Deck 18: Standard Costs and Variances

Question 1

A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours. A fixed manufacturing overhead volume variance will necessarily occur in a month in which there is a fixed manufacturing overhead budget variance.

Answer 1

False

Question 2

A volume variance and an efficiency variance are computed for fixed manufacturing overhead costs.

Answer 2

False

Question 3

An unfavorable volume variance means that a firm operated at an activity level that was above the activity level planned for the period.

Answer 3

False

Question 4

Rameriz Company erred in selecting a denominator activity and chose a much higher level than was realistic. This error would most likely result in a large:

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

Question 5

A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours. The amount of overhead that the company would apply to finished production would ordinarily be the standard hours allowed for the actual units of finished output times the predetermined overhead rate per direct labor-hour.

Question 6

A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours. The company's choice of the denominator level of activity affects the Fixed component of the predetermined overhead rate.

Question 7

A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours. The company's choice of the denominator level of activity affects the Variable component of the predetermined overhead rate.

Question 8

The economic impact of the inability to reach a target denominator level of activity would best be measured by:

A)the amount of the volume variance.
B)the contribution margin lost by failing to meet the target denominator level of activity.
C)the amount of the fixed manufacturing overhead budget variance.
D)the amount of the variable overhead efficiency variance.

Question 9

The terms "standard quantity allowed" or "standard hours allowed" means:

A)the actual output in units multiplied by the standard output allowed.
B)the actual input in units multiplied by the standard output allowed.
C)the actual output in units multiplied by the standard input allowed.
D)the standard output in units multiplied by the standard input allowed.

Question 10

Moralez Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?

A)$380 unfavorable
B)$1,620 favorable
C)$1,660 unfavorable
D)$3,280 unfavorable

Question 11

The fixed manufacturing overhead budget variance is not controllable by managers because fixed costs are not controllable.

Question 12

The higher the denominator level of activity:

A)the higher the cost per unit of product.
B)the lower the cost per unit of product.
C)the less likely is the occurrence of a volume variance.
D)the more profitable operations likely will be.

Question 13

In a standard costing system where the denominator activity for the predetermined overhead rate is labor-hours, overhead costs are applied to work in process on the basis of actual hours worked.

Question 14

Overhead is applied to work in process in a standard costing system by:

A)multiplying actual hours times the predetermined rate.
B)multiplying standard hours allowed for the output of the period times the predetermined rate.
C)multiplying actual hours times the actual rate.
D)multiplying standard hours allowed for the output of the period times the actual rate.

Question 15

The fixed manufacturing overhead volume variance will be unfavorable if production volume is less than sales volume.

Question 16

In a standard cost system, the volume variance will be unfavorable when:

A)actual hours are greater than the denominator hours.
B)the standard hours allowed for the output of the period are less than the denominator hours.
C)the standard hours allowed for the output of the period are greater than the actual hours incurred.
D)actual hours are less than the denominator hours.

Question 17

If the fixed manufacturing overhead volume variance is unfavorable, too much has been spent on fixed manufacturing overhead items.

Question 18

Dosier Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: What was the fixed manufacturing overhead budget variance for the month?

A)$2,000 unfavorable
B)$2,000 favorable
C)$610 unfavorable
D)$610 favorable

Question 19

The budget variance represents the difference between the actual fixed manufacturing overhead cost incurred during a period and the budgeted fixed manufacturing overhead cost.

Question 20

In a standard costing system, underapplied or overapplied fixed manufacturing overhead is equal to the sum of the fixed manufacturing overhead budget variance and the fixed manufacturing overhead volume variance.

Question 21

Behring Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual fixed manufacturing overhead costs for the most recent month appear below: $\begin{array}{lrr}&\text { Original Budget }&\text {Actual Costs }\\\text { Fixed overhead costs: }\\\text {Supervision. }&\$3,840&\$3,880 \\\text { Utilities.}&5,120&4,900 \\\text {Factory depreciation. }&18,880&18,440 \\\text {Total overhead cost }&\$ 27,40&\$27,220\\\end{array}$ The company based its original budget on 3,200 machine-hours. The company actually worked 3,170 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 3,250 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

A)$435 favorable
B)$261 unfavorable
C)$435 unfavorable
D)$261 favorable

Question 22

Coskey Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the month appear below: $\begin{array}{l}&\text { Original Budget }&\text { Actual Costs }\\\text { Variable overhead costs: }\\\text {Supplies. }&\$ 16,770 & \$ 16,150 \\\text {Indirect labor. }&19,890 & 18,910\\\text { Fixed overhead costs: }\\\text { Supervision}&13,300 & 13,540 \\\text {Utilities. }&4,100 & 4,100 \\\text {Factory depreciation }&9,300 & 9,380 \\\text {Total overhead cost }&\$ 63,360 & \$ 62,080 \\\end{array}$ The company based its original budget on 3,900 machine-hours. The company actually worked 3,580 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 3,770 machine-hours. What was the overall fixed manufacturing overhead budget variance for the month?

A)$1,280 favorable
B)$320 favorable
C)$320 unfavorable
D)$1,280 unfavorable

Question 23

Rubyor Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $10.70 per machine-hour and fixed manufacturing overhead cost of $821,104 per period. If the denominator level of activity is 7,300 machine-hours, the variable element in the predetermined overhead rate would be:

A)$112.48
B)$123.18
C)$121.66
D)$10.70

Question 24

Meister Electronics Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company had budgeted its fixed manufacturing overhead cost at $68,800 for the month and its level of activity at 2,000 MHs. The actual total fixed manufacturing overhead was $73,300 for the month and the actual level of activity was 1,800 MHs. What was the fixed manufacturing overhead budget variance for the month to the nearest dollar?

A)$11,380 unfavorable
B)$4,500 unfavorable
C)$11,380 favorable
D)$4,500 favorable

Question 25

Sommers Fabrication Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) at $9.70 per MH. The company budgeted its fixed manufacturing overhead cost at $67,000 for the month. During the month, the actual total variable manufacturing overhead was $66,660 and the actual total fixed manufacturing overhead was $70,000. The actual level of activity for the period was 6,600 MHs. What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?

A)$2,640 unfavorable
B)$5,640 favorable
C)$2,640 favorable
D)$5,640 unfavorable

Question 26

Temores Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company's predetermined overhead rate for fixed manufacturing overhead is $1.50 per machine-hour and the denominator level of activity is 5,600 machine-hours. In the most recent month, the total actual fixed manufacturing overhead was $8,510 and the company actually worked 5,840 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 5,980 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

A)$360 favorable
B)$360 unfavorable
C)$570 favorable
D)$210 favorable

Question 27

Trecroci Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company bases its predetermined overhead rate on 2,500 machine-hours. The company's total budgeted fixed manufacturing overhead is $5,750. In the most recent month, the total actual fixed manufacturing overhead was $6,030. The company actually worked 2,600 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 2,490 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

A)$230 favorable
B)$280 unfavorable
C)$23 unfavorable
D)$230 unfavorable

Question 28

The Ammon Company uses a standard cost system in which manufacturing overhead is applied to units on the basis of standard machine-hours. During July, the company budgeted $350,000 in manufacturing overhead cost at a denominator activity of 25,000 machine-hours. At standard, each unit of finished product requires 5 machine-hours. The following cost and activity were recorded during July: The amount of overhead cost that the company applied to work in process for July was:

A)$292,500
B)$315,000
C)$322,000
D)$325,000

Question 29

Franklin's fixed manufacturing overhead budget variance for the year is:

A)$19,000 favorable
B)$25,000 favorable
C)$25,000 unfavorable
D)$19,000 unfavorable

Question 30

Heroman Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The budgeted fixed manufacturing overhead cost for the most recent month was $26,550 and the actual fixed manufacturing overhead cost for the month was $26,570. The company based its original budget on 5,900 machine-hours. The standard hours allowed for the actual output of the month totaled 5,750 machine-hours. What was the overall fixed manufacturing overhead budget variance for the month?

A)$20 unfavorable
B)$675 favorable
C)$20 favorable
D)$675 unfavorable

Question 31

Morisey Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $8.60 per machine-hour and fixed manufacturing overhead cost of $457,002 per period. If the denominator level of activity is 6,300 machine-hours, the predetermined overhead rate would be:

A)$81.14
B)$860.00
C)$72.54
D)$8.60

Question 32

The standard hours allowed for actual production for the year total:

A)247,500
B)396,000
C)400,000
D)495,000

Question 33

Heersink Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $10.50 per machine-hour and fixed manufacturing overhead cost of $108,108 per period. If the denominator level of activity is 2,700 machine-hours, the fixed element in the predetermined overhead rate would be:

A)$1,050.00
B)$40.04
C)$10.50
D)$50.54

Question 34

Franklin's variable overhead efficiency variance for the year is:

A)$33,000 unfavorable
B)$35,200 favorable
C)$35,200 unfavorable
D)$33,000 favorable

Question 35

Sultzer Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below: $\begin{array}{lrr}&\text { Original Budget }&\text {Actual Costs }\\\text { Fixed overhead costs: }\\\text {Supervision. }&\$ 18,900 & \$ 19,090 \\\text { Utilities.}&3,400 & 3,190 \\\text {Factory depreciation. }&9,800 & 9,660 \\\text {Total overhead cost }&\$ 32,100 & \$ 31,940 \\\end{array}$ The company based its original budget on 3,000 machine-hours. The company actually worked 2,730 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 2,690 machine-hours. What was the overall fixed manufacturing overhead budget variance for the month?

A)$3,317 favorable
B)$160 unfavorable
C)$3,317 unfavorable
D)$160 favorable

Question 36

Rostad Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below: $\begin{array}{l}&\text { Original Budget }&\text { Actual Costs }\\\text { Variable overhead costs: }\\\text {Supplies. }&\$ 7,100&\$7,290 \\\text {Indirect labor. }&10,650&10,000\\\text { Fixed overhead costs: }\\\text { Supervision}&14,910&14,420\\\text {Utilities. }&14,200&14,250 \\\text {Factory depreciation }&61,770&61,410 \\\text {Total overhead cost }&\$ 108,630&\$107,370 \\\end{array}$ The company based its original budget on 7,100 machine-hours. The company actually worked 7,060 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 6,990 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

A)$512 favorable
B)$512 unfavorable
C)$1,408 favorable
D)$1,408 unfavorable

Question 37

Jaune Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours (DLHs). The following data pertain to last month's operations: The fixed manufacturing overhead budget variance is:

A)$500 U
B)$500 F
C)$2,200 U
D)$1,700 U

Question 38

Jay Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours (DLHs). The information below pertains to a recent month's activity: The volume variance would be:

A)$300 F
B)$300 U
C)$150 F
D)$180 F

Question 39

Franklin's variable overhead rate variance for the year is:

A)$20,000 unfavorable
B)$22,000 favorable
C)$22,000 unfavorable
D)$20,000 favorable

Question 40

At the end of the year, actual manufacturing overhead costs were $110,000 and applied manufacturing overhead costs were $118,800. If the denominator activity for the year was 20,000 machine-hours, and if 22,000 standard machine-hours were allowed for the year's production, the predetermined overhead rate per machine-hour was:

A)$5.00
B)$5.94
C)$5.50
D)$5.40

Question 41

The fixed manufacturing overhead budget variance for March is:

A)$2,000 favorable
B)$500 favorable
C)$2,000 unfavorable
D)$2,500 favorable

Question 42

What was the fixed manufacturing overhead volume variance for the period to the nearest dollar?

A)$2,565 F
B)$2,810 F
C)$225 U
D)$2,585 F

Question 43

What is the predetermined overhead rate to the nearest cent?

A)$18.17 per MH
B)$18.31 per MH
C)$18.70 per MH
D)$18.84 per MH

Question 44

The variable overhead rate variance was:

A)$4,500 U
B)$10,500 U
C)$13,500 U
D)$16,500 U

Question 45

How much overhead was applied to products during the period to the nearest dollar?

A)$128,140
B)$130,601
C)$130,900
D)$127,160

Question 46

The variable overhead rate variance for maintenance cost for November was:

A)$7,420 unfavorable
B)$2,400 favorable
C)$9,820 unfavorable
D)$5,620 unfavorable

Question 47

The variable overhead rate variance for March is:

A)$7,000 unfavorable
B)$9,000 unfavorable
C)$13,000 unfavorable
D)$11,000 unfavorable

Question 48

The variable overhead efficiency variance was:

A)$6,000 U
B)$6,000 F
C)$12,000 U
D)$12,000 F

Question 49

The total predetermined overhead rate per machine-hour for November was:

A)$1.75
B)$2.40
C)$2.97
D)$1.40

Question 50

What was the variable overhead rate variance for the period to the nearest dollar?

A)$1,750 U
B)$820 F
C)$1,750 F
D)$820 U

Question 51

The variable overhead efficiency variance for March is:

A)$8,000 favorable
B)$4,000 favorable
C)$8,000 unfavorable
D)$4,000 unfavorable

Question 52

What was the variable overhead efficiency variance for the period to the nearest dollar?

A)$1,746 U
B)$70 U
C)$820 F
D)$74 U

Question 53

Franklin's fixed manufacturing overhead volume variance for the year is:

A)$6,000 unfavorable
B)$19,000 favorable
C)$25,000 favorable
D)$55,000 unfavorable

Question 54

The fixed manufacturing overhead budget variance for November was:

A)$2,970 unfavorable
B)$4,550 favorable
C)$7,520 favorable
D)$22,900 unfavorable

Question 55

What was the fixed manufacturing overhead budget variance for the period to the nearest dollar?

A)$1,800 U
B)$222 F
C)$1,010 U
D)$785 U

Question 56

The fixed manufacturing overhead volume variance for March is:

A)$1,000 favorable
B)$5,000 favorable
C)$2,500 unfavorable
D)$5,000 unfavorable

Question 57

The total amount of overhead cost applied to Work in Process during November was:

A)$47,520
B)$66,528
C)$106,528
D)$114,048

Question 58

The variable overhead efficiency variance for utilities cost for November was:

A)$2,760 favorable
B)$3,760 unfavorable
C)$3,760 favorable
D)$1,000 favorable

Question 59

The fixed manufacturing overhead budget variance was:

A)$750 F
B)$3,750 F
C)$7,500 F
D)$3,000 U

Question 60

The fixed manufacturing overhead applied to Franklin's production for the year is:

A)$484,200
B)$575,000
C)$594,000
D)$600,000

Question 61

What was the fixed manufacturing overhead budget variance for the period to the nearest dollar?

A)$881 U
B)$484 U
C)$395 U
D)$1,500 F

Question 62

What is the predetermined overhead rate to the nearest cent?

A)$13.40
B)$13.61
C)$13.81
D)$13.20

Question 63

The volume variance was:

A)$2,000 favorable
B)$2,600 unfavorable
C)$1,000 favorable
D)$800 favorable

Question 64

The fixed manufacturing overhead volume variance as:

A)$7,500 F
B)$1,500 F
C)$3,750 U
D)$7,500 U

Question 65

The amount of fixed manufacturing overhead cost contained in the company's budget for February is:

A)$27,000
B)$27,550
C)$25,200
D)$29,350

Question 66

The fixed manufacturing overhead budget variance for October was:

A)$48,000 Unfavorable
B)$150,000 Unfavorable
C)$300,000 Favorable
D)$390,000 Unfavorable

Question 67

The volume variance for July is:

A)$1,131 F
B)$900 F
C)$1,131 U
D)$900 U

Question 68

The Fixed component of the predetermined overhead rate for June is:

A)$3.11
B)$3.39
C)$3.77
D)$3.00

Question 69

How much fixed manufacturing overhead was applied to products during the period to the nearest dollar?

A)$85,571
B)$84,690
C)$86,190
D)$85,085

Question 70

The denominator activity level in direct labor-hours used by Hawkins in setting the predetermined overhead rate for February is:

A)9,300 hours
B)8,400 hours
C)9,000 hours
D)8,700 hours

Question 71

The fixed manufacturing overhead cost applied to work in process was:

A)$27,400
B)$30,000
C)$30,850
D)$13,700

Question 72

What was the fixed manufacturing overhead budget variance for the period to the nearest dollar?

A)$4,286 F
B)$1,800 U
C)$2,775 F
D)$1,575 F

Question 73

What was the fixed manufacturing overhead volume variance for the period to the nearest dollar?

A)$2,486 U
B)$1,511 U
C)$975 U
D)$2,653 U

Question 74

The fixed element of the predetermined overhead rate was (per DLH):

A)$4.15
B)$3.00
C)$2.00
D)$1.15

Question 75

What is the predetermined fixed manufacturing overhead rate to the nearest cent?

A)$11.05 per MH
B)$11.19 per MH
C)$11.00 per MH
D)$10.86 per MH

Question 76

The variable overhead efficiency variance for October was:

A)$40,000 Favorable
B)$60,000 Favorable
C)$160,000 Unfavorable
D)$210,000 Unfavorable

Question 77

The fixed manufacturing overhead budget variance was:

A)$3,450 unfavorable
B)$3,450 favorable
C)$850 unfavorable
D)$1,200 favorable

Question 78

How much overhead was applied to products during the period to the nearest dollar?

A)$86,394
B)$88,440
C)$89,760
D)$92,555

Question 79

The variable overhead rate variance for October was:

A)$60,000 Favorable
B)$110,000 Unfavorable
C)$100,000 Unfavorable
D)$140,000 Unfavorable

Question 80

The variable element of the predetermined overhead rate was (per DLH):

A)$4.15
B)$3.00
C)$2.00
D)$1.15