Question 1

What is the overhead production volume variance for Terry Company for the period?

Accepted Answer

A) $600 favorable. 
B) $1,000 unfavorable. 
C) $1,200 unfavorable. 
D) $1,400 favorable. 
E) $1,400 unfavorablE.Production volume variance = Budgeted fixed OH - Standard FOH applied to production = $11,000 (given) - (4,000 hours × $2.50/DLH) = $11,000 - $10,000 = $1,000 unfavorable

Question 2

The variable factory overhead efficiency variance is:

Accepted Answer

A) $600 unfavorable. 
B) $1,000 favorable. 
C) $1,400 unfavorable. 
D) $1,500 favorable. 
E) $2,100 favorable.

Question 3

Dillard, Inc., has developed the following standard cost data based on a denominator volume of 60,000 direct labor hours (DLHs). Budgeted fixed overhead is $360,000 and budgeted variable overhead is $180,000 at this level of activity.  During the last period, the company used 48,000 DLHs to produce 128,000 units. It incurred the following manufacturing costs:  Required: Determine all variances for direct materials, direct labor, and factory overhead. Use a 4-variance breakdown (decomposition) of the total overhead variance for the period. Note: this problem requires knowledge from Chapter 14.

Accepted Answer

The answer of Dillard, Inc., has developed the following standard...

Question 4

Intangible attributes often play dominant roles in determining the value of outputs from a service organization. These characteristics often lead service firms to rely on:

Accepted Answer

A) Input-related measures for measuring and monitoring operations. 
B) Intuitive judgment in monitoring operations. 
C) Quantitative measures of output. 
D) Qualitative measures exclusively for measuring and monitoring operations. 
E) Output-related measures for measuring and monitoring operations.

Question 5

Random variances are:

Accepted Answer

A) Often considered as uncontrollable from the standpoint of management. 
B) Likely to recur until corrected. 
C) The result of failing to include all relevant variables in the analysis. 
D) The result of in including wrong or irrelevant variables in the variance-investigation model. 
E) Controlled through the use of six sigma and other techniques from operations management.

Question 6

The total underapplied or overapplied factory overhead in April for Neptune, Inc. is:

Accepted Answer

A) $1,900 underapplied. 
B) $1,900 overapplied. 
C) $3,200 underapplied. 
D) $3,200 overapplied. 
E) $5,100 overapplied.

Question 7

A payoff table for variance investigation that measures the cost of two states of nature and possible alternative actions by management will have:

Accepted Answer

A) Four combinations. 
B) Three combinations. 
C) Only two realistic combinations. 
D) Only idealistic combinations. 
E) One combination for each probability level.

Question 8

What is the factory overhead efficiency variance for May under the assumption that Gerhan uses a four-variance breakdown (decomposition) of the total overhead variance?

Accepted Answer

A) $180 unfavorable. 
B) $380 favorable. 
C) $380 unfavorable. 
D) $480 unfavorable. 
E) $480 favorable.

Question 9

A standard costing system will produce the same income as an actual costing system when end-of-period standard cost variances are assigned:

Accepted Answer

A) Only to work-in-process (WIP) inventory. 
B) Only to finished goods inventory. 
C) To work-in-process and finished goods inventories. 
D) Entirely to cost of goods sold. 
E) To cost of goods sold and all inventory accounts.

Question 10

The total overhead flexible-budget (FB) variance for the period is:

Accepted Answer

A) $800 unfavorable. 
B) $1,400 unfavorable. 
C) $2,000 unfavorable. 
D) $2,600 unfavorable. 
E) $3,000 unfavorable.

Question 11

McAllister Company's master budget for the year just completed was based on 100% capacity and included 40,000 machine hours and $240,000 total factory overhead. The budgeted fixed overhead at 75% of factory capacity would be $160,000 (and 30,000 machine hours). The company actually operated at 90% capacity for the year, and incurred $252,000 total factory overhead.
Required:
1. Determine the factory overhead flexible-budget variance for the year. Show calculations.
2. Calculate the factory overhead production volume variance for the year. Show calculations.

Accepted Answer

The answer of McAllister Company's master budget for the year...

Question 12

What is the total factory overhead flexible-budget variance for Gerhan Company in May?

Accepted Answer

A) $380 unfavorable. 
B) $680 unfavorable. 
C) $860 unfavorable. 
D) $1,160 unfavorable. 
E) $1,360 unfavorable.

Question 13

ABN Corp. has the following information about its standards and production activity in May:  Required: Calculate and show calculations for each of the following variances:
1. Variable overhead flexible-budget (FB) variance.
2. Fixed overhead spending variance.
3. Fixed overhead production volume variance.
4. Provide and interpretation of each of the above variances.

Accepted Answer

The answer of ABN Corp. has the following information about...

Question 14

Under a three-variance breakdown (decomposition) of the total factory overhead variance, the factory overhead efficiency variance is:

Accepted Answer

A) $400 favorable. 
B) $600 unfavorable. 
C) $1,400 favorable. 
D) $1,400 unfavorable. 
E) $2,000 favorable.

Question 15

Among characteristics that distinguish service and manufacturing firms are the:

Accepted Answer

A) Absence of output inventory in service firms. 
B) Existence of labor-intensive products in manufacturing firms. 
C) Rendering of identical services in a service firm. 
D) Capital intensiveness of service firms. 
E) Organizational structure of service firms.

Question 16

The difference between the total actual overhead cost incurred during a period and budgeted total factory overhead for the actual quantity of the cost driver used to apply overhead is equal to the:

Accepted Answer

A) Total overhead spending variance. 
B) Total overhead efficiency variance. 
C) Factory overhead production-volume variance. 
D) Total overhead rate variance. 
E) Total overhead variance.

Question 17

Under a three-way breakdown (decomposition) of the total overhead variance, what is the total factory overhead spending variance for Zero Company in December?

Accepted Answer

A) N/A-this variance doesn't exist under a three-way breakdown of the total overhead variance. 
B) $225 favorable. 
C) $425 unfavorable. 
D) $560 unfavorable. 
E) $600 unfavorable

Question 18

Finding a single cost driver that changes in the same proportion as variable factory overhead costs is:

Accepted Answer

A) Simplified by breaking out the fixed portion of overhead cost. 
B) The first step in variable overhead cost assignment. 
C) Difficult but manageable using advanced statistical techniques. 
D) An important goal of effective cost system design. 
E) Virtually impossible because of the underlying nature of variable overhead costs.

Question 19

The factory overhead production volume variance for Bonehead Co. this period is:

Accepted Answer

A) $4,000 unfavorable. 
B) $7,000 favorable. 
C) $10,000 favorable. 
D) $11,000 unfavorable. 
E) $14,000 unfavorable.

Question 20

Which one of the following reflects both price (rate) as well as efficiency (quantity) effects regarding variable overhead items?

Accepted Answer

A) Variable overhead production-volume variance. 
B) Variable overhead rate variance. 
C) Variable overhead spending variance. 
D) Variable usage variance. 
E) Variable overhead efficiency variance.

Exam 15: Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management