Question 1

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 2

Davidson Corporation manufactured 53,400 units during September.The following fixed overhead data relates to September:
$\begin{array}{lll}& \text { Actual } & \text { Static Buidget } \
\text { Production } & 53,400 \text { units } & 53,000 \text { units } \
\text { Machine-hours } & 1,960 \text { hours } & 2,120 \text { hours } \
\text { Fixed overhead costs for September } & \$ 86,520 & \$ 86,920
\end{array}$
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 $86,520 (actual) - $86,920 (budgeted) = -$400, which is favorable because the actual costs are less than the budgeted costs.

Question 3

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 4

Hockey Accessories Corporation manufactured 23,000 duffle bags during March.The following fixed overhead data pertain to March:
$\begin{array}{lll}& \text { Actual } & \text { Static Buidget } \
\text { Production } & 23,000 \text { units } & 23,500 \text { units } \
\text { Machine-hours } & 13,100 \text { hours } & 14,100 \text { hours } \
\text { Fixed overhead cost for March } & \$ 626,100 & \$ 634,500
\end{array}$
What is the amount of fixed overhead allocated to production?

Accepted Answer

The fixed overhead allocated to production is based on the budgeted fixed overhead rate per unit, which is calculated from the static budget. The rate is $634,500 / 23,500 units = $27 per unit. For 23,000 units produced, the allocated fixed overhead is 23,000 units * $27 = $621,000.

Question 5

Castleton Corporation manufactured 41,000 units during March.The following fixed overhead data relates to March:
$\begin{array}{lll}& \text { Actual } & \text { Static Buidget } \
\text { Production } & 41,000 \text { units } & 39,000 \text { units } \
\text { Machine-hours } & 6,020 \text { hours } & 5,850 \text { hours } \
\text { Fixed overhead costs for March } & \$ 125,500 & \$ 117,000
\end{array}$
What is the amount of fixed overhead allocated to production?

Accepted Answer

The answer of Castleton Corporation manufactured 41,000 units during March.The...

Question 6

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

Accepted Answer

The answer of Which of the following journal entries is...

Question 7

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 is calculated by comparing the budgeted fixed overhead with the fixed overhead allocated for actual output. This will give an indication of whether the fixed overhead costs were over or under allocated based on the actual production volume.

Question 8

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 by subtracting the flexible-budget amount from the actual costs incurred. This variance shows whether the actual fixed overhead costs were higher or lower than what was expected (flexible budget) for the actual level of production.

Question 9

Hockey Accessories Corporation manufactured 21,400 duffle bags during March.The following fixed overhead data pertain to March:
$\begin{array}{lll}& \text { Actual } & \text { Static Buidget } \
\text { Production } & 21,400 \text { units } & 22,000 \text { units } \
\text { Machine-hours } & 3,400 \text { hours } & 4,400 \text { hours } \
\text { Fixed overhead cost for March } & \$ 176,300 & \$ 184.800
\end{array}$
What is the amount of fixed overhead spending variance?

Accepted Answer

The answer of Hockey Accessories Corporation manufactured 21,400 duffle bags...

Question 10

Davidson Corporation manufactured 52,400 units during September.The following fixed overhead data relates to September:
$\begin{array}{lll}& \text { Actual } & \text { Static Buidget } \
\text { Production } & 52,400 \text { units } & 52,000 \text { units } \
\text { Machine-hours } & 2,485 \text { hours } & 2,600 \text { hours } \
\text { Fixed overhead costs for September } & \$ 108,900 & \$ 109,200
\end{array}$
What is the flexible-budget amount?

Accepted Answer

The flexible-budget amount for fixed overhead is the same as the static budget amount, which is $109,200, because fixed costs do not change with the level of production.

Question 11

Davidson Corporation manufactured 58,500 units during September.The following fixed overhead data relates to September:
$\begin{array}{lll}& \text { Actual } & \text { Static Buidget } \
\text { Production } & 58,500 \text { units } & 58,000 \text { units } \
\text { Machine-hours } & 3,320 \text { hours } & 3,480 \text { hours } \
\text { Fixed overhead costs for September } & \$ 170,220 & \$ 170,520
\end{array}$
What is the amount of fixed overhead allocated to production?

Accepted Answer

The answer of Davidson Corporation manufactured 58,500 units during September.The...

Question 12

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 13

Castleton Corporation manufactured 36,500 units during March.The following fixed overhead data relates to March:
$\begin{array}{lll}& \text { Actual } & \text { Static Buidget } \
\text { Production } & 36,500 \text { units } & 35,000 \text { units } \
\text { Machine-hours } & 5,400 \text { hours } & 5,250 \text { hours } \
\text { Fixed overhead costs for March } & \$ 139.510 & \$ 131,250
\end{array}$
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 $139,510 (actual) - $131,250 (budgeted) = $8,260 unfavorable.

Question 14

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 15

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 16

Hockey Accessories Corporation manufactured 22,400 duffle bags during March.The following fixed overhead data pertain to March:
$\begin{array}{lll}& \text { Actual } & \text { Static Buidget } \
\text { Production } & 22,400 \text { units } & 23,000 \text { units } \
\text { Machine-hours } & 10,450 \text { hours } & 11,500 \text { hours } \
\text { Fixed overhead cost for March } & \$ 451,700 & \$ 460,000
\end{array}$
What is the flexible-budget amount?

Accepted Answer

The flexible-budget amount for fixed overhead is the same as the static budget amount because fixed costs do not change with the level of production. Therefore, it is $460,000.

Question 17

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

If annual leasing costs for equipment unexpectedly increase, it means that the fixed overhead cost will increase, and since machine-hours are used as an overhead cost-allocation base, the fixed overhead flexible-budget variance will most likely be unfavorable. The variable overhead spending variance and the variable overhead efficiency variance are related to variable costs, so they would not be impacted by leasing costs. The production-volume variance is related to output levels and would also not be impacted by leasing costs.

Question 18

Castleton Corporation manufactured 36,000 units during March.The following fixed overhead data relates to March:
$\begin{array}{lll}
& \text { Actual } & \text { Static Buidget } \
\text { Production }  & 36,000 \text { units } & 34,000 \text { units } \
 \text { Machine-hours }& 6,960 \text { hours } & 6,800 \text { hours } \
\text { Fixed overhead costs for March }& \$ 164,700 & \$ 156,400
\end{array}$
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 $156,400.00.

Question 19

Advanced Manufacturing Company reported:

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

Accepted Answer

$430,000 + $19,000 - $24,000 = $425,000

Question 20

Fixed overhead costs for March for a factory were Salaries of $44,000,depreciation of $10,000,and property taxes of $4,000.Which of the following journal entries would be correct?

Accepted Answer

The answer of Fixed overhead costs for March for a...

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

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.