Question 1

Which of the following is not a plausible cause of a systematic variance?

Accepted Answer

A) Prediction error. 
B) Modeling error. 
C) Implementation error. 
D) Measurement error. 
E) Random error.

Question 2

Which of the following statement is true regarding choice of the denominator volume level in conjunction with the process of allocating fixed manufacturing costs to production?

Accepted Answer

A) The choice typically will affect end-of-period asset values,but not the production-volume variance for the period. 
B) The choice is important only if the company in question uses variable costing. 
C) Under absorption (full)costing,this choice can affect reported profits for the period. 
D) This choice has no effect on the standard overhead cost-allocation rate. 
E) The choice affects the standard overhead cost-allocation rate but not product cost.

Question 3

At the denominator activity level,Norland Company's total overhead budget for 25,000 units of production shows variable overhead costs of $36,000 and fixed overhead costs of $32,000.During the most recent period,the company incurred total overhead costs of $61,400 to manufacture 20,000 units.The total factory overhead variance is:

Accepted Answer

A) $200 favorable. 
B) $600 unfavorable. 
C) $6,000 unfavorable. 
D) $6,600 favorable. 
E) $7,000 unfavorable.

Question 4

You are provided with the following summary of overhead-related costs for the most recent accounting period for a company that uses a single overhead account,Factory Overhead,into which it records both actual and standard overhead costs during the period:

Accepted Answer

The answer of You are provided with the following summary...

Question 5

The difference between total factory overhead cost incurred during a period and the total standard factory overhead cost assigned to production of the period is the ______________

Accepted Answer

A) Flexible-budget variance. 
B) Production-volume variance. 
C) Total factory overhead variance. 
D) Overhead efficiency variance. 
E) Total overhead spending variance.

Question 6

You are provided with the following summary of overhead-related costs for the most recent accounting period:

Accepted Answer

The answer of You are provided with the following summary...

Question 7

In a standard cost system,when production is greater than the denominator volume level,there will be:

Accepted Answer

A) An unfavorable production-volume variance. 
B) An unfavorable total spending variance. 
C) A favorable production-volume variance. 
D) A favorable sales-volume variance. 
E) A favorable overhead budget variance.

Question 8

Oslund Company manufactures only one product and uses a standard cost system.During the past month,the following variances were observed: 
Oslund applies variable overhead using a standard rate of $20 per standard DLH allowed.During the month,Oslund used 20% more DLHs than the total standard hours for the units manufactured.What were the total actual direct hours worked?

Accepted Answer

A) 1,200. 
B) 3,000. 
C) 4,800. 
D) 6,000. 
E) 7,200.

Question 9

Carl Jones Company's master budget for the year just completed was based on 100% capacity and included 50,000 machine hours and $300,000 total factory overhead.(That is,the denominator volume,for purposes of calculating the fixed overhead application rate,is defined as 100% capacity. )Budgeted fixed overhead at 70% factory capacity is $200,000 (and 35,000 machine hours).The company operated at 80% capacity for the year,and incurred $275,000 total factory overhead.
Required: (a)Determine the factory overhead flexible-budget variance for the year just completed.Show calculations.(b)Calculate the factory overhead production-volume variance for the year just completed.Show calculations.(c)Supply an interpretation of each of the two variances calculated above.

Accepted Answer

The answer of Carl Jones Company's master budget for the...

Question 10

In deciding whether to further investigate a variance,managers usually:

Accepted Answer

A) Investigate all variances determined to be systematic in nature. 
B) Investigate all variances under a prescribed percentage limit. 
C) Investigate all variances associated with factory overhead spending. 
D) Investigate all variances over a given dollar amount or percentage. 
E) Investigate all flexible-budget but not volume-related variances.

Question 11

Neptune Inc.uses a standard cost system and has the following information for April: 
The total factory overhead flexible-budget variance is:

Accepted Answer

A) $940 unfavorable. 
B) $1,040 favorable. 
C) $1,980 favorable. 
D) $2,160 favorable.

Question 12

A deviation from standard because of the failure to include one or more relevant variables,or the inclusion of the wrong or irrelevant variables in the standard-setting process is an example of a(n):

Accepted Answer

A) Random error. 
B) Prediction error. 
C) Implementation error. 
D) Modeling error. 
E) Measurement error.

Question 13

The difference between the actual fixed overhead cost incurred during a period and the budgeted fixed overhead cost for the period is the:

Accepted Answer

A) Fixed overhead efficiency variance. 
B) Fixed overhead production-volume variance. 
C) Fixed overhead spending variance. 
D) Fixed overhead rate variance. 
E) Fixed overhead sales-volume variance.

Question 14

Bonehead Co.has the following factory overhead costs: 
The total overhead flexible-budget (FB)variance is:

Accepted Answer

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

Question 15

The difference between actual overhead costs incurred during the period and the overhead in the flexible budget based on the output for the period is called the:

Accepted Answer

A) Total overhead spending variance. 
B) Total overhead efficiency variance. 
C) Production-volume variance. 
D) Overhead flexible-budget variance. 
E) Total overhead variance.

Question 16

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: 
The standard fixed overhead application rate is:

Accepted Answer

A) $1.00 per machine hour. 
B) $2.00 per machine hour. 
C) $3.00 per machine hour. 
D) $4.00 per machine hour. 
E) $5.00 per machine hour.

Question 17

In terms of allocating fixed overhead cost to products,generally accepted accounting principles:

Accepted Answer

A) Require that such allocations be based on normal capacity. 
B) Allow for the use of either practical capacity or theoretical capacity. 
C) Don't apply since the resulting data are used only internally (for control purposes). 
D) Specify only that such costs be "reasonably allocated" to outputs.

Question 18

Air Inc.uses a standard cost system.Overhead cost information for Product CX10 for the month of October is as follows: 
What is the total overhead variance for October?

Accepted Answer

A) $300 unfavorable. 
B) $500 favorable. 
C) $800 favorable. 
D) $4,100 unfavorable. 
E) $4,600 unfavorable.

Question 19

Which of the following is a characteristic of calculating standard cost variances for manufacturing overhead costs under an activity-based cost (ABC)system?

Accepted Answer

A) Only non-volume-related cost drivers are used in the cost-allocation process. 
B) An ABC system would likely have a greater number of standard cost variances reported each period. 
C) Fewer variances need to be reported,compared to the number of overhead variances calculated under a traditional cost system. 
D) Flexible budgets are used for planning but not cost-control purposes. 
E) The flexible budget variance will be the same under both a traditional cost system and an ABC system.

Question 20

The following information is available from the Taro Company: 
What is the total overhead efficiency variance for the period?

Accepted Answer

A) $750 favorable. 
B) $750 unfavorable. 
C) $950 favorable. 
D) $1,150 unfavorable. 
E) $1,150 favorable.

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

Which of the following is not a plausible cause of a systematic variance?

Which of the following statement is true regarding choice of the denominator volume level in conjunction with the process of allocating fixed manufacturing costs to production?

You are provided with the following summary of overhead-related costs for the most recent accounting period for a company that uses a single overhead account,Factory Overhead,into which it records both actual and standard overhead costs during the period:

The difference between total factory overhead cost incurred during a period and the total standard factory overhead cost assigned to production of the period is the ______________

You are provided with the following summary of overhead-related costs for the most recent accounting period:

In a standard cost system,when production is greater than the denominator volume level,there will be:

In deciding whether to further investigate a variance,managers usually:

Neptune Inc.uses a standard cost system and has the following information for April: The total factory overhead flexible-budget variance is:

A deviation from standard because of the failure to include one or more relevant variables,or the inclusion of the wrong or irrelevant variables in the standard-setting process is an example of a(n) :

The difference between the actual fixed overhead cost incurred during a period and the budgeted fixed overhead cost for the period is the:

Bonehead Co.has the following factory overhead costs: The total overhead flexible-budget (FB) variance is:

The difference between actual overhead costs incurred during the period and the overhead in the flexible budget based on the output for the period is called the:

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: The standard fixed overhead application rate is:

In terms of allocating fixed overhead cost to products,generally accepted accounting principles:

Air Inc.uses a standard cost system.Overhead cost information for Product CX10 for the month of October is as follows: What is the total overhead variance for October?

Which of the following is a characteristic of calculating standard cost variances for manufacturing overhead costs under an activity-based cost (ABC) system?

The following information is available from the Taro Company: What is the total overhead efficiency variance for the period?