Question 1

Bannister Motors Corporation reported the following variances for the period just ended:  If Bannister desires to analyze variances that arose primarily from managers' expenditures in excess of anticipated amounts, the company should focus on variances that total:

Accepted Answer

A) $50,000U. 
B) $70,000U. 
C) $120,000U. 
D) $178,000U. 
E) None of the answers is correct.

Question 2

The overhead cost performance report includes spending and eﬃciency variances for both variable and ﬁxed items.

Accepted Answer

A) True 
 B)False

Question 3

Chong Corporation recently prepared a ﬂexible budget for water usage at its manufacturing plant.Budgeted water cost at various projected production levels is as follows:  Actual units produced amounted to 60,000.Actual cost incurred for water usage was $4,500.What was Chong's cost variance for water?

Accepted Answer

A) $300 favorable. 
B) $500 unfavorable. 
C) $1,500 favorable. 
D) $2,700 favorable. 
E) None of the answers is correct.

Question 4

The Step Company has the following information for the year just ended:  The Step Company's sales-price variance is:

Accepted Answer

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

Question 5

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?

Accepted Answer

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 6

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:

Accepted Answer

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

Question 7

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

Accepted Answer

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

Question 8

Pocono Co.uses a standard costing system and a standard overhead rate of $12 per process hour.Pocono's Production Overhead account shows a debit of $365,780 for the month.The company produced 7,900 products and used 30,800 process hours.The standard for each product is 4 process hours.What amount did Pocono Co. credit to the Production Overhead account for the month?

Accepted Answer

A) $3,820. 
B) $369,600. 
C) $379,200. 
D) $13,420. 
E) None of the answers is correct.

Question 9

Seven Falls Cuisines has the following ﬂexible-budget formula: Y = $13PH + $450,000 where PH is deﬁned as process hours. What is Seven Falls' budgeted total cost if its process hours equal 25,000?

Accepted Answer

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

Question 10

The units of output are meaningful measures in multiproduct ﬁrms.

Accepted Answer

A) True 
 B)False

Question 11

A ﬂexible budget:

Accepted Answer

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 both preferred over a static budget in the evaluation of performance and can be used to compare

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

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

Question 14

Institute Technologies is choosing new cost drivers for its accounting system.One driver is labor hours; the other is a combination of machine hours for unit variable costs and number of setups for a pool of batch-level costs.Data for the past year follow.

Accepted Answer

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

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Sigmo Company, which uses a standard cost system, budgeted $800,000 of ﬁxed overhead when 50,000 machine hours were anticipated.Other data for the period were: Actual units produced: 10,600 Actual machine hours worked: 51,800 Actual variable overhead incurred: $475,000 Actual ﬁxed overhead incurred: $790,100 Standard variable overhead rate per machine hour: $8.50 Standard production time per unit: 5 hours Sigmo's ﬁxed-overhead budget variance is:

Accepted Answer

A) $9,900U. 
B) $9,900F. 
C) $28,800U. 
D) $28,800F. 
E) None of the answers is correct.

Question 17

Priority 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 Priority estimates two hours to manufacture a completed unit, the company's variable-overhead eﬃciency variance is:

Accepted Answer

A) $1,600 favorable. 
B) $1,600 unfavorable. 
C) $7,000 favorable. 
D) $7,000 unfavorable. 
E) None of the answers is correct.

Question 18

Approach 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 Approach estimates four hours to manufacture a completed unit, the company's ﬁxed-overhead volume variance would be:

Accepted Answer

A) $10,400 negative. 
B) $10,400 positive. 
C) $11,000 negative. 
D) $11,000 positive. 
E) None of the answers is correct.

Question 19

The Step Company has the following information for the year just ended:  The Step Company's sales-volume variance is:

Accepted Answer

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

Question 20

Barrington Industries 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, Barrington would report a cost variance of:

Accepted Answer

A) $6,300U. 
B) $6,300F. 
C) $8,700U. 
D) $8,700F. 
E) None of the answers is correct.

Exam 11: Flexible Budgeting and Analysis of Overhead Costs

Bannister Motors Corporation reported the following variances for the period just ended: If Bannister desires to analyze variances that arose primarily from managers' expenditures in excess of anticipated amounts, the company should focus on variances that total:

The overhead cost performance report includes spending and eﬃciency variances for both variable and ﬁxed items.

The Step Company has the following information for the year just ended: The Step Company's sales-price variance is:

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 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:

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

Seven Falls Cuisines has the following ﬂexible-budget formula: Y = $13PH + $450,000 where PH is deﬁned as process hours. What is Seven Falls' budgeted total cost if its process hours equal 25,000?

The units of output are meaningful measures in multiproduct ﬁrms.

A ﬂexible budget:

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

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

Institute Technologies is choosing new cost drivers for its accounting system.One driver is labor hours; the other is a combination of machine hours for unit variable costs and number of setups for a pool of batch-level costs.Data for the past year follow.

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

The Step Company has the following information for the year just ended: The Step Company's sales-volume variance is: