost per lot}\end{array}\begin{array}{lll}\\\\ \text {10 pounds at \$ 2.40 / 1b}\\ \text {0.5 hour at\$ 16.00 / hr }\\ \text {0.5 hour at \$ 24.00 / hr }\\ \text {0.5 hour at\$ 43.20 / hr} \\\\\end{array}\begin{array}{lll} \text {Per finished}\\ \text {lot of product}\\\$ 24.00 \\8.00 \\12.00 \\\underline{21.60} \\\underline{\$ 65.60} \\\end{array}\end{array}$

Overhead is assigned to products based on standard direct labor hours.Humphrey budgeted 10,000 finished lots for the period,9,810 were actually produced.Actual overhead was $340,000 and actual direct labor hours were 3,950.What is Humphrey's overhead efficiency variance?

A)$4,000 favorable
B)$4,000 unfavorable
C)$22,920 favorable
D)$29,200 unfavorable
E)$33,304 favorable

Question 14

Karpoff Kremes (KK)planned to sell 40,000 Kings at $20 each and 20,000 Kweens at $15 each.Actual sales of the former were 45,000 and 25,000 of the latter,at $19 and $16 respectively. Which is true of KK's mix variance? (Do not round your intermediate calculations. )

A)$0
B)$175,000 favorable
C)$28,348 favorable
D)$8,348 unfavorable
E)Unable to determine