Question 1

Luke's Football Manufacturing Company reported: $\begin{array}{ll}
\text { Actual fixed overhead } & \$ 400,000 \
\text { Fixed manufacturing overhead spending variance } & \$ 10,000 \text { favorable }\
\text { Fixed manufacturing production-volume variance }& \$ 15,000 \text { unfavorable }\

\end{array}$ To isolate these variances at the end of the accounting period,John would debit Fixed Manufacturing Overhead Allocated for ________.

Accepted Answer

The fixed manufacturing overhead allocated is calculated by adjusting the actual fixed overhead with the spending and production-volume variances. The spending variance is favorable, so it reduces the actual overhead: $400,000 - $10,000 = $390,000. The production-volume variance is unfavorable, so it increases the allocated overhead: $390,000 + $15,000 = $405,000. However, the question asks for the amount to debit, which is the actual overhead minus the spending variance: $400,000 - $10,000 = $390,000. Therefore, the correct debit amount is $395,000.

Question 2

Answer the following questions using the information below:
Sport-in Corporation manufactured 10,000 golf bags during April. The following fixed overhead data pertain to March:
 $\begin{array}{lrr}&\text { Actual }&\text { Static Budget }\
\text { Production } & 20,000 \text { units } & 20,500 \text { units } \
\text { Machine-hours } & 5,100 \text { hours } & 6,150 \text { hours } \
\text { Fixed overhead cost for March } & \$ 250,000 & \$ 258,300
\end{array}$
-What is the amount of fixed overhead spending variance?

Accepted Answer

The answer of Answer the following questions using the information...

Question 3

Answer the following questions using the information below:
Deocomfort Corporation manufactured 54,000 door jambs during September. The following fixed overhead data relates to September:
 $\begin{array}{lrr}&\text { Actual }&\text { Static Budget }\
\text { Production } & 55,500 \text { units } & 55,000 \text { units } \
\text { Machine-hours } & 985 \text { hours } & 1,100 \text { hours } \
\text { Fixed overhead costs for September } & \$ 50,500 & \$ 50,600
\end{array}$
-What is the fixed overhead spending variance?

Accepted Answer

The fixed overhead spending variance is calculated as the difference between the actual fixed overhead costs and the budgeted fixed overhead costs. Here, the actual fixed overhead costs are $50,500, and the budgeted costs are $50,600. The variance is $50,600 - $50,500 = $100 favorable.

Question 4

Which of the following is the correct mathematical expression to calculate the fixed overhead production-volume variance?

Accepted Answer

The fixed overhead production-volume variance measures the difference between the budgeted fixed overhead and the fixed overhead allocated for actual output. Choice A is the formula for the static-budget variance, choice B is the formula for the flexible-budget variance, and choice C is the formula for the fixed overhead spending variance.

Question 5

Answer the following questions using the information below:
Sport-in Corporation manufactured 10,000 golf bags during April. The following fixed overhead data pertain to March:
 $\begin{array}{lrr}&\text { Actual }&\text { Static Budget }\
\text { Production } & 20,000 \text { units } & 20,500 \text { units } \
\text { Machine-hours } & 5,100 \text { hours } & 6,150 \text { hours } \
\text { Fixed overhead cost for March } & \$ 250,000 & \$ 258,300
\end{array}$
-What is the amount of fixed overhead allocated to production?

Accepted Answer

The fixed overhead allocation rate is $258,300 / 20,500 units = $12.60 per unit. The fixed overhead allocated to production is 10,000 units * $12.60 per unit = $126,000.

Question 6

Can the variable overhead efficiency variance
a.be computed the same way as the efficiency variance for direct-cost items?
b.be interpreted the same way as the efficiency variance for direct-cost items? Explain.

Accepted Answer

The answer of Can the variable overhead efficiency variance
a.be computed...

Question 7

Use the below information to answer the following questions:
Bekits Corporation manufactured 25,000 grooming kits for horses during March. The following fixed overhead data relates to March:
 $\begin{array}{lrr}&\text { Actual }&\text { Static Budget }\
\text { Production } & 37,500 \text { units } & 36,000 \text { units } \
\text { Machine-hours } & 6,100 \text { hours } & 5,940 \text { hours } \
\text { Fixed overhead costs for March } & \$ 133,000 & \$ 124,740
\end{array}$
-What is the amount of fixed overhead allocated to production?

Accepted Answer

The fixed overhead rate is calculated based on the static budget: $124,740 / 36,000 units = $3.465 per unit. For actual production of 37,500 units, the allocated fixed overhead is 37,500 units * $3.465 = $129,937.50.

Question 8

An unfavorable fixed overhead spending variance indicates that ________.

Accepted Answer

An unfavorable fixed overhead spending variance occurs when the actual fixed overhead costs are higher than the budgeted or standard fixed overhead costs. This can happen if the price of items that contribute to fixed overhead costs more than was budgeted for.

Question 9

Answer the following questions using the information below:
Deocomfort Corporation manufactured 54,000 door jambs during September. The following fixed overhead data relates to September:
 $\begin{array}{lrr}&\text { Actual }&\text { Static Budget }\
\text { Production } & 55,500 \text { units } & 55,000 \text { units } \
\text { Machine-hours } & 985 \text { hours } & 1,100 \text { hours } \
\text { Fixed overhead costs for September } & \$ 50,500 & \$ 50,600
\end{array}$
-What is the amount of fixed overhead allocated to production?

Accepted Answer

The answer of Answer the following questions using the information...

Question 10

The amount reported for fixed overhead on the static budget is also reported ________.

Accepted Answer

The answer of The amount reported for fixed overhead on...

Question 11

Define variable overhead spending variance.Briefly explain why a favorable variable overhead spending variance may not always be desirable.

Accepted Answer

The answer of Define variable overhead spending variance.Briefly explain why...

Question 12

Answer the following questions using the information below:
Deocomfort Corporation manufactured 54,000 door jambs during September. The following fixed overhead data relates to September:
 $\begin{array}{lrr}&\text { Actual }&\text { Static Budget }\
\text { Production } & 55,500 \text { units } & 55,000 \text { units } \
\text { Machine-hours } & 985 \text { hours } & 1,100 \text { hours } \
\text { Fixed overhead costs for September } & \$ 50,500 & \$ 50,600
\end{array}$
-What is the flexible-budget amount?

Accepted Answer

The flexible-budget amount for fixed overhead costs is the same as the static budget amount, which is $50,600, because fixed costs do not change with the level of production.

Question 13

Which of the following journal entries is used to record fixed overhead costs allocated?

Accepted Answer

Work-in-Process Control account is debited to record the increase in the value of WIP due to the allocation of fixed overhead costs. Fixed Overhead Allocated is credited to indicate where the overhead costs have been allocated to.

Question 14

Use the below information to answer the following questions:
Bekits Corporation manufactured 25,000 grooming kits for horses during March. The following fixed overhead data relates to March:
 $\begin{array}{lrr}&\text { Actual }&\text { Static Budget }\
\text { Production } & 37,500 \text { units } & 36,000 \text { units } \
\text { Machine-hours } & 6,100 \text { hours } & 5,940 \text { hours } \
\text { Fixed overhead costs for March } & \$ 133,000 & \$ 124,740
\end{array}$
-What is the flexible-budget amount?

Accepted Answer

The flexible-budget amount for fixed overhead costs is the same as the static budget amount because fixed costs do not change with the level of production. Therefore, it is $124,740.00.

Question 15

Which of the following is the correct mathematical expression to calculate the fixed overhead spending variance?

Accepted Answer

The fixed overhead spending variance is calculated as the difference between the flexible-budget amount and the actual costs incurred.

Question 16

Use the below information to answer the following questions:
Bekits Corporation manufactured 25,000 grooming kits for horses during March. The following fixed overhead data relates to March:
 $\begin{array}{lrr}&\text { Actual }&\text { Static Budget }\
\text { Production } & 37,500 \text { units } & 36,000 \text { units } \
\text { Machine-hours } & 6,100 \text { hours } & 5,940 \text { hours } \
\text { Fixed overhead costs for March } & \$ 133,000 & \$ 124,740
\end{array}$
-What is the fixed overhead spending variance?

Accepted Answer

The fixed overhead spending variance is calculated as the difference between the actual fixed overhead costs and the budgeted fixed overhead costs. Here, it is $133,000 (actual) - $124,740 (budgeted) = $8,260 unfavorable.

Question 17

Answer the following questions using the information below:
Sport-in Corporation manufactured 10,000 golf bags during April. The following fixed overhead data pertain to March:
 $\begin{array}{lrr}&\text { Actual }&\text { Static Budget }\
\text { Production } & 20,000 \text { units } & 20,500 \text { units } \
\text { Machine-hours } & 5,100 \text { hours } & 6,150 \text { hours } \
\text { Fixed overhead cost for March } & \$ 250,000 & \$ 258,300
\end{array}$
-What is the flexible-budget amount?

Accepted Answer

The answer of Answer the following questions using the information...

Question 18

When machine-hours are used as an overhead cost-allocation base and annual leasing costs for equipment unexpectedly increase,the most likely result would be to report a(n)________.

Accepted Answer

When leasing costs for equipment increase unexpectedly, it is a fixed overhead cost rather than a variable overhead cost. As a result, the most likely outcome would be an unfavorable fixed overhead flexible-budget variance since the actual fixed overhead costs have exceeded the budgeted fixed overhead costs.

Question 19

For fixed manufacturing overhead,there is no ________.

Accepted Answer

For fixed manufacturing overhead, there is no efficiency variance because efficiency variances are related to how efficiently a company uses its variable inputs. Fixed manufacturing overhead costs do not vary with the level of production or efficiency in the use of inputs.

Question 20

Which of the following statements is true of fixed overhead variances?

Accepted Answer

The flexible budget costs and static budget costs for fixed overheads are the same because fixed costs do not change with the level of production, hence the variance is always nil.

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

Which of the following is the correct mathematical expression to calculate the fixed overhead production-volume variance?

Can the variable overhead efficiency variance a.be computed the same way as the efficiency variance for direct-cost items? b.be interpreted the same way as the efficiency variance for direct-cost items? Explain.

An unfavorable fixed overhead spending variance indicates that ________.

The amount reported for fixed overhead on the static budget is also reported ________.

Define variable overhead spending variance.Briefly explain why a favorable variable overhead spending variance may not always be desirable.

Which of the following journal entries is used to record fixed overhead costs allocated?

Which of the following is the correct mathematical expression to calculate the fixed overhead spending variance?

When machine-hours are used as an overhead cost-allocation base and annual leasing costs for equipment unexpectedly increase,the most likely result would be to report a(n) ________.

For fixed manufacturing overhead,there is no ________.

Which of the following statements is true of fixed overhead variances?