Question 1

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

Accepted Answer

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

Question 2

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:

Accepted Answer

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

Question 3

A flexible budget is appropriate for a(n):

Accepted Answer

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

Question 4

Briefly describe the procedures that are used to apply manufacturing overhead to production for companies that use (1)normal costing systems and (2)those that use standard costing systems.

Accepted Answer

The answer of Briefly describe the procedures that are used...

Question 5

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.

Accepted Answer

A) True 
 B)False

Question 6

The budget variance arises from a comparison of:

Accepted Answer

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 7

Which of the following is not an overhead variance?

Accepted Answer

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 8

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:

Accepted Answer

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

Question 9

Abbott's variable-overhead spending variance is:

Accepted Answer

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

Question 10

Rich's variable-overhead efficiency variance is:

Accepted Answer

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

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 characterized by choices "B" and "D" abovE.

Question 12

What is Gourmet's 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 13

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?

Accepted Answer

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

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?

Accepted Answer

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

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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?

Accepted Answer

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

Question 17

Benson'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 18

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

Accepted Answer

A) True 
 B)False

Question 19

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) Elements "A" and "B" above. 
E) Elements "A" and "C" abovE.

Question 20

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

Accepted Answer

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.

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

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

A flexible budget is appropriate for a(n) :

Briefly describe the procedures that are used to apply manufacturing overhead to production for companies that use (1)normal costing systems and (2)those that use standard costing systems.

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.

The budget variance arises from a comparison of:

Which of the following is not an overhead variance?

Abbott's variable-overhead spending variance is:

Rich's variable-overhead efficiency variance is:

A flexible budget:

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

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

Benson's fixed-overhead budget variance is:

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

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

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