Deck 11: Flexible Budgeting and the Management of Overhead and Support Activity Costs

Question 1

The budget variance arises from a comparison of actual variable overhead expenditures with budgeted variable overhead costs.

Answer 1

False

Question 2

Which of the following statements is (are)true?

A)Gourmet has $450,000 of fixed costs.
B)Each additional hour of process time is expected to cost Gourmet $13.
C)Y would equal the amount shown as "total cost" in the company's flexible budget.
D)Choices "A" and "B" are true.
E)Choices "A," "B," and "C" are truE.

Answer 2

E

Question 3

Trois Elles Corporation recently prepared a manufacturing cost budget for an output of 50,000 units,as follows:
Actual units produced amounted to 60,000.Actual costs incurred were: direct materials,$110,000;direct labor,$60,000;variable overhead,$100,000;and fixed overhead,$97,000.If Trois Elles evaluated performance by the use of a flexible budget,a performance report would reveal a total variance of:

A)$3,000 favorable.
B)$23,000 favorable.
C)$27,000 unfavorable.
D)$42,000 unfavorable.
E)none of these amounts.

Answer 3

A

Question 4

Bunnie's Bakery anticipated making 17,000 fancy cakes during a recent period,requiring 14,000 hours of process time.Each hour of process time was expected to cost the firm $11.Actual activity for the period was higher than anticipated: 18,000 cakes and 15,200 hours.If each hour of process time actually cost Bunnie $12,what process-time variance would be disclosed on a performance report that incorporated static budgets and flexible budgets?

A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question 5

Flexible budgets reflect a company's anticipated costs based on variations in:

A)activity levels.
B)inflation rates.
C)managers.
D)anticipated capital acquisitions.
E)standards.

Question 6

A flexible budget:

A)parallels a static budget with respect to format and advantages of use.
B)is preferred over a static budget in the evaluation of performance.
C)gives management flexibility in terms of meeting budget goals.
D)can be used to compare actual and budgeted costs at various levels of activity.
E)is characterized by choices "B" and "D" abovE.

Question 7

A static budget:

A)is based totally on prior year's costs.
B)is based on one anticipated activity level.
C)is based on a range of activity.
D)is preferred over a flexible budget in the evaluation of performance.
E)presents a clear measure of performance when planned activity differs from actual activity.

Question 8

What is Gourmet's budgeted total cost if its process hours equal 25,000?

A)$325,000.
B)$450,000.
C)$775,000.
D)$1,225,000.
E)Answer cannot be determined from the information provided.

Question 9

Del's Diner anticipated that 84,000 process hours would be worked during an upcoming accounting period when,in fact,90,000 hours were actually worked.One of the company's cost functions is expressed as follows:
Y = $16PH + $640,000 where PH is defined as process hours
What is Del's flexible budget for the preceding cost function?

A)$1,280,000
B)$2,080,000
C)$1,984,000
D)$1,221,000
E)$2,112,000

Question 10

The manufacturing overhead applied to Work-in-Process Inventory by a company that uses standard costing would be computed as actual hours * a predetermined (standard)overhead rate.

Question 11

Gridiron Merchandising anticipated selling 27,000 units of a major product and paying sales commissions of $6 per unit.Actual sales and sales commissions totaled 27,500 units and $171,400,respectively.If the company used a flexible budget for performance evaluations,Gridiron would report a cost variance of:

A)$6,400U.
B)$6,400F.
C)$9,400U.
D)$9,400F.
E)some other amount not listed abovE.

Question 12

Zin,Inc.is planning its cash needs for an upcoming period when 85,000 machine hours are expected to be worked.Activity may drop as low as 78,000 hours if some overdue equipment maintenance procedures are performed;on the other hand,activity could jump to 94,000 hours if one of Zin's major competitors likely goes bankrupt.A flexible cash budget to determine cash needs would best be based on:

A)78,000 hours.
B)85,000 hours.
C)94,000 hours.
D)78,000 hours and 94,000 hours.
E)78,000 hours,85,000 hours,and 94,000 hours.

Question 13

If Young operated at 35,000 hours,its total budgeted cost would be:

A)$877,500.
B)$945,000.
C)$787,500.
D)$997,500.
E)$810,000.

Question 14

Delicious Treats (DT)anticipated that 84,000 process hours would be worked during an upcoming accounting period when,in fact,92,000 hours were actually worked.One of the company's cost functions is expressed as follows:
Y = $16PH + $640,000 where PH is defined as process hours
What budgeted dollar amount would appear in DT's static budget and flexible budget for the preceding cost function?

A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question 15

Interspace Merchandising anticipated selling 29,000 units of a major product and paying sales commissions of $6 per unit.Actual sales and sales commissions totaled 31,500 units and $182,700,respectively.If the company used a static budget for performance evaluations,Interstate would report a cost variance of:

A)$6,300U.
B)$6,300F.
C)$8,700U.
D)$8,700F.
E)some other amount not listed abovE.

Question 16

Which of the following mathematical expressions is found in a typical flexible-budget formula for overhead?

A)Total activity units + budgeted fixed overhead cost per unit.
B)Budgeted variable overhead cost per unit + budgeted fixed overhead cost.
C)(Budgeted variable overhead cost per unit * total activity units)+ budgeted fixed overhead costs.
D)(Budgeted fixed overhead cost per unit * total activity units)+ (budgeted variable overhead cost per unit * total activity units).
E)None of thesE.

Question 17

Flexible budgets reflect a company's anticipated costs based on variations in activity levels.

Question 18

Efficient or inefficient use of a specific component of variable overhead (e.g. ,electricity)will cause the variable-overhead efficiency variance?

Question 19

Young's flexible-budget formula,where Y is defined as total cost and AH represents activity hours,is:

A)Y = $4.50AH + $24AH.
B)Y = $4.50AH + $720,000.
C)Y = $22.50AH.
D)Y = $180,000 + $18AH.
E)Y = $945,000.

Question 20

A flexible budget for 15,000 hours revealed variable manufacturing overhead of $90,000 and fixed manufacturing overhead of $120,000.The budget for 25,000 hours would reveal total overhead costs of $210,000.

Question 21

Which of the following elements is (are)needed in a straightforward calculation of the variable-overhead spending variance?

A)Variable overhead incurred during the period.
B)Budgeted variable overhead based on actual hours worked.
C)Standard variable overhead applied to production.
D)Elements "A" and "B" above.
E)Elements "A" and "C" abovE.

Question 22

Which of the following is used in the computation of the fixed overhead budget variance?

A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question 23

Assume that machine hours is the cost driver for overhead.The difference between the actual variable overhead incurred and the applied variable overhead is the:

A)volume variance.
B)production variance.
C)efficiency variance.
D)sum of the spending and efficiency variances.
E)spending variancE.

Question 24

The difference between the total actual factory overhead and the total factory overhead applied to production is the:

A)sum of the spending,efficiency,budget,and volume variances.
B)controllable variance.
C)efficiency variance.
D)spending variance.
E)volume variancE.

Question 25

A flexible budget for 15,000 hours revealed variable manufacturing overhead of $90,000 and fixed manufacturing overhead of $120,000.The budget for 25,000 hours would reveal total overhead costs of:

A)$210,000.
B)$270,000.
C)$290,000.
D)$350,000.
E)some other amount.

Question 26

What will cause the variable-overhead efficiency variance?

A)Efficient or inefficient use of a specific component of variable overhead (e.g. ,electricity).
B)Full or partial utilization of major equipment resources.
C)Production of units in excess of the number of units sold.
D)Efficient or inefficient use of the cost driver (e.g. ,machine hours)for variable overheaD.
E)Changes in the salary cost of manufacturing supervisors.

Question 27

Smithville uses labor hours to apply variable overhead to production.If the company's workers were very inefficient during the period,which of the following statements would be true about the variable-overhead efficiency variance?

A)The variance would be favorable.
B)The variance would be unfavorable.
C)The nature of the variance (favorable or unfavorable)would be unknown based on the facts presented.
D)The variance would be the same amount as the labor efficiency variance.
E)None of thesE.

Question 28

Which of the following variances would be useful to help control overhead spending?

A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question 29

A flexible budget is appropriate for a(n):

A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question 30

The activity measure selected for use in a variable- and fixed-overhead flexible budget:

A)should be stated in sales dollars.
B)should be approved by the company's president.
C)should vary in a similar behavior pattern to the way that variable overhead varies.
D)should remain fixeD.
E)should produce the most attractive results for the individual who will use the budget in managerial applications.

Question 31

A flexible budget is appropriate for a:

A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question 32

A flexible budget for 15,000 hours revealed variable manufacturing overhead of $90,000 and fixed manufacturing overhead of $120,000.The budget for 20,000 hours would reveal total overhead costs of:

A)$240,000.
B)$270,000.
C)$290,000.
D)$350,000.
E)$210,000.

Question 33

Which of the following is not an overhead variance?

A)Variable-overhead spending variance.
B)Variable-overhead volume variance.
C)Variable-overhead efficiency variance.
D)Fixed-overhead budget variance.
E)Fixed-overhead volume variancE.

Question 34

Which of the following is used in the computation of the variable-overhead spending variance?

A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question 35

Which of the following should have the strongest cause and effect relationship with overhead costs?

A)Cost followers.
B)Non-value-added costs.
C)Cost drivers.
D)Value-added costs.
E)Units of output.

Question 36

The manufacturing overhead applied to Work-in-Process Inventory by a company that uses standard costing would be computed as:

A)actual hours * a predetermined (standard)overhead rate.
B)standard hours * a predetermined (standard)overhead rate.
C)actual hours * an actual overhead rate.
D)standard hours * an actual overhead rate.
E)$0,because users of standard costing do not apply overhead to work in process.

Question 37

Which of the following is not an overhead variance?

A)Variable-overhead spending variance.
B)Variable-overhead efficiency variance.
C)Fixed-overhead efficiency variance.
D)Fixed-overhead budget variance.
E)Fixed-overhead volume variancE.

Question 38

Which of the following statements is/are correct concerning the application of overhead in a standard costing system driven by process hours?

A)A predetermined overhead rate is allowed only for fixed overhead.
B)Overhead application is based on standard process hours allowed.
C)Overhead application is based on actual process hours incurred.
D)Only prime costs are considered to be product costs in a standard costing system.
E)Only variable overhead costs are applied to production.

Question 39

The budget variance arises from a comparison of:

A)budgeted fixed overhead expenditures with budgeted fixed overhead costs.
B)actual fixed overhead costs with budgeted fixed overhead costs.
C)actual variable overhead expenditures with budgeted variable overhead costs.
D)variable overhead costs with budgeted fixed overhead costs.
E)static-budget amounts with flexible-budget amounts.

Question 40

With respect to overhead,what is the difference between normal costing and standard costing?

A)Use of a predetermined overhead rate.
B)Use of standard hours versus actual hours.
C)Use of a standard rate versus an actual rate.
D)The choice of an activity measure.
E)There is no differencE.

Question 41

Herman Company,which applies overhead to production on the basis of machine hours,reported the following data for the period just ended:
Actual units produced: 13,000
Actual fixed overhead incurred: $742,000
Standard fixed overhead rate: $15 per hour
Budgeted fixed overhead: $720,000
Planned level of machine-hour activity: 48,000
If Herman estimates four hours to manufacture a completed unit,the company's fixed-overhead budget variance would be:

A)$22,000 favorable.
B)$22,000 unfavorable.
C)$60,000 favorable.
D)$60,000 unfavorable.
E)some other amount.

Question 42

If Rowe prepared an overhead cost performance report,which of these overhead variances is likely to be excluded from the report?

A)Variable-overhead spending variance.
B)Variable-overhead efficiency variance.
C)Fixed-overhead budget variance.
D)Fixed-overhead volume variance.
E)None of the variances would be excluded.

Question 43

Luke,Inc.has a standard variable overhead rate of $5 per machine hour,with each completed unit expected to take three machine hours to produce.A review of the company's accounting records found the following:
Actual production: 19,500 units
Variable-overhead efficiency variance: $9,000U
Variable-overhead spending variance: $21,000F
What was Luke's actual variable overhead during the period?

A)$262,500.
B)$280,500.
C)$304,500.
D)$322,500.
E)Some other amount.

Question 44

Abbott's variable-overhead spending variance is:

A)$20,000 favorable.
B)$20,000 unfavorable.
C)$27,000 favorable.
D)$27,000 unfavorable.
E)not listed abovE.

Question 45

Benson's fixed-overhead volume variance is:

A)$10,000 favorable.
B)$15,000 favorable.
C)$15,000 unfavorable.
D)$20,000 favorable.
E)$20,000 unfavorablE.

Question 46

Robert Company,which applies overhead to production on the basis of machine hours,reported the following data for the period just ended:
Actual units produced: 12,000
Actual variable overhead incurred: $77,700
Actual machine hours worked: 18,800
Standard variable overhead cost per machine hour: $4.50
If Robert estimates 1.5 hours to manufacture a completed unit,the company's variable-overhead spending variance is:

A)$3,600 favorable.
B)$3,600 unfavorable.
C)$6,900 favorable.
D)$6,900 unfavorable.
E)some other amount not listed abovE.

Question 47

Benson's fixed-overhead budget variance is:

A)$10,000 favorable.
B)$15,000 favorable.
C)$15,000 unfavorable.
D)$20,000 favorable.
E)$20,000 unfavorablE.

Question 48

Abbott's variable-overhead efficiency variance is:

A)$20,000 favorable.
B)$20,000 unfavorable.
C)$27,000 favorable.
D)$27,000 unfavorable.
E)not listed abovE.

Question 49

Darling Company,which applies overhead to production on the basis of machine hours,reported the following data for the period just ended:
Actual units produced: 12,000
Actual fixed overhead incurred: $730,000
Actual machine hours worked: 60,000
Budgeted fixed overhead: $720,000
Planned level of machine-hour activity: 50,000
If Darling estimates four hours to manufacture a completed unit,the company's standard fixed overhead rate per machine hour would be:

A)$12.00.
B)$14.40.
C)$14.60.
D)$15.00.
E)some other amount.

Question 50

Atlanta Enterprises incurred $828,000 of fixed overhead during the period.During that same period,the company applied $845,000 of fixed overhead to production and reported an unfavorable budget variance of $41,000.How much was Atlanta's budgeted fixed overhead?

A)$787,000.
B)$804,000.
C)$869,000.
D)$886,000.
E)Not enough information to judgE.

Question 51

A fixed-overhead volume variance would normally arise when:

A)actual hours of activity coincide with actual units of production.
B)budgeted fixed overhead is less than (or greater than)applied fixed overhead.
C)there is a fixed-overhead budget variance.
D)actual fixed overhead exceeds budgeted fixed overheaD.
E)there is a variable-overhead efficiency variancE.
Overapplied overhead can also be the result of a budget variancE.

Question 52

Rich's fixed-overhead budget variance is:

A)$9,900U.
B)$9,900F.
C)$28,800U.
D)$28,800F.
E)some other amount.

Question 53

Rich's variable-overhead efficiency variance is:

A)$10,200U.
B)$10,200F.
C)$15,300U.
D)$15,300F.
E)some other amount.

Question 54

Which variance is commonly associated with measuring the cost of under- or over-utilization of plant capacity?

A)The variable-overhead spending variance.
B)The variable-overhead efficiency variance.
C)The fixed-overhead budget variance.
D)The fixed-overhead volume variance.
E)The total fixed-overhead variancE.

Question 55

The difference between budgeted fixed manufacturing overhead and the fixed overhead applied to production is the:

A)sum of the spending and efficiency variances.
B)controllable variance.
C)efficiency variance.
D)spending variance.
E)volume variancE.

Question 56

Martin Company,which applies overhead to production on the basis of machine hours,reported the following data for the period just ended:
Actual units produced: 9,000
Actual variable overhead incurred: $54,400
Actual machine hours worked: 16,000
Standard variable overhead cost per machine hour: $3.50
If Martin estimates two hours to manufacture a completed unit,the company's variable-overhead efficiency variance is:

A)$1,600 favorable.
B)$1,600 unfavorable.
C)$7,000 favorable.
D)$7,000 unfavorable.
E)some other amount not listed abovE.

Question 57

If Rowe desires to analyze variances that arose primarily from managers' expenditures in excess of anticipated amounts,the company should focus on variances that total:

A)$50,000U.
B)$70,000U.
C)$120,000U.
D)$178,000U.
E)some other amount.

Question 58

Enberg Company,which applies overhead to production on the basis of machine hours,reported the following data for the period just ended:
Actual units produced: 14,800
Actual fixed overhead incurred: $791,000
Standard fixed overhead rate: $13 per hour
Budgeted fixed overhead: $780,000
Planned level of machine-hour activity: 60,000
If Enberg estimates four hours to manufacture a completed unit,the company's fixed-overhead volume variance would be:

A)$10,400 favorable.
B)$10,400 unfavorable.
C)$11,000 favorable.
D)$11,000 unfavorable.
E)some other amount.

Question 59

Bushnell,Inc.has a standard variable overhead rate of $4 per machine hour,with each completed unit expected to take three machine hours to produce.A review of the company's accounting records found the following:
Actual variable overhead: $210,000
Variable-overhead efficiency variance: $18,000U
Variable-overhead spending variance: $30,000F
How many units did Bushnell actually produce during the period?

A)13,500.
B)16,500.
C)18,500.
D)21,500.
E)Some other amount.

Question 60

The standard variable overhead rate for May is:

A)$2.00.
B)$2.08.
C)$3.00.
D)$5.00.
E)$5.21.

Question 61

Draco's variable-overhead spending variance is:

A)$550 favorable.
B)$4,550 unfavorable.
C)$4,800 favorable.
D)$9,350 unfavorable.
E)not listed abovE.

Question 62

The company's sales-volume variance is:

A)$3,000 unfavorable.
B)$4,000 unfavorable.
C)$4,400 favorable.
D)$10,000 unfavorable.
E)$10,000 favorablE.

Question 63

Assume that the two separate pools are used.The flexible budget dollar amounts for the actual level of machine hours and actual number of setups are:

A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question 64

When actual variable cost per unit equals standard variable cost per unit,the difference between actual and budgeted contribution margin is explained by a combination of which two variances?

A)The sales-volume variance and the fixed-overhead volume variance.
B)The sales-volume variance and the fixed-overhead budget variance.
C)The sales-price variance and the fixed-overhead volume variance.
D)The sales-price variance and sales-volume variance.
E)The sales-price variance and fixed-overhead budget variancE.

Question 65

Hunters,Inc.uses a standard cost system when accounting for its sole product.Manufacturing overhead is applied to production on the basis of process hours.Planned activity is 60,000 process hours per month,which gives rise to the following per-unit standards:
Variable overhead: 13 hours at $15 per hour
Fixed overhead: 13 hours at $7 per hour
During September,5,100 units were produced and the company incurred the following overhead costs: variable,$942,500;fixed,$429,000.Actual process hours totaled 65,000.
Required:
A.Calculate the spending and efficiency variances for variable overhead.
A.Spending variance: $942,500 - (65,000 * $15)= $32,500F
Efficiency variance: (65,000 * $15)- (5,100 * 13 * $15)= $19,500F
B.Budget variance: $429,000 - (60,000 * $7)= $9,000U
Volume variance: (60,000 * $7)- (5,100 * 13 * $7)= $44,100F*
*Some accountants choose to label a negative volume variance as "favorable," while others prefer to omit the unfavorable/favorable label altogether.
B.Calculate the budget and volume variances for fixed overheaD.

Question 66

The company's sales-price variance is:

A)$3,000 unfavorable.
B)$7,000 unfavorable.
C)$7,000 favorable.
D)$7,500 unfavorable.
E)$7,500 favorablE.

Question 67

Jackson Corporation uses a standard cost system,applying manufacturing overhead on the basis of machine hours.The company's overhead standards per unit are shown below.
Variable overhead: 4 hours at $9 per hour
Fixed overhead: 4 hours at $6* per hour
*Based on planned monthly activity of 120,000 machine hours
Actual data for May were:
Number of units produced: 29,000
Number of machine hours worked: 125,000
Variable overhead costs incurred: $1,085,000
Fixed overhead costs incurred: $755,000
Required:
A.Calculate the spending and efficiency variances for variable overhead.
A.Spending variance: $1,085,000 - (125,000 * $9)= $40,000F
Efficiency variance: (125,000 *$9)- (29,000 * 4 * $9)= $81,000U
B.Budget variance: $755,000 - (120,000 * $6)= $35,000U
Volume variance: (120,000* $6)- (29,000 * 4 * $6)= $24,000U*
*Some accountants choose to label a positive volume variance as "unfavorable," while others prefer to omit the unfavorable/favorable label altogether.
B.Calculate the budget and volume variances for fixed overheaD.

Question 68

The amount of variable overhead that Draco applied to production is:

A)$158,400.
B)$160,000.
C)$163,200.
D)$167,750.
E)not listed abovE.

Question 69

Draco's fixed-overhead budget variance is:

A)$6,000 unfavorable.
B)$7,000 unfavorable.
C)$10,000 unfavorable.
D)$12,000 unfavorable.
E)not listed abovE.

Question 70

Assume that both cost pools are combined into a single pool,and labor hours is the driver.The total flexible budget for the actual level of labor hours and the total variance for the combined pool are:

A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question 71

Draco's fixed-overhead volume variance is:

A)$4,000 favorable.
B)$4,000 unfavorable.
C)$10,000 favorable.
D)$10,000 unfavorable.
E)not listed abovE.

Question 72

In an effort to reduce record-keeping,companies that sell perishable goods will often enter the standard cost of direct material,direct labor,and manufacturing overhead directly into what account?

A)Work-in-Process Inventory.
B)Finished-Goods Inventory.
C)Cost of Goods Sold.
D)Cost of Goods ManufactureD.
E)Sales RevenuE.

Question 73

The variable-overhead spending and efficiency variances are:

A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question 74

The Houston Chamber Orchestra presents a series of concerts throughout the year.Budgeted fixed costs total $300,000 for the concert season;variable costs are expected to average $5 per patron.The orchestra uses flexible budgeting.
Required:
A.Prepare a flexible budget that shows the expected costs of 8,000,8,500,and 9,000 patrons.
B.Construct the orchestra's flexible budget formula.
C.Assume that 8,700 patrons attended concerts during the year just ended,and actual costs were: variable,$42,000;fixed,$307,500.Evaluate the orchestra's financial performance by computing variances for variable costs and fixed costs.

Question 75

Hempstead Corporation plans to manufacture 8,000 units over the next month at the following costs: direct materials,$480,000;direct labor,$60,000;variable manufacturing overhead,$150,000;straight-line depreciation,$24,000,and other fixed manufacturing overhead,$272,000.The result is total budgeted cost of $990,000.
Shortly after the conclusion of the month,Hempstead reported the following costs:
A.

Budget calculations:
Direct materials used: $480,000 / 8,000 units = $60.00 per unit
Direct labor: $60,000 / 8,000 units = $7.50 per unit
Variable manufacturing overhead: $150,000 / 8,000 units = $18.75 per unit
A.Prepare a performance report that fairly compares budgeted and actual costs for the period just ended-namely,the report that the general manager likely used when assessing performance.
B.Should Krueger be praised for "having met the budget" or is the general manager's unhappiness justified? Explain,citing any apparent problems for the firm.
B.The general manager's unhappiness is appropriate because of the variances that have arisen.By comparing the original budget of $990,000 vs.actual costs of $988,100,Krueger appears to have met the budget.Bear in mind,though,that volume was below the original monthly expectation of 8,000 units-presumably because of the plant closure.A reduced volume will likely lead to lower variable costs than anticipated (and resulting favorable variances).
When the volume differential is removed,variable cost variances turn unfavorable for direct materials and direct labor.These two amounts are,respectively,13.5% and 28.9% greater than budget.

Question 76

What is the most common treatment of the fixed-overhead budget variance at the end of the accounting period?

A)Reported as a deferred charge or credit.
B)Allocated among Work-in-Process Inventory,Finished-Goods Inventory,and Cost of Goods Sold.
C)Charged or credited to Cost of Goods Sold.
D)Allocated among Cost of Goods Manufactured,Finished-Goods Inventory,and Cost of Goods SolD.
E)Charged or credited to Income Summary.

Question 77

The sales-volume variance equals:

A)(actual sales volume - budgeted sales volume)* actual sales price.
B)(actual sales volume - budgeted sales volume)* actual contribution margin.
C)(actual sales volume - budgeted sales volume)* budgeted sales price.
D)(actual sales price - budgeted sales price)* budgeted sales volume.
E)(actual sales price - budgeted sales price)* fixed-overhead volume variancE.

Question 78

Bavaria's budget for variable overhead and fixed overhead revealed the following information for an anticipated 40,000 hours of activity: variable overhead,$348,000;fixed overhead,$600,000.
The company actually worked 43,000 hours,and actual overhead incurred was: variable,$365,500;fixed,$608,000.
Required:
A.Compute the company's total cost variance for variable overhead and fixed overhead if the firm uses a static budget to help assess performance.
B.Repeat part "A" assuming the use of a flexible budget.
C.Flexible budgets are preferred in performance evaluations.The use of flexible budgets eliminates volume differences between actual and budgeted activity,allowing the analyst to concentrate on differences between actual and budgeted costs "on the same,level playing field." The result is a clearer picture to study.
C.Which of the two budgets (static or flexible)is preferred for performance evaluations? Why?

Question 79

The fixed-overhead budget and volume variances are:

A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question 80

Draco's variable-overhead efficiency variance is:

A)$550 favorable.
B)$550 unfavorable.
C)$4,800 favorable.
D)$4,800 unfavorable.
E)not listed abovE.