Deck 8: Flexible Budgets, overhead Cost Variances, and Management Control

Question 1

Which of the following is the mathematical expression for the budgeted fixed overhead cost per unit of cost allocation base?

A) Budgeted fixed overhead cost per unit of cost allocation base = Actual total costs in fixed overhead cost pool ÷ Budgeted total quantity of cost allocation base
B) Budgeted fixed overhead cost per unit of cost allocation base = Budgeted total costs in fixed overhead cost pool ÷ Budgeted total quantity of cost allocation base
C) Budgeted fixed overhead cost per unit of cost allocation base = Actual total costs in fixed overhead cost pool ÷ Actual total quantity of cost allocation base
D) Budgeted fixed overhead cost per unit of cost allocation base = Budgeted total costs in fixed overhead cost pool ÷ Actual total quantity of cost allocation base

Answer 1

B

Question 2

While calculating the costs of products and services,a standard costing system ________.

A) allocates overhead costs on the basis of the actual overhead-cost rates
B) uses standard costs to determine the cost of products
C) does not keep track of overhead cost
D) traces direct costs to output by multiplying the standard prices or rates by the actual quantities

Answer 2

B

Question 3

Which of the following statements is true of variable overhead costs?

A) All the decisions determining the level of variable overhead costs are made at the start of a budget period.
B) Planning of variable overhead costs includes choosing the appropriate level of capacity.
C) Activities which add value are of least relevance while planning variable overhead costs.
D) The level of variable overhead costs incurred in a period is mainly determined by day-to-day operating decisions.

Answer 3

D

Question 4

Christine Corporation manufactures baseball uniforms and uses budgeted machine-hours to allocate variable manufacturing overhead.The following information pertains to the company's manufacturing overhead data: $\begin{array}{lr}\text { Budgeted output units } & 10,000 \text { units } \\\text { Budgeted machine-hours } & 15,000 \text { hours } \\\text { Budgeted variable manufacturing overhead costs for } 20,000 \text { units } & \$ 180,000 \\& \\\text { Actual output units produced } & 9,000 \text { units } \\\text { Actual machine-hours used } & 14,000 \text { hours } \\\text { Actual variable manufacturing overhead costs } & \$ 171,000\end{array}$ What is the budgeted variable overhead cost rate per output unit?

A) $12.00
B) $12.21
C) $18.00
D) $19.00

Question 5

Most of the decisions determining the level of fixed overhead costs to be incurred will be made ________.

A) by the end of a budget period
B) by the middle of a budget period
C) on a day-to-day ongoing basis
D) at the start of a budget period

Question 6

Green Energy Inc.produces fertilizer and distributes the product by using his tanker trucks.Green Energy uses budgeted fleet hours to allocate variable manufacturing overhead.The following information relates to the company's manufacturing overhead data: $\begin{array}{lr}\text { Budgeted output units } & 730 \text { truckloads } \\\text { Budgeted fleet hours } & 511 \text { hours } \\\text { Budgeted pounds of fertilizer } & 24,000,000 \text { pounds } \\\text { Budgeted variable manufacturing overhead costs for } 730 \text { loads } & \$ 89,425 \\& 720 \text { truckloads } \\\text { Actual output units produced and delivered } & 436 \text { hours } \\\text { Actual fleet hours } & 25,200,000 \text { pounds } \\\text { Actual pounds of fertilizer produced and delivered } & \$ 87,120\end{array}$ What is the budgeted variable overhead cost rate per output unit?

A) $120.00
B) $122.50
C) $123.69
D) $121.00

Question 7

Alka Corporation manufactures industrial-sized gas furnaces and uses budgeted machine-hours to allocate variable manufacturing overhead.The following information pertains to the company's manufacturing overhead data: $\begin{array}{lr}\text { Budgeted output units } & 29,000 \text { urits } \\\text { Budgeted machine-hours } & 10,150 \text { hours } \\\text { Budgeted variable manufacturing overhead costs for } 29,000 \text { units } & \$ 324,800 \\\text { Actual output units produced } & 31,000 \text { urits } \\\text { Actual machine-hours used } & 14,400 \text { hours } \\\text { Actual variable manufacturing overhead costs } & \$ 333,250\end{array}$ What is the budgeted variable overhead cost rate per output unit?

A) $11.70
B) $11.75
C) $11.20
D) $11.00

Question 8

The major challenge when planning fixed overhead is ________.

A) calculating total costs
B) calculating the cost-allocation rate
C) choosing the appropriate level of capacity
D) choosing the appropriate planning period

Question 9

In flexible budgets,costs that remain the same regardless of the output levels within the relevant range are ________.

A) allocated costs
B) budgeted costs
C) fixed costs
D) variable costs

Question 10

Which of the following mathematical expression is used to calculate budgeted variable overhead cost rate per output unit?

A) Budgeted output allowed per input unit × Budgeted variable overhead cost rate per input unit
B) Budgeted input allowed per output unit ÷ Budgeted variable overhead cost rate per input unit
C) Budgeted output allowed per input unit ÷ Budgeted variable overhead cost rate per input unit
D) Budgeted input allowed per output unit × Budgeted variable overhead cost rate per input unit

Question 11

Effective planning of fixed overhead costs includes ________.

A) planning day-to-day operational decisions
B) eliminating value-added costs
C) determining which products are to be produced
D) choosing the appropriate level of capacity

Question 12

Compared to variable overhead costs planning,fixed overhead costs planning have an additional strategic issue of ________.

A) eliminating activities that do not add value
B) increasing the linearity between total costs and volume of production
C) choosing the appropriate level of investment
D) identifying essential value-adding activities

Question 13

Which of the following is a step in developing budgeted variable overhead rates?

A) identifying the fixed costs associated with direct manufacturing labor
B) estimating the budgeted denominator level based on expected utilization of available capacity
C) selecting the cost-allocation base to use in allocating machine-handling costs
D) choosing the appropriate level of capacity or investment

Question 14

An effective plan for variable overhead costs will eliminate activities that do not add value.

Question 15

At the start of the budget period,management will have made most decisions regarding the level of fixed overhead costs to be incurred.

Question 16

The planning of fixed overhead costs differs from the planning of variable overhead costs in terms of timing.

Question 17

The planning of fixed overhead costs does not differ from the planning of variable overhead costs.

Question 18

Effective planning of variable overhead costs means that a company performs those variable overhead costs that primarily ________.

A) increase the planned variable overhead budgets
B) add value for the customer using the products or services
C) increase the linearity between total costs and volume of production
D) identify the product advertising requirements

Question 19

Fixed overhead costs include ________.

A) the cost of sales commissions
B) property taxes paid on plant facilities
C) energy costs
D) indirect materials

Question 20

Effective planning of variable overhead costs includes ________.

A) choosing the appropriate level of investment
B) eliminating value-added costs
C) redesigning products to use fewer resources
D) reorganizing management structure

Question 21

Use the following information to answer the following questions:
Autogas Corporation manufactures industrial-sized gas furnaces and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:
$\begin{array}{lr}\text { Budgeted output units } & 31,000 \text { urits } \\\text { Budgeted machine-hours } & 16,585 \text { hours } \\\text { Budgeted variable manufacturing overhead costs for } 31,000 \text { units } & \$ 348,285 \\\text { Actual output units produced } & 33,000 \text { urits } \\\text { Actual machine-hours used } & 14,400 \text { hours } \\\text { Actual variable manufacturing overhead costs } & \$ 384,000\end{array}$

-What is the amount of the budgeted variable manufacturing overhead cost per unit?

A) $11.745
B) $10.570
C) $11.235
D) $11.636

Question 22

Use the following information to answer the questions below:
Mynarc Corporation produces fertilizer and distributes the product by using his tanker trucks. Mynarc
uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:
$\begin{array}{lr}\text { Budgeted output units } & 675 \text { truckloads } \\\text { Budgeted fleet hours } & 540 \text { hours } \\\text { Budgeted variable manufacturing overhead costs for } 675 \text { loads } & \$ 82,350 \\\\\text { Actual output units produced and delivered } & 630 \text { truckloads } \\\text { Actual fleet hours } & 436 \text { hours } \\\text { Actual variable manufacturing overhead costs } & \$ 77,490\end{array}$

-What is the budgeted variable manufacturing overhead cost per unit?

A) $183.00 per unit
B) $178.89 per unit
C) $119.25 per unit
D) $122.00 per unit

Question 23

The flexible budget enables to highlight the differences ________.

A) between actual costs and actual quantities versus budgeted costs and budgeted quantities for the actual output level
B) between budgeted costs and budgeted quantities versus actual costs and budgeted quantities for the budgeted output level
C) between budgeted costs and actual quantities versus budgeted costs and budgeted quantities for the actual output level
D) between actual costs and actual quantities versus budgeted costs and budgeted quantities for the budgeted output level

Question 24

The variable overhead flexible-budget variance can be further subdivided into the ________.

A) price variance and the efficiency variance
B) static-budget variance and sales-volume variance
C) spending variance and the efficiency variance
D) sales-volume variance and the spending variance

Question 25

A $5,000 unfavorable flexible-budget variance indicates that ________.

A) the flexible-budget amount exceeded actual variable manufacturing overhead by $5,000
B) the actual variable manufacturing overhead exceeded the flexible-budget amount by $5,000
C) the flexible-budget amount exceeded standard variable manufacturing overhead by $5,000
D) the standard variable manufacturing overhead exceeded the flexible-budget amount by $5,000

Question 26

Standard costing is a cost system that allocates overhead costs on the basis of overhead cost rates based on actual overhead costs times the standard quantities of the allocation bases allowed for the actual outputs produced.

Question 27

List the four steps to develop budgeted variable overhead cost-allocation.

Question 28

Use the following information to answer the questions below:
Baseballic Corporation manufactures baseball uniforms and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:
$\begin{array}{lr}\text { Budgeted output units } & 11,250 \text { units } \\\text { Budgeted machine-hours } & 22,500 \text { hours } \\\text { Budgeted variable manufacturing overhead costs for } 11,250 \text { units } & \$ 213,750 \\\text { Actual output urits produced } & 11,500 \text { units } \\\text { Actual machine-hours used } & 22,000 \text { hours } \\\text { Actual variable manufacturing overhead costs } & \$ 225,000\end{array}$

-What is the flexible-budget amount for variable manufacturing overhead?

A) $6,500 unfavorable
B) $6,500 favorable
C) $11,250 unfavorable
D) $11,250 favorable

Question 29

What is a standard costing system?

Question 30

Use the following information to answer the following questions:
Autogas Corporation manufactures industrial-sized gas furnaces and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:
$\begin{array}{lr}\text { Budgeted output units } & 31,000 \text { urits } \\\text { Budgeted machine-hours } & 16,585 \text { hours } \\\text { Budgeted variable manufacturing overhead costs for } 31,000 \text { units } & \$ 348,285 \\\text { Actual output units produced } & 33,000 \text { urits } \\\text { Actual machine-hours used } & 14,400 \text { hours } \\\text { Actual variable manufacturing overhead costs } & \$ 384,000\end{array}$

-What is the flexible-budget variance for variable manufacturing overhead?

A) $13,245 unfavorable
B) $35,715 unfavorable
C) $13,245 favorable
D) $35,715 favorable

Question 31

The variable overhead spending variance measures the difference between ________,multiplied by the actual quantity of variable overhead cost-allocation base used.

A) the actual variable overhead cost per unit and the budgeted variable overhead cost per unit
B) the standard variable overhead cost rate and the budgeted variable overhead cost rate
C) the actual variable overhead cost per unit and the budgeted fixed overhead cost per unit
D) the actual quantity per unit and the budgeted quantity per unit

Question 32

Standard costing is a costing system that allocates overhead costs on the basis of the standard overhead-cost rates times the standard quantities of the allocation bases allowed for the actual outputs produced.

Question 33

Teddy Company uses a standard cost system.In May,$234,000 of variable manufacturing overhead costs were incurred and the flexible-budget amount for the month was $240,000.Which of the following variable manufacturing overhead entries would have been recorded for May?

A)Accounts Payable Control and other accounts $\quad 240,000$
Work-in-Process Control $\quad 240,000$

B) $\begin{array}{ll}\text { Work-in-Process Control } & 240,000\\\text { Variable Manufacturing Overhead Allocated}&240,000\end{array}$


C) $\begin{array} { l } \text {Work-in-Process Control }&234,000 \\ \text {Accounts Payable Control and other accounts }&234,000 \\\end{array}$

D) $\begin{array} { l } \text {Accounts Payable Control and other accounts }&234,000 \\ \text {Variable Manufacturing Overhead Control }&234,000 \\\end{array}$

Question 34

Fixed costs automatically increase or decrease with the level of activity within a relevant range of activity.

Question 35

Use the following information to answer the following questions:
Autogas Corporation manufactures industrial-sized gas furnaces and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:
$\begin{array}{lr}\text { Budgeted output units } & 31,000 \text { urits } \\\text { Budgeted machine-hours } & 16,585 \text { hours } \\\text { Budgeted variable manufacturing overhead costs for } 31,000 \text { units } & \$ 348,285 \\\text { Actual output units produced } & 33,000 \text { urits } \\\text { Actual machine-hours used } & 14,400 \text { hours } \\\text { Actual variable manufacturing overhead costs } & \$ 384,000\end{array}$

-What is the flexible-budget amount for variable manufacturing overhead?

A) $348,750
B) $370,755
C) $384,000
D) $360,727

Question 36

Use the following information to answer the questions below:
Baseballic Corporation manufactures baseball uniforms and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:
$\begin{array}{lr}\text { Budgeted output units } & 11,250 \text { units } \\\text { Budgeted machine-hours } & 22,500 \text { hours } \\\text { Budgeted variable manufacturing overhead costs for } 11,250 \text { units } & \$ 213,750 \\\text { Actual output urits produced } & 11,500 \text { units } \\\text { Actual machine-hours used } & 22,000 \text { hours } \\\text { Actual variable manufacturing overhead costs } & \$ 225,000\end{array}$

-What is the amount for budgeted variable manufacturing overhead cost per unit?

A) $225,000
B) $218,500
C) $213,750
D) $221,750

Question 37

Use the following information to answer the questions below:
Mynarc Corporation produces fertilizer and distributes the product by using his tanker trucks. Mynarc
uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:
$\begin{array}{lr}\text { Budgeted output units } & 675 \text { truckloads } \\\text { Budgeted fleet hours } & 540 \text { hours } \\\text { Budgeted variable manufacturing overhead costs for } 675 \text { loads } & \$ 82,350 \\\\\text { Actual output units produced and delivered } & 630 \text { truckloads } \\\text { Actual fleet hours } & 436 \text { hours } \\\text { Actual variable manufacturing overhead costs } & \$ 77,490\end{array}$

-What is the flexible-budget amount for variable manufacturing overhead?

A) $83,025
B) $82,350
C) $76,860
D) $77,490

Question 38

Computing standard costs at the start of the budget period results in a complex record keeping system.

Question 39

Use the following information to answer the questions below:
Baseballic Corporation manufactures baseball uniforms and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:
$\begin{array}{lr}\text { Budgeted output units } & 11,250 \text { units } \\\text { Budgeted machine-hours } & 22,500 \text { hours } \\\text { Budgeted variable manufacturing overhead costs for } 11,250 \text { units } & \$ 213,750 \\\text { Actual output urits produced } & 11,500 \text { units } \\\text { Actual machine-hours used } & 22,000 \text { hours } \\\text { Actual variable manufacturing overhead costs } & \$ 225,000\end{array}$

-What is the amount of the budgeted variable manufacturing overhead cost per unit?

A) $9.50 per unit
B) $18.58 per unit
C) $19.00 per unit
D) $19.56 per unit

Question 40

Use the following information to answer the questions below:
Mynarc Corporation produces fertilizer and distributes the product by using his tanker trucks. Mynarc
uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:
$\begin{array}{lr}\text { Budgeted output units } & 675 \text { truckloads } \\\text { Budgeted fleet hours } & 540 \text { hours } \\\text { Budgeted variable manufacturing overhead costs for } 675 \text { loads } & \$ 82,350 \\\\\text { Actual output units produced and delivered } & 630 \text { truckloads } \\\text { Actual fleet hours } & 436 \text { hours } \\\text { Actual variable manufacturing overhead costs } & \$ 77,490\end{array}$

-What is the flexible-budget variance for variable manufacturing overhead?

A) $4,860 favorable
B) $4,860 unfavorable
C) $630 favorable
D) $630 unfavorable

Question 41

Answer the following questions using the information below:
Zitrik Corporation manufactured 100,000 buckets during February. The variable overhead cost-allocation base is $5.00 per machine-hour. The following variable overhead data pertain to February:
$\begin{array}{lrr}&\text { Actual } &\text { Budgeted }\\\text { Production } & 90,000 \text { units } & 90,000 \text { units } \\\text { Machine-hours } & 9,800 \text { hours } & 9,000 \text { hours } \\\text { Variable overhead cost per machine-hour } & \$ 5.15 & \$ 5.05\end{array}$

-What is the variable overhead efficiency variance?

A) $4,040 unfavorable
B) $4,120 favorable
C) $4,040 favorable
D) $4,120 unfavorable.

Question 42

Answer the following questions using the information below:
Russo Corporation manufactured 16,000 air conditioners during November. The overhead cost-allocation base is $31.50 per machine-hour. The following variable overhead data pertain to November:
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Production }& 16,000 \text { units } & 18,000 \text { units } \\\text { Machine-hours } & 7,875 \text { hours }& 9,000 \text { hours } \\\text { Variable overhead cost per machine-hour: } &\$ 31.00 & \$ 31.50\end{array}$$

-What is the total variable overhead variance

A) $7,875 unfavorable
B) $3,937.50 f unfavorable
C) $7,875 favorable
D) $3,937.50 f favorable

Question 43

Answer the following questions using the information below:
Roberson Corporation manufactured 30,000 ice chests during September. The variable overhead cost-allocation base is $11.25 per machine-hour. The following variable overhead data pertain to September:
$\begin{array}{lrr}&\text { Actual } &\text { Budgeted }\\\text { Production } & 30,000 \text { units } & 24,000 \text { units } \\\text { Machine-hours } & 15,000 \text { hours } & 10,800 \text { hours } \\\text { Variable overhead cost per machine-hour: } & \$ 11.00 & \$ 11.25\end{array}$

-What is the actual variable overhead cost?

A) $121,500
B) $151,875
C) $165,000
D) $168,750

Question 44

Answer the following questions using the information below:
Roberson Corporation manufactured 30,000 ice chests during September. The variable overhead cost-allocation base is $11.25 per machine-hour. The following variable overhead data pertain to September:
$\begin{array}{lrr}&\text { Actual } &\text { Budgeted }\\\text { Production } & 30,000 \text { units } & 24,000 \text { units } \\\text { Machine-hours } & 15,000 \text { hours } & 10,800 \text { hours } \\\text { Variable overhead cost per machine-hour: } & \$ 11.00 & \$ 11.25\end{array}$

-What is the variable overhead efficiency variance?

A) $3,750 favorable
B) $16,875 unfavorable
C) $13,125 unfavorable
D) $30,375 unfavorable

Question 45

When machine-hours are used as an overhead cost-allocation base,the most likely cause of a favorable variable overhead spending variance is ________.

A) excessive machine breakdowns
B) the production scheduler efficiently scheduled jobs
C) a decline in the cost of energy
D) strengthened demand for the product

Question 46

Answer the following questions using the information below:
Russo Corporation manufactured 16,000 air conditioners during November. The overhead cost-allocation base is $31.50 per machine-hour. The following variable overhead data pertain to November:
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Production }& 16,000 \text { units } & 18,000 \text { units } \\\text { Machine-hours } & 7,875 \text { hours }& 9,000 \text { hours } \\\text { Variable overhead cost per machine-hour: } &\$ 31.00 & \$ 31.50\end{array}$$

-What is the flexible-budget amount?

A) $248,033
B) $252,000
C) $248,000
D) $279,000

Question 47

Answer the following questions using the information below:
Russo Corporation manufactured 16,000 air conditioners during November. The overhead cost-allocation base is $31.50 per machine-hour. The following variable overhead data pertain to November:
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Production }& 16,000 \text { units } & 18,000 \text { units } \\\text { Machine-hours } & 7,875 \text { hours }& 9,000 \text { hours } \\\text { Variable overhead cost per machine-hour: } &\$ 31.00 & \$ 31.50\end{array}$$

-What is the variable overhead efficiency variance?

A) $3,937.50 favorable
B) $3,937.50 unfavorable
C) $4,500 favorable
D) $4,500 unfavorable

Question 48

Answer the following questions using the information below:
Roberson Corporation manufactured 30,000 ice chests during September. The variable overhead cost-allocation base is $11.25 per machine-hour. The following variable overhead data pertain to September:
$\begin{array}{lrr}&\text { Actual } &\text { Budgeted }\\\text { Production } & 30,000 \text { units } & 24,000 \text { units } \\\text { Machine-hours } & 15,000 \text { hours } & 10,800 \text { hours } \\\text { Variable overhead cost per machine-hour: } & \$ 11.00 & \$ 11.25\end{array}$

-What is the flexible-budget amount?

A) $121,500
B) $151,875
C) $165,000
D) $168,750

Question 49

Answer the following questions using the information below:
Zitrik Corporation manufactured 100,000 buckets during February. The variable overhead cost-allocation base is $5.00 per machine-hour. The following variable overhead data pertain to February:
$\begin{array}{lrr}&\text { Actual } &\text { Budgeted }\\\text { Production } & 90,000 \text { units } & 90,000 \text { units } \\\text { Machine-hours } & 9,800 \text { hours } & 9,000 \text { hours } \\\text { Variable overhead cost per machine-hour } & \$ 5.15 & \$ 5.05\end{array}$

-What is the actual variable overhead cost?

A) $463,500
B) $436,500
C) $50,470
D) $49,490

Question 50

Answer the following questions using the information below:
Russo Corporation manufactured 16,000 air conditioners during November. The overhead cost-allocation base is $31.50 per machine-hour. The following variable overhead data pertain to November:
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Production }& 16,000 \text { units } & 18,000 \text { units } \\\text { Machine-hours } & 7,875 \text { hours }& 9,000 \text { hours } \\\text { Variable overhead cost per machine-hour: } &\$ 31.00 & \$ 31.50\end{array}$$

-What is the variable overhead spending variance?

A) $4,500 unfavorable
B) $3,937.50 unfavorable
C) $4,500 favorable
D) $3,937.50 favorable

Question 51

Answer the following questions using the information below:
Zitrik Corporation manufactured 100,000 buckets during February. The variable overhead cost-allocation base is $5.00 per machine-hour. The following variable overhead data pertain to February:
$\begin{array}{lrr}&\text { Actual } &\text { Budgeted }\\\text { Production } & 90,000 \text { units } & 90,000 \text { units } \\\text { Machine-hours } & 9,800 \text { hours } & 9,000 \text { hours } \\\text { Variable overhead cost per machine-hour } & \$ 5.15 & \$ 5.05\end{array}$

-What is the variable overhead spending variance?

A) $980 favorable
B) $900 unfavorable
C) $980 unfavorable
D) $900 favorable

Question 52

Answer the following questions using the information below:
Russo Corporation manufactured 16,000 air conditioners during November. The overhead cost-allocation base is $31.50 per machine-hour. The following variable overhead data pertain to November:
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Production }& 16,000 \text { units } & 18,000 \text { units } \\\text { Machine-hours } & 7,875 \text { hours }& 9,000 \text { hours } \\\text { Variable overhead cost per machine-hour: } &\$ 31.00 & \$ 31.50\end{array}$$

-What is the actual variable overhead cost?

A) $244,125
B) $279,000
C) $248,063
D) $250,000

Question 53

Answer the following questions using the information below:
Neocomfort Corporation manufactured 3,000 chairs during June. The following variable overhead data relates to June:
$\begin{array}{ll}\text { Budgeted variable overhead cost per unit } & \$ 12.00 \\\text { Actual variable manufacturing overhead cost } & \$ 49,900 \\\text { Flexible-budget amount for variable manufacturing overhead } & \$ 47,800 \\\text { Variable manufacturing overhead efficiency variance } & \$ 720 \text { unfavorable }\end{array}$

-What is the variable overhead spending variance?

A) $1,380 favorable
B) $2,820 favorable
C) $2,820 unfavorable
D) $1,380 unfavorable

Question 54

Answer the following questions using the information below:
Neocomfort Corporation manufactured 3,000 chairs during June. The following variable overhead data relates to June:
$\begin{array}{ll}\text { Budgeted variable overhead cost per unit } & \$ 12.00 \\\text { Actual variable manufacturing overhead cost } & \$ 49,900 \\\text { Flexible-budget amount for variable manufacturing overhead } & \$ 47,800 \\\text { Variable manufacturing overhead efficiency variance } & \$ 720 \text { unfavorable }\end{array}$

-What is the variable overhead flexible-budget variance?

A) $2,100 favorable
B) $1,380 favorable
C) $2,100 unfavorable
D) $1,380 unfavorable

Question 55

Answer the following questions using the information below:
Ecocomfort Corporation manufactured 1,000 coolers during October. The following variable overhead data relates to October:
$$\begin{array} { l l } \text { Variable overhead spending variance } & \$ 1,230 \text { Unfavorable } \\\text { Variable overhead efficiency variance } & \$ 175 \text { Unfavorable } \\\text { Budgeted machine hours allowed for actual output } & 615 \text { machine hours } \\\text { Actual cost per machine hour } & \$ 27 \\\text { Budgeted cost per machine hour } & \$ 25\end{array}$$

-Calculate the variable overhead flexible-budget variance.

A) $1,055 unfavorable
B) $1,055 favorable
C) $1,405 unfavorable
D) $1,405 favorable

Question 56

Answer the following questions using the information below:
Roberson Corporation manufactured 30,000 ice chests during September. The variable overhead cost-allocation base is $11.25 per machine-hour. The following variable overhead data pertain to September:
$\begin{array}{lrr}&\text { Actual } &\text { Budgeted }\\\text { Production } & 30,000 \text { units } & 24,000 \text { units } \\\text { Machine-hours } & 15,000 \text { hours } & 10,800 \text { hours } \\\text { Variable overhead cost per machine-hour: } & \$ 11.00 & \$ 11.25\end{array}$

-What is the variable overhead spending variance?

A) $3,750 favorable
B) $16,875 unfavorable
C) $13,125 unfavorable
D) $30,375 unfavorable

Question 57

Answer the following questions using the information below:
Zitrik Corporation manufactured 100,000 buckets during February. The variable overhead cost-allocation base is $5.00 per machine-hour. The following variable overhead data pertain to February:
$\begin{array}{lrr}&\text { Actual } &\text { Budgeted }\\\text { Production } & 90,000 \text { units } & 90,000 \text { units } \\\text { Machine-hours } & 9,800 \text { hours } & 9,000 \text { hours } \\\text { Variable overhead cost per machine-hour } & \$ 5.15 & \$ 5.05\end{array}$

-What is the flexible-budget amount?

A) $49,490
B) $45,450
C) $46,350
D) $47,650

Question 58

When variable overhead efficiency variance is favorable,it can be safely assumed that the ________.

A) actual rate per unit of the cost-allocation base is higher than the budgeted rate
B) actual quantity of the cost-allocation base used is higher than the budgeted quantity
C) actual rate per unit of the cost-allocation base is lower than the budgeted rate
D) actual quantity of the cost-allocation base used is lower than the budgeted quantity

Question 59

The variable overhead efficiency variance measures the difference between the ________,multiplied by the budgeted variable overhead cost per unit of the cost-allocation base.

A) budgeted quantity of the cost-allocation base used and the budgeted quantity of the cost-allocation base that should have been used to produce the actual output
B) actual quantity of the cost-allocation base used and the budgeted quantity of the cost-allocation base that should have been used to produce the actual output
C) actual cost incurred and the budgeted quantity of the cost-allocation base that should have been used to produce the actual output
D) budgeted cost and the actual cost used to produce the actual output

Question 60

Answer the following questions using the information below:
Ecocomfort Corporation manufactured 1,000 coolers during October. The following variable overhead data relates to October:
$$\begin{array} { l l } \text { Variable overhead spending variance } & \$ 1,230 \text { Unfavorable } \\\text { Variable overhead efficiency variance } & \$ 175 \text { Unfavorable } \\\text { Budgeted machine hours allowed for actual output } & 615 \text { machine hours } \\\text { Actual cost per machine hour } & \$ 27 \\\text { Budgeted cost per machine hour } & \$ 25\end{array}$$

-Calculate the actual machine hours used by Stark during October.

A) 622 hours
B) 615 hours
C) 608 hours
D) 620 hours

Question 61

If the production planners set the budgeted machine hours standards too tight,one could anticipate there would be a favorable variable overhead efficiency variance.

Question 62

An unfavorable variable overhead efficiency variance indicates that ________.

A) the actual rate of variable overhead was more than budgeted rate
B) the price of variable overhead items was less than budgeted
C) the variable overhead cost-allocation base was not used efficiently
D) the variable overhead cost-allocation base was used efficiently

Question 63

When variances are immaterial,which of the following statements is true of the journal entry to write-off the variable overhead variance accounts?

A) Cost of Goods Sold account will always be debited.
B) Unfavorable efficiency variance will be credited.
C) Favorable efficiency variance will be credited.
D) Cost of Goods Sold account will always be credited.

Question 64

The flexible budget enables to highlight the differences between budgeted costs and budgeted quantities versus actual costs and actual quantities for the budgeted output level.

Question 65

Briefly explain the meaning of the variable overhead efficiency variance and the variable overhead spending variance.

Question 66

Which of the following journal entries is used to record actual variable overhead costs incurred?

Question 67

Marshall Company uses a standard cost system.In April,$266,000 of variable manufacturing overhead costs were incurred and the flexible-budget amount for the month was $300,000.Which of the following variable manufacturing overhead entries would have been recorded for March?

A)Accounts Payable Control and other accounts $\quad 300,000$
Work-in-Process Control $\quad 300,000$

B)Variable Manufacturing Overhead Allocated $\quad 300,000$
Accounts Payable and other accounts $\quad 300,000$

C)Work-in-Process Control $\quad266,000$
Accounts Payable Control and other accounts $\quad266,000$
D)Variable Manufacturing Overhead Control $\quad266,000$
Accounts Payable Control and other accounts $\quad266,000$

Question 68

Osium Company made the following journal entry: $\begin{array}{lrr}\text { Variable Manufacturing Overhead Allocated } & 200,000 & \\\text { Variable Manufacturing Overhead Efficiency Variance } & 60,000 & \\\text { Variable Manufacturing Overhead Control } & 250,000 \\\text { Variable Manufacturing Overhead Spending Variance } & 10,000\end{array}$ Which of the following statements is true of the given journal entry?

A) Osium overallocated variable manufacturing overhead.
B) A $10,000 unfavorable spending variance was recorded.
C) Work-in-Process is currently overstated.
D) A $60,000 unfavorable efficiency variance was recorded.

Question 69

Skytalk Company manufactures weathervanes.The 2015 operating budget is based on the production of 5,300 weathervanes with 1.25 machine-hour allowed per weathervane.Variable manufacturing overhead is anticipated to be $145,750.
Actual production for 2015 was 5,250 weathervanes using 6,050 machine-hours.Actual variable costs were $21.75 per machine-hour.
Required:
Calculate the variable overhead spending and the efficiency variances.

Question 70

Unskilled workforce can lead to unfavorable efficiency variance.

Question 71

Mendel Company makes the following journal entry: \begin{array}{lr}\text { Variable Manufacturing Overhead Allocated } & 200,000 \\\text { Variable Manufacturing Overhead Efficiency Variance } & 5,000\\end{array}
Variable Manufacturing Overhead Control $\quad 175,000$
Variable Manufacturing Overhead Spending Variance $\quad 30,000$ Which of the following statements is true of the given journal entry?

A) A variable manufacturing overhead cost of $175,000 is written-off.
B) An unfavorable spending variance of $30,000 is recorded.
C) A favorable efficiency variance of $5,000 is recorded.
D) A favorable flexible-budget variance of $25,000 is recorded.

Question 72

The variable overhead efficiency variance is the difference between actual quantity of the
cost-allocation base used and budgeted quantity of the cost-allocation base allowed for actual output,multiplied by the budgeted variable overhead cost per unit of the cost-allocation base.

Question 73

Tightly budgeted machine time standards can lead to unfavorable variable overhead efficiency variance.

Question 74

Comfort Company manufactures pillows.The 2015 operating budget is based on production of 25,000 pillows with 0.75 machine-hour allowed per pillow.Budgeted variable overhead per hour was $25.
Actual production for 2015 was 27,000 pillows using 19,050 machine-hours.Actual variable costs were $23 per machine-hour.
Required:
Calculate the variable overhead spending and efficiency variances.

Question 75

Which of the following is the correct mathematical expression is used to calculate variable overhead efficiency variance?

A) (Actual rate − Budgeted rate) × Budgeted quantity
B) (Actual quantity × Budgeted rate) - (Budgeted input quantity allowed for actual output × Budgeted rate)
C) (Actual quantity ÷ Budgeted rate) − (Budgeted quantity ÷ Budgeted rate)
D) (Actual quantity ÷ Budgeted rate) × Budgeted quantity allowed for actual output

Question 76

The variable overhead efficiency variance is computed ________ and interpreted ________ the direct-cost efficiency variance.

A) the same as; the same as
B) the same as; differently than
C) differently than; the same as
D) differently than; differently than

Question 77

Managers can always view a favorable variable overhead spending variance as desirable.

Question 78

When machine-hours are used as a cost-allocation base,the item most likely to contribute to a favorable variable overhead efficiency variance is ________.

A) excessive machine breakdowns
B) skillful workforce
C) additional machinery
D) strengthened demand for the product

Question 79

Causes of a favorable variable overhead efficiency variance might include using lower-skilled workers than expected.

Question 80

If budgeted and actual machine hours are equal,spending variance will always be nil.