Question 1

Wolle Corporation estimates that its variable manufacturing overhead is $11.60 per machine-hour and its fixed manufacturing overhead is $298,936 per period.
-If the denominator level of activity is 4,300 machine-hours,the variable element in the predetermined overhead rate would be:

Accepted Answer

A) $11.60 
B) $79.54 
C) $69.52 
D) $81.12

Question 2

The fixed manufacturing overhead budget variance and the fixed manufacturing overhead volume variance taken together explain the difference between the actual fixed manufacturing overhead cost incurred and the fixed manufacturing overhead cost applied to production.

Accepted Answer

A) True 
 B)False

Question 3

If the standard hours allowed for the actual output of the period is greater than the denominator level of activity (in hours),then the overhead budget variance will be unfavorable.

Accepted Answer

A) True 
 B)False

Question 4

A furniture manufacturer has a standard costing system based on standard direct labor-hours (DLHs)as the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below: $\begin{array}{llcc}
  \text {Denominator level of activity  } &1,100\quad\text { DLHs }\
 \text { Overhead costs at the denominator activity level: } &\
 \text { Variable overhead cost } &\$7,920\
 \text { Fixed overhead cost } &\$10,120\
\end{array}$
 The following data pertain to operations for the most recent period: $\begin{array}{lrc}
\text { Actual hours ................................................ } & 1,200& \text { DLHs } \
\text { Standard hours allowed for the actual output............... } & 1,166 &\text { DLHs }\
\text { Actual total variable manufacturing overhead cost....... }&\$ 8,460 \
\text { Actual total fixed manufacturing overhead cost } & \$ 9.070
\end{array}$

-What was the fixed manufacturing overhead budget variance for the period to the nearest dollar?

Accepted Answer

A) $1,050 F 
B) $257 F 
C) $1,657 U 
D) $1,970 U

Question 5

A furniture manufacturer has a standard costing system based on standard direct labor-hours (DLHs)as the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below: $\begin{array}{llcc}
  \text {Denominator level of activity  } &1,100\quad\text { DLHs }\
 \text { Overhead costs at the denominator activity level: } &\
 \text { Variable overhead cost } &\$7,920\
 \text { Fixed overhead cost } &\$10,120\
\end{array}$
 The following data pertain to operations for the most recent period: $\begin{array}{lrc}
\text { Actual hours ................................................ } & 1,200& \text { DLHs } \
\text { Standard hours allowed for the actual output............... } & 1,166 &\text { DLHs }\
\text { Actual total variable manufacturing overhead cost....... }&\$ 8,460 \
\text { Actual total fixed manufacturing overhead cost } & \$ 9.070
\end{array}$

-What was the fixed manufacturing overhead volume variance for the period to the nearest dollar?

Accepted Answer

A) $313 U 
B) $607 F 
C) $920 F 
D) $513 F

Question 6

An outdoor barbecue grill manufacturer has a standard costing system based on standard direct labor-hours (DLHs)as the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below: $\begin{array}{llcc}
  \text {Denominator level of activity................  } &3,900&\text {DLHs  } \
 \text { Fixed overhead cost............................. } &\$49,530\
\end{array}$
 The following data pertain to operations for the most recent period: $\begin{array}{lrc}
\text { Actual hours ................................................ } & 3,800& \text { DLHs } \
\text { Standard hours allowed for the actual output............... } &3,861 &\text { DLHs }\
\text { Actual total variable manufacturing overhead cost....... }&\$ 50,230\
\end{array}$
 
-What was the fixed manufacturing overhead budget variance for the period to the nearest dollar?

Accepted Answer

A) $806 U 
B) $700 U 
C) $1,970 F 
D) $1,195 F

Question 7

Wriphoff Company uses a standard cost system to collect costs related to the production of its clay bud vases.Manufacturing overhead at Wriphoff is applied to production on the basis of standard direct labor-hours.The overhead standards used at Wriphoff are as follows: $\begin{array}{lcc}
&\text { Standard Cost Per Hour } & \text { Standard Cost Per Vase }\
\text { Variable overhead ........ } & \$ 6.40 & \$ 5.76 \
\text { Fixed overhead .......... } & \$ 9.60 & \$ 8.64
\end{array}$ The standards above were based on an expected annual volume of 40,000 bud vases or 36,000 direct labor-hours.The actual results for last year were as follows: $\begin{array}{lr}
\text { Number of vases produced........... } & 35,600 \
\text { Direct labor-hours incurred ........... } & 34,250 \
\text { Variable overhead cost ................ } & \$ 212,350 \
\text { Fixed overhead cost } \ldots \ldots \ldots \ldots \ldots \ldots \ldots . . . & \$ 338,000
\end{array}$

-What total amount of manufacturing overhead cost (variable and fixed)did Wriphoff apply to the 35,600 vases produced during last year?

Accepted Answer

A) $512,640 
B) $548,000 
C) $564,800 
D) $569,600

Question 8

A furniture manufacturer has a standard costing system based on standard direct labor-hours (DLHs)as the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below: $\begin{array}{llcc}
  \text {Denominator level of activity  } &1,100\quad\text { DLHs }\
 \text { Overhead costs at the denominator activity level: } &\
 \text { Variable overhead cost } &\$7,920\
 \text { Fixed overhead cost } &\$10,120\
\end{array}$
 The following data pertain to operations for the most recent period: $\begin{array}{lrc}
\text { Actual hours ................................................ } & 1,200& \text { DLHs } \
\text { Standard hours allowed for the actual output............... } & 1,166 &\text { DLHs }\
\text { Actual total variable manufacturing overhead cost....... }&\$ 8,460 \
\text { Actual total fixed manufacturing overhead cost } & \$ 9.070
\end{array}$

-What is the predetermined overhead rate to the nearest cent?

Accepted Answer

A) $15.94 
B) $16.40 
C) $14.61 
D) $15.03

Question 9

The Ferris Company applies manufacturing overhead costs to products on the basis of standard direct labor-hours.The standard cost card shows that 3 direct labor-hours are required per unit of product.For August,the company budgeted to work 90,000 direct labor-hours and to incur the following total manufacturing overhead costs: $\begin{array}{llcc}
  \text {  Total variable manufacturing overhead costs......} &\$99,000\
 \text {Total fixed manufacturing overhead costs ...........  } &\$118,800\
\end{array}$
 During August,the company completed 28,000 units of product,worked 86,000 direct labor-hours,and incurred the following total manufacturing overhead costs: $\begin{array}{llcc}
  \text {  Total variable manufacturing overhead costs......} &\$98,900\
 \text {Total fixed manufacturing overhead costs ...........  } &\$115,300\
\end{array}$
 The denominator activity in the predetermined overhead rate is 90,000 direct labor-hours.
-For August,the variable overhead efficiency variance is:

Accepted Answer

A) $1,800 F 
B) $0 
C) $2,200 U 
D) $2,200 F

Question 10

A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours.A fixed manufacturing overhead volume variance will NOT necessarily occur in a month in which actual direct labor-hours differ from standard hours allowed.

Accepted Answer

A) True 
 B)False

Question 11

Macdowell Corporation's manufacturing overhead includes $2.50 per machine-hour for supplies;$3.50 per machine-hour for indirect labor;$214,200 per period for salaries;and $307,020 per period for depreciation.
Required:
Determine the predetermined overhead rate if the denominator level of activity is 8,500 machine-hours.Show your work!

Accepted Answer

The answer of Macdowell Corporation's manufacturing overhead includes $2.50 per...

Question 12

Labossiere Corporation has provided the following data for November. $\begin{array}{llcc}
  \text {Denominator level of activity...........................  } &7,000& \text {machine-hours  } \
 \text { Budgeted fixed manufacturing overhead costs } &\$204,400\
 \text { Fixed portion of the predetermined overhead } &\
 \text { rate................................................................. } &\$29.20& \text { per machine-hour  } \
 \text {Actual level of activity.....................................  } &7,100& \text { machine-hours } \
 \text { Standard machine-hours allowed for the actual  } &\
 \text {output..............................................................  } &6,700& \text {  machine-hours } \
 \text {Actual fixed manufacturing overhead costs......  } &\$209,990\
\end{array}$

-The budget variance for November is:

Accepted Answer

A) $5,590 U 
B) $2,920 F 
C) $5,590 F 
D) $2,920 U

Question 13

Which of the following variances is caused by a difference between the denominator activity in the predetermined overhead rate and the standard hours allowed for the actual production of the period?

Accepted Answer

A) variable overhead rate variance. 
B) variable overhead efficiency variance. 
C) fixed manufacturing overhead budget variance. 
D) fixed manufacturing overhead volume variance.

Question 14

The following data for August has been provided by Mirabelli Corporation. $\begin{array}{llcc}
  \text {Denominator level of activity...........................  } &3,700& \text {machine-hours  } \
 \text { Budgeted fixed manufacturing overhead costs } &\$85,840\
 \text {Actual level of activity.....................................  } &4,00& \text { machine-hours } \
 \text { Standard machine-hours allowed for the actual  } &\
 \text {output..............................................................  } &3,800& \text {  machine-hours } \
 \text {Actual fixed manufacturing overhead costs......  } &\$88,080\
\end{array}$

-The volume variance for August is:

Accepted Answer

A) $6,960 F 
B) $6,960 U 
C) $2,320 F 
D) $2,320 U

Question 15

Shiplett Corporation applies overhead to products based on machine-hours.The denominator level of activity is 8,800 machine-hours.The budgeted fixed manufacturing overhead costs are $317,680.In March,the actual fixed manufacturing overhead costs were $314,300 and the standard machine-hours allowed for the actual output were 8,500 machine-hours.
Required:
a.Compute the budget variance for March.Show your work!
b.Compute the volume variance for March.Show your work!

Accepted Answer

The answer of Shiplett Corporation applies overhead to products based...

Question 16

The following data pertain to operations for the most recent period: $\begin{array}{lrc}
\text { Actual hours ................................................ } & 6,400& \text { DLHs } \
\text { Standard hours allowed for the actual output............... } & 6,273 &\text { DLHs }\
\text { Actual total variable manufacturing overhead cost....... }&\$ 58,110 \
\end{array}$

-How much fixed manufacturing overhead was applied to products during the period to the nearest dollar?

Accepted Answer

A) $59,210 
B) $59,907 
C) $61,120 
D) $58,110

Question 17

Which of the following is not correct?

Accepted Answer

A) If the denominator level of activity and the standard hours allowed for the output of the period are the same,then there is no volume variance. 
B) If the denominator level of activity is greater than the standard hours allowed for the output of the period,then the volume variance is unfavorable. 
C) If the denominator level of activity is greater than the standard hours allowed for the output of the period,then the volume variance is favorable. 
D) The volume variance is the most appropriate measure of the utilization of plant facilities.

Question 18

Mzimba Sofa Company has developed the following manufacturing overhead standards for its sofa production. $\begin{array}{lc}
  &\text {  Standard Cost} \
& \text { Per Sofa  } \
 \text {Variable overhead  } &\
 \text { (0.9 machine-hours $ @\$ 32.00 $ per machine-hour)..... } &\$28.80\
 \text { Fixed overhead } &\
 \text {  (0.9 machine-hours $ @ \$ 58.00 $ per machine-hour).....} &\$52.20\
\end{array}$
 Manufacturing overhead at Mzimba is applied to production on the basis of standard machine-hours.The above standards were based on an expected annual volume of 20,000 sofas.The actual results last year were as follows: $\begin{array}{lr}
\text { Number of sofas produced ........... } & 21,400 \
\text { Machine-hours incurred .............. } & 19,800 \
\text { Variable overhead cost ................. } & \$ 625,086 \
\text { Fixed overhead cost .................... } & \$ 1,105,000
\end{array}$

-What was Mzimba's fixed manufacturing overhead volume variance?

Accepted Answer

A) $12,080 favorable 
B) $42,920 unfavorable 
C) $61,000 unfavorable 
D) $73,080 favorable

Question 19

A manufacturing company uses a standard costing system in which standard machine-hours (MHs)is the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below: $\begin{array}{llcc}
  \text {Denominator level of activity  } &8,900\quad \text { $\mathrm{MHs}$ }\
 \text {  Overhead costs at the denominator activity level:  } &\
 \text { Variable overhead cost  } &\$86,775\
 \text {Fixed overhead cost  } &\$137,950\
 &\
 \text {  } &\
\end{array}$
 The following data pertain to operations for the most recent period: $\begin{array}{llcc}
  \text {Actual hours  } &9,000\quad\text { MHs }\
 \text {Standard hours allowed for the actual output.  } &8,977\quad\text { MHs }\
 \text {Actual total variable manufacturing overhead cost  } &\$88,650\
 \text { Actual total fixed manufacturing overhead cost } &\$136,850\
\end{array}$

-What was the fixed manufacturing overhead budget variance for the period to the nearest dollar?

Accepted Answer

A) $1,100 F 
B) $350 F 
C) $2,294 U 
D) $2,650 U

Question 20

Web Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard machine-hours.During February,the company used a denominator activity of 80,000 machine-hours in computing its predetermined overhead rate.However,only 75,000 standard machine-hours were allowed for the month's actual production.If the fixed manufacturing overhead volume variance for February was $6,400 unfavorable,then the total budgeted fixed manufacturing overhead cost for the month was:

Accepted Answer

A) $96,000 
B) $102,400 
C) $100,000 
D) $98,600

Exam 10: Compute and Interpret the Fixed Overhead Variances

Wolle Corporation estimates that its variable manufacturing overhead is $11.60 per machine-hour and its fixed manufacturing overhead is $298,936 per period. -If the denominator level of activity is 4,300 machine-hours,the variable element in the predetermined overhead rate would be:

The fixed manufacturing overhead budget variance and the fixed manufacturing overhead volume variance taken together explain the difference between the actual fixed manufacturing overhead cost incurred and the fixed manufacturing overhead cost applied to production.

If the standard hours allowed for the actual output of the period is greater than the denominator level of activity (in hours),then the overhead budget variance will be unfavorable.

Which of the following variances is caused by a difference between the denominator activity in the predetermined overhead rate and the standard hours allowed for the actual production of the period?

Which of the following is not correct?