Question 1

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

Accepted Answer

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

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Nerve Pain Innovations 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 Nerve Pain's ﬂexible budget (Y) for the preceding cost function?

Accepted Answer

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

Question 4

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

Accepted Answer

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

Question 5

Zhou, Inc.is planning its overhead costs 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 Zhou's major competitors likely goes bankrupt.A ﬂexible overhead budget would best be based on:

Accepted Answer

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 6

Commerce Corporation has a high probability of operating at 40,000 activity hours during the upcoming period, and lower probabilities of operating at 30,000 hours and 50,000 hours.The company's ﬂexible budget revealed the following:  If Commerce operated at 35,000 hours, its total budgeted cost would be:

Accepted Answer

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

Question 7

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

Accepted Answer

A) Variable overhead incurred during the period. 
B) Budgeted variable overhead based on actual hours worked. 
C) Standard variable overhead applied to production. 
D) Both variable overhead incurred during the period and budgeted variable overhead based on actual 
E) Both variable overhead incurred during the period and standard variable overhead applied to production.

Question 8

Which of the following is not an overhead variance?

Accepted Answer

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 9

One of the accountants at Agave Industries is attempting to identify the activity measure best suited to use for the ﬂexible budget.Based on the limited information provided, which of the following activity measures should be used for the ﬂexible budget?

Accepted Answer

A) Labor cost. 
B) Set-ups. 
C) Machine hours. 
D) Labor hours. 
E) None of the answers is correct.

Question 10

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

Accepted Answer

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 11

The sales-price variance is the difference between the actual and budgeted sales prices multiplied by the actual sales volume.

Accepted Answer

A) True 
 B)False

Question 12

The advantage of dollar measures as a basis for ﬂexible overhead budgeting is that they are relatively stable overtime.

Accepted Answer

A) True 
 B)False

Question 13

A static budget:

Accepted Answer

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 14

Messenger, 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 Messenger's actual variable overhead during the period?

Accepted Answer

A) $262,500. 
B) $280,500. 
C) $304,500. 
D) $322,500. 
E) None of the answers is correct.

Question 15

Forward Venture Company, which uses a standard cost system, budgeted $600,000 of ﬁxed overhead when 40,000 machine hours were anticipated.Other data for the period were: Actual units produced: 10,000 Standard production time per unit: 3.9 machine hours Fixed overhead incurred: $620,000 Actual machine hours worked: 42,000 Forward Venture Company's ﬁxed-overhead budget variance is:

Accepted Answer

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

Question 16

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?

Accepted Answer

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

Question 17

Forward Venture Company, which uses a standard cost system, budgeted $600,000 of ﬁxed overhead when 40,000 machine hours were anticipated.Other data for the period were: Actual units produced: 10,000 Standard production time per unit: 3.9 machine hours Fixed overhead incurred: $620,000 Actual machine hours worked: 42,000 Forward Venture Company's ﬁxed-overhead volume variance is:

Accepted Answer

A) $10,000 negative. 
B) $15,000 negative. 
C) $15,000 positive. 
D) $20,000 negative. 
E) $20,000 positive.

Question 18

The overhead cost performance report presents itemized variances along with actual and budgeted costs for each overhead item.

Accepted Answer

A) True 
 B)False

Question 19

Match Point, Inc.has the following overhead standards: Variable overhead: 4 hours at $8 per hour Fixed overhead: 4 hours at $10 per hour The standards were based on a planned activity of 20,000 machine hours when 5,000 units were scheduled for production.Actual data follow. Variable overhead incurred: $167,750 Fixed overhead incurred: $210,000 Machine hours worked: 19,800 Actual units produced: 5,100 The amount of variable overhead that Match Point applied to production is:

Accepted Answer

A) $158,400. 
B) $160,000. 
C) $163,200. 
D) $167,750. 
E) None of the answers is correct.

Question 20

Match Point, Inc.has the following overhead standards: Variable overhead: 4 hours at $8 per hour Fixed overhead: 4 hours at $10 per hour The standards were based on a planned activity of 20,000 machine hours when 5,000 units were scheduled for production.Actual data follow. Variable overhead incurred: $167,750 Fixed overhead incurred: $210,000 Machine hours worked: 19,800 Actual units produced: 5,100 Match Point's ﬁxed-overhead volume variance is:

Accepted Answer

A) $4,000 negative. 
B) $4,000 positive. 
C) $10,000 negative. 
D) $10,000 positive. 
E) None of the answers is correct.

Exam 11: Flexible Budgeting and Analysis of Overhead Costs

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

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

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

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

Which of the following is not an overhead variance?

One of the accountants at Agave Industries is attempting to identify the activity measure best suited to use for the ﬂexible budget.Based on the limited information provided, which of the following activity measures should be used for the ﬂexible budget?

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

The sales-price variance is the difference between the actual and budgeted sales prices multiplied by the actual sales volume.

The advantage of dollar measures as a basis for ﬂexible overhead budgeting is that they are relatively stable overtime.

A static budget:

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?

The overhead cost performance report presents itemized variances along with actual and budgeted costs for each overhead item.