Deck 11: Flexible Budgets and Overhead Analysis

Question 1

What is the best use of a static budget?

A)to measure whether a manager accomplishes his or her goals
B)to compare expected costs at the actual level of activity with the actual costs
C)to assess how well costs were controlled during the year
D)to determine managerial efficiency

Answer 1

A

Question 2

Which of the following is characteristic of an after-the-fact flexible budget?

A)It is a budget for the actual level of activity.
B)It allows managers to deal with uncertainty.
C)It can be used to generate results for a number of plausible scenarios.
D)It is a useful planning tool.

Answer 2

A

Question 3

How does one create a meaningful performance report?

A)compare actual costs with the expected costs found in the static budget
B)calculate actual costs as a percentage of sales
C)compare actual costs with the prior year's actual costs
D)compare actual costs with the expected costs at the same level of activity

Answer 3

D

Question 4

Suppose a company's variable manufacturing overhead is applied on the basis of direct labour hours,and the company has an unfavourable direct labour efficiency variance.Which of the following is most likely to result?

A)The direct materials usage variance will be unfavourable.
B)The direct labour rate variance will be favourable.
C)The variable manufacturing overhead efficiency variance will be unfavourable.
D)The variable manufacturing overhead spending variance will be unfavourable.

Question 5

For what level of activity is a static budget prepared?

A)for past levels of activity
B)for several levels of activity
C)for the actual level of activity
D)for a particular level of activity

Question 6

Why are flexible budgets powerful control tools?

A)They allow managers to set the budget at a budgeted activity level.
B)They allow the calculation of what cost should be for the actual level of activity.
C)They allow the preparation of historical reports.
D)They allow the calculation of what cost should be for the budgeted level of activity.

Question 7

What are the two variances for variable overhead?

A)spending and efficiency variances
B)budget and spending variances
C)volume and budget variances
D)efficiency and volume variances

Question 8

The difference between which two amounts equals the total variable overhead variance?

A)the actual overhead and the budgeted overhead
B)the total actual variable overhead and the total budgeted variable overhead
C)the total actual variable overhead and the total applied variable overhead
D)the total actual variable overhead and the total applied overhead

Question 9

Which budget is prepared for a particular level of activity?

A)an operational budget
B)a capital budget
C)a static budget
D)a flexible budget

Question 10

What is the formula for the variable overhead spending variance?

A)(AH − SH)SVOR
B)(AVOR − SVOR)SH
C)(AVOR − SVOR)AH
D)(AH − SH)AVOR

Question 11

Which budget should be used to determine managerial effectiveness?

A)operational budget
B)capital budget
C)static budget
D)flexible budget

Question 12

Which of the following is characteristic of a before-the-fact flexible budget?

A)It calculates expected costs for various levels of activity.
B)It is used for performance reports.
C)It calculates what costs should have been for the actual level of activity.
D)It is used to compare expected costs with actual costs.

Question 13

How is variable overhead applied in a standard cost system?

A)using actual direct labour hours
B)using budgeted direct labour hours
C)using direct labour hours at practical capacity
D)using standard direct labour hours

Question 14

Which of the following is characteristic of a performance report?

A)It uses static budgets.
B)It compares actual costs with budgeted costs.
C)It usually uses flexible budgets.
D)It does not include variances.

Question 15

The difference between which two amounts is measured by the variable overhead spending variance?

A)the total variable overhead and the applied variable overhead
B)the total variable overhead and total budgeted overhead costs
C)the total variable overhead and the budgeted overhead for the expected activity
D)the actual variable overhead rate and the standard variable overhead rate

Question 16

Showcase Inc's standard variable overhead rate is $7 per direct labour hour,and each unit requires three standard direct labour hours.During April,Showcase recorded 7,000 actual direct labour hours,$65,000 actual variable overhead costs,and 2,950 units of product manufactured. What is Showcase's total variable overhead variance for April?

A)$490 (U)
B)$1,000 (U)
C)$2,950 (U)
D)$3,050 (U)

Question 17

Assume that the expectations on the static budget were met.What can be concluded?

A)The static budget was ill conceived.
B)The effectiveness of the manager is not in question.
C)The manager is very efficient.
D)There is no need for a flexible budget.

Question 18

Which budget allows the determination of expected costs for various levels of activity?

A)operational budget
B)capital budget
C)static budget
D)flexible budget

Question 19

Which budget is used to assess managerial efficiency?

A)operational budget
B)capital budget
C)static budget
D)flexible budget

Question 20

What does inefficient use of labour imply?

A)unfavourable variable overhead efficiency variance
B)favourable variable overhead efficiency variance
C)unfavourable variable overhead spending variance
D)favourable variable overhead spending variance

Question 21

Universal Forklifts,Inc.produces a specialized machine part used in forklifts.For last year's operations,the following data were gathered: Universal Forklifts employs a standard costing system.During the year,a variable overhead rate of $4.50 per hour was used.The labour standard requires a half hour per unit produced.What are the variable overhead spending and efficiency variances,respectively?
$\begin{array}{ll}\text { Units produced: } & 60,000 \\\text { Direct labour: } & 30,000 \text { hours } @ \$ 9.00 \text { per hour } \\\text { Actual variable overhead: } & \$ 150,000\end{array}$

A)$7,500 U and $10,000 F
B)$10,000 U and $7,500 U
C)$15,000 U and $15,000 U
D)$15,000 F and $15,000 F

Question 22

What are the two variances for fixed overhead?

A)budget and efficiency
B)efficiency and usage
C)volume and spending
D)usage and volume

Question 23

Glassco Company is planning to produce 4,500,000 speakers for the coming year.Actual production was 4,000,000 speakers.Each speaker requires 0.80 direct labour hours per unit.Predetermined overhead rates are calculated using expected production,measured in direct labour hours.The budgeted variable overhead for the coming year is $720,000.The actual variable overhead incurred was $714,000.What was the applied variable overhead for the year?

A)$640,000
B)$680,000
C)$714,000
D)$800,000

Question 24

Long,Inc.produces small engines.For last year's operations,the following data were gathered: Long,Inc.employs a standard costing system.During the year,a variable overhead rate of $8.00 per hour was used.The labour standard requires 1.5 hours per unit produced.What are the variable overhead spending and efficiency variances,respectively?
$\begin{array}{ll}\text { Units produced: } & 100,000 \\\text { Direct labour: } & 160,000 \text { hours }@\$ 12.00 \text { per } \\& \text { hour } \\\text { Actual variable overhead: } & \$ 1,300,000\end{array}$

A)$20,000 U and $80,000 U
B)$20,000 U and $80,000 F
C)$100,000 U and $20,000 U
D)$100,000 U and $20,000 F

Question 25

Budgeted variable overhead for the year is $130,000.Expected activity is 20,000 standard direct labour hours.The actual hours worked were 18,250,and the standard hours allowed for actual production were 19,750.What was the variable overhead efficiency variance?

A)$0
B)$1,500 F
C)$9,750 F
D)$12,000 F

Question 26

What does the fixed overhead volume variance measure?

A)the cost of overspending on fixed overhead items
B)the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate
C)the cost of unused activity capacity acquired
D)both the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate and the cost of unused activity capacity

Question 27

What is the formula for fixed overhead volume variance?

A)(AFOH − SFOR) × SH
B)(AFOH − SFOR) × AH
C)AFOH− (SH × SFOR)
D)(AFOH − SFOR) × SH

Question 28

What department is usually held responsible for the fixed overhead volume variance?

A)the accounting department
B)the production department
C)top management
D)the planning department

Question 29

What is the formula for calculating the variable overhead efficiency variance?

A)(AVOR × AH) − (SVOR × AH)
B)(AVOR − SVOR)SH
C)(AH − SH)SVOR
D)(AH − SH)AVOR

Question 30

Which of the following is NOT a function of activity flexible budgeting?

A)improving performance reporting
B)allowing the prediction of activity costs as activity output changes
C)estimating revenues and costs by organizational units
D)improving the ability to plan and monitor activity improvements

Question 31

HyTech Production Company uses a standard costing system.The following information pertains to the current year. The factory overhead rate is based on an activity level of 10,000 units.Standard cost data for 5,000 units is as follows:
$\begin{array}{lr}\text { Actual factory overhead costs }(\$ 16,500 \text { is }\\\text { fixed) }&\$40,125\\\text { Actual direct labour costs }(11,250 \text { hours })&\$131,625\\\text { Standard direct labour for } 5,500 \text { units: }\\\text { Standard hours allowed }&11,000 \text { hours }\\\text { Labour rate }&\$12.00\end{array}$
What is the variable overhead efficiency variance for HyTech Production Company?
$\begin{array}{lr}\text { Variable factory overhead } & \$ 22,500 \\\text { Fixed factory overhead } & 13,500 \\\text { Total factory overhead } & \$ 36,000\end{array}$

A)$562.50 (U)
B)$562.50 (F)
C)$1,687.50 (F)
D)$3,000.00 (U)

Question 32

What is the formula for total fixed overhead variance?

A)total actual overhead − total applied overhead
B)AFOH − standard overhead rate × SH
C)AFOH − SFOR × SH
D)AFOH − SFOR × AH

Question 33

How is the standard fixed overhead rate often calculated?

A)budgeted fixed overhead divided by practical capacity measured in standard hours
B)budgeted fixed overhead divided by actual capacity measured in standard hours
C)budgeted fixed overhead divided by actual hours
D)budgeted fixed overhead divided by practical capacity measured in actual hours

Question 34

During the year,Plasticine produced 10,000 units,used 21,000 direct labour hours,and incurred variable overhead of $100,000.Budgeted variable overhead for the year was $88,000.The hours allowed per unit are 2.1.The standard variable overhead rate is $4.10 per direct labour hour.What was the variable overhead spending variance?

A)$2,000 U
B)$2,900 F
C)$4,100 U
D)$13,900 U

Question 35

Which department is usually assigned responsibility for the variable overhead spending variance?

A)the purchasing department
B)the production department
C)the engineering department
D)the personnel department

Question 36

What does the variable overhead efficiency variance claim to measure?

A)changes in spending efficiency because the company paid too much for direct labour
B)changes in productive efficiency caused by the overuse of producing assets
C)changes in variable overhead costs because of the efficient (inefficient) use of direct labour
D)changes in variable overhead costs attributable to inefficient purchase of variable inputs

Question 37

What does a performance report for variable overhead reveal?

A)both the volume and spending variances and the spending and efficiency variances for each variable overhead item
B)the volume and spending variances
C)the volume and efficiency variances for each variable overhead item
D)both the aggregate variable overhead spending and efficiency variances and the spending and efficiency variances for each variable overhead item

Question 38

What is the formula for the fixed overhead spending variance?

A)AFOH − SFOR × SH
B)AFOH − SFOR × AH
C)AFOH − BFOH
D)AFOH − SFOR × SH

Question 39

Which of the following may cause an unfavourable variable overhead spending variance?

A)the use of excessive quantities of variable overhead items
B)the payment of lower prices for variable overhead items used
C)the use of excessive quantities of the variable overhead allocation base
D)the payment of higher prices for variable overhead items used

Question 40

Which of the following is characteristic of the fixed overhead spending variance?

A)It is usually significant.
B)It is made up of a single item.
C)It is the difference between actual costs and budgeted costs.
D)It is investigated only if the variance is immaterial.

Question 41

In an activity flexible budget,what does the fixed cost component typically correspond to?

A)resources that vary with direct labour hours
B)resources that vary as the activity output changes
C)resources acquired in advance of usage
D)resources acquired as needed

Question 42

Suppose a company had actual fixed manufacturing overhead of $60,000,a $1,500 unfavourable spending variance,and a $1,000 unfavourable volume variance.What would be the budgeted fixed manufacturing overhead?

A)$50,300
B)$52,700
C)$53,000
D)$58,500

Question 43

For which of the following is a cost formula developed for activity flexible budgeting?

A)each overhead item as a function of direct labour hours
B)each activity as a function of activity drivers
C)each activity as a function of resource drivers
D)each overhead item as a function of resource drivers

Question 44

Fixed overhead was budgeted at $85,000,and 10,000 direct labour hours were budgeted.Suppose the fixed overhead volume variance was $5,000 unfavourable and the fixed overhead spending variance was $1,200 favourable.What would be the fixed overhead applied?

A)$80,000
B)$82,000
C)$82,800
D)$90,000

Question 45

Why does activity flexible budgeting provide a more accurate prediction of costs than a traditional flexible budgeting approach?

A)Costs often vary with more than one driver, and direct labour hours are not correct.
B)Unit-level drivers are often not highly correlated with direct labour hours.
C)Direct labour hours are often not measured correctly.
D)Costs often vary with more than one driver, and non-unit-level drivers are often not highly correlated with direct labour hours.

Question 46

Which of the following is the result of fixed overhead being made up of many items?

A)The fixed overhead spending variance is not meaningful.
B)It is not possible to calculate a fixed overhead volume variance.
C)The fixed overhead volume variance will always be unfavourable.
D)A line-by-line comparison of budgeted costs with actual costs provides more information.

Question 47

Suppose an organization has implemented an ABC or ABM system.Which of the following has the organization already accomplished?

A)It has identified the activities within an organization.
B)It has estimated the demand for each activity's output.
C)It has assessed the cost of resources required to produce this activity output.
D)It has calculated the variances for the activities.

Question 48

Hype Production Company uses a standard costing system.The following information pertains to the current year: The factory overhead rate is based on an activity level of 10,000 units.Standard cost data for 5,000 units are as follows:
$\begin{array}{lr}\text { Actual factory overhead costs }(\$ 16,500 \text { is }\\\text { fixed) }&\$40,125\\\text { Actual direct labour costs }(11,250 \text { hours })&\$131,625\\\text { Standard direct labour for } 5,500 \text { units: }\\\text { Standard hours allowed }&11,000 \text { hours }\\\text { Labour rate }&\$12.00\end{array}$
What is the fixed overhead volume variance for Hype Production Company?
$\begin{array}{lr}\text { Variable factory overhead } & \$ 22,500 \\\text { Fixed factory overhead } & 13,500 \\\text { Total factory overhead } & \$ 36,000\end{array}$

A)$1,350 (U)
B)$1,350 (F)
C)$3,600 (F)
D)$4,125 (U)

Question 49

In an activity flexible budget,what does the variable cost component typically correspond to?

A)those resources that vary with direct labour hours
B)resources acquired as needed
C)resources acquired in advance of usage
D)resources that do not change as the activity output changes

Question 50

Which of the following is the total fixed overhead variance?

A)both AFOH − ApFOH and the sum of the spending and volume variances
B)AFOH - the sum of the spending and volume variances
C)ApFOH - the sum of the spending and efficiency variance
D)both AFOH − ApFOH and the sum of the spending and efficiency variances

Question 51

Which relationship represents fixed overhead budgeted at the beginning of the year?

A)BFOH = SFOR × AH
B)BFOH = SFOR × SH for actual production
C)BFOH = SFOR × SH for planned production
D)BFOH = SFOR/SH for actual production

Question 52

In an activity framework,what do controlling costs translate into?

A)managing activities
B)reducing direct labour hours
C)selling more goods
D)carefully identifying resource drivers

Question 53

Fixed manufacturing overhead was budgeted at $250,000,and 25,000 direct labour hours were budgeted.Suppose the fixed overhead volume variance was $10,000 favourable and the fixed overhead spending variance was $6,000 unfavourable.What would be the fixed manufacturing overhead applied?

A)$194,000
B)$202,000
C)$206,000
D)$260,000

Question 54

Which two costs are compared in a performance report that uses activity flexible budgeting?

A)budgeted costs for actual activity-usage levels and the actual activity costs
B)actual activity costs and budgeted overhead costs
C)actual overhead costs and the budgeted activity costs for actual activity-usage levels
D)static activity budget costs and the budgeted activity costs for the actual activity-usage levels

Question 55

Which of the following is NOT one of the three steps in building an activity-based budget?

A)identifying activities
B)classifying activities as value-added or non-value-added
C)estimating the demand for each activity's output
D)estimating the cost of producing the output demanded by each activity

Question 56

Where are the major differences found between activity-based budgeting and traditional budgeting?

A)in the materials and labour categories
B)in the sales and production budgets
C)in the cash budget
D)in the overhead and selling and administrative categories

Question 57

When budgeting at the activity level,with respect to which of the following is the cost behaviour of each activity defined?

A)direct labour hours
B)machine hours
C)the activity output measure
D)the activity's resource driver

Question 58

Suppose a company had actual fixed overhead of $99,500,a $3,100 favourable spending variance,and a $700 unfavourable volume variance.What would be the budgeted fixed overhead?

A)$96,400
B)$99,700
C)$100,680
D)$102,600

Question 59

Which of the following tasks is NOT required when building an activity-based budget?

A)identifying the activities within an organization
B)estimating the demand for each activity's output
C)assessing the cost of resources required to produce this activity output
D)using a single unit-based driver such as direct labour

Question 60

Which of the following is a disadvantage of an activity-budgetary system?

A)It supports continuous improvement.
B)It supports process management.
C)It emphasizes cost reduction assuming one unit-based driver.
D)It helps improve the efficiency of necessary activities.

Question 61

Jewel Company calculates its predetermined rates using practical volume, which is 300,000 units. The standard cost system allows two direct labour hours per unit produced. Overhead is applied using direct labour hours. The total budgeted overhead is $3,200,000 of which $900,000 is fixed overhead. The actual results for the year are as follows:
$\begin{array}{ll}\text { Units produced: } & 280,000 \\\text { Direct labour: } & 570,000 \text { hours }@\$ 9 \text { per hour } \\\text { Variable overhead: } & \$ 2,320,000 \\\text { Fixed overhead: } & \$ 872,000\end{array}$

-Refer to the Figure.What is the applied fixed overhead?

A)$840,000
B)$855,000
C)$864,000
D)$910,000

Question 62

Kelsey, Inc. produces plastic grocery bags. Kelsey has developed a static budget for the month of August, which is based on 8,000 direct labour hours. During the quarter, the actual activity was 9,000 direct labour hours. Data for August are summarized as follows:

Refer to the Figure.What is the flexible budget for August?

A)$142,000
B)$159,000
C)$165,000
D)$171,000

Question 63

Bridgestone Company has developed the following flexible budget formulas for its four overhead items:
Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however, this year 15,000 units were produced with the following actual costs:

Refer to the Figure.Prepare an overhead budget for the expected activity level of 10,000 units.What is the total budgeted overhead?

A)$12,400
B)$27,400
C)$124,000
D)$139,400

Question 64

Bridgestone Company has developed the following flexible budget formulas for its four overhead items:
Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however, this year 15,000 units were produced with the following actual costs:

Refer to the Figure.When using an after-the-fact flexible budget,what is the total budget variance?

A)$3,600 U
B)$3,600 F
C)$5,000 U
D)$5,000 F

Question 65

Bridgestone Company has developed the following flexible budget formulas for its four overhead items:
Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however, this year 15,000 units were produced with the following actual costs:

Refer to the Figure.What is the variance for maintenance when using an after-the-fact flexible budget?

A)$1,000 F
B)$3,000 U
C)$3,000 F
D)$11,000 U

Question 66

Hyphen Corporation uses a standard costing system. Information for the month of June is as follows:
The factory overhead rate is based on a normal volume of 12,000 direct labour hours. Standard cost data at 12,000 direct labour hours were as follows:
$\begin{array}{lr}\text { Actual manufacturing overhead costs }(\$ 26,000 \text { is fixed) }&\$80,000\\\text { Direct labour: }\\\text { Actual hours worked } & 12,000 \text { hours } \\\text { Standard hours allowed for actual production } & 10,000 \text { hours } \\\text { Average actual labour cost per hour } & \$ 18\end{array}$ $\begin{array}{lr}\text { Variable factory overhead } & \$ 48,000 \\\text { Fixed factory overhead } & 24,000 \\\text { Total factory overhead } & \$ 72,000\end{array}$

-Refer to the Figure.What is the fixed overhead spending variance for Hyphen?

A)$2,000 (U)
B)$4,000 (U)
C)$8,000 (U)
D)$20,000 (U)

Question 67

Jewel Company calculates its predetermined rates using practical volume, which is 300,000 units. The standard cost system allows two direct labour hours per unit produced. Overhead is applied using direct labour hours. The total budgeted overhead is $3,200,000 of which $900,000 is fixed overhead. The actual results for the year are as follows:
$\begin{array}{ll}\text { Units produced: } & 280,000 \\\text { Direct labour: } & 570,000 \text { hours }@\$ 9 \text { per hour } \\\text { Variable overhead: } & \$ 2,320,000 \\\text { Fixed overhead: } & \$ 872,000\end{array}$

-Refer to the Figure.What is the predetermined fixed overhead rate?

A)$1.50 per direct labour hour
B)$3 per direct labour hour
C)$4 per direct labour hour
D)$5.50 per direct labour hour

Question 68

Kelsey, Inc. produces plastic grocery bags. Kelsey has developed a static budget for the month of August, which is based on 8,000 direct labour hours. During the quarter, the actual activity was 9,000 direct labour hours. Data for August are summarized as follows:

Refer to the Figure.What is the flexible budget variance for August?

A)$12,000 U
B)$12,000 F
C)$29,000 U
D)$29,000 F

Question 69

Which of the following is characteristic of activity-based budgeting?

A)It builds a budget for each function.
B)It identifies only the overhead activity.
C)It classifies costs as variable or fixed with respect to the activity output measure.
D)It creates a budget after the fact.

Question 70

Within which of the following categories are the major differences between functional and activity-based budgeting found?

A)overhead and selling and administration
B)direct materials and selling and administration
C)direct labour and overhead
D)direct materials and overhead

Question 71

Cannon Company's standard fixed overhead cost is $5 per direct labour hour on the basis of budgeted fixed costs of $500,000. The standard allows one direct labour hour per unit. During the current year, Cannon produced 110,000 units of product, incurred $550,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labour.
Refer to the Figure.What is Cannon's fixed overhead spending variance for the current year?

A)$24,000 (F)
B)$30,000 (U)
C)$50,000 (U)
D)$60,000 (F)

Question 72

Bridgestone Company has developed the following flexible budget formulas for its four overhead items:
Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however, this year 15,000 units were produced with the following actual costs:

Refer to the Figure.What is the after-the-fact budget for the actual level of activity?

A)$15,000
B)$27,400
C)$31,600
D)$33,600

Question 73

Just Bags produces leather purses. Just Bags has developed a static budget for the first quarter, which is based on 20,000 direct labour hours. During the quarter, the actual activity was 22,000 direct labour hours. Data for the first quarter are summarized as follows:
$\begin{array}{lrr}&\text { Static budget } & \text { Actual costs } \\&(20,000 \text { hours }) & (22,000 \text { hours })\\\text { Direct materials } & \$ 80,000 & \$ 87,000 \\\text { Direct labour } & 160,000 & 174,000 \\\text { Rent } & 48,000 & 50,000 \\\text { Total } & \$ 288,000 & \$ 311,000\end{array}$

-Refer to the Figure.Which of the following can be concluded when comparing the static budget to the actual outcomes?

A)The manager had less direct labour hours.
B)The variances are all unfavourable.
C)The comparison is useful for assessing managerial efficiency.
D)A static budget should be used for assessing efficiency.

Question 74

Just Bags produces leather purses. Just Bags has developed a static budget for the first quarter, which is based on 20,000 direct labour hours. During the quarter, the actual activity was 22,000 direct labour hours. Data for the first quarter are summarized as follows:
$\begin{array}{lrr}&\text { Static budget } & \text { Actual costs } \\&(20,000 \text { hours }) & (22,000 \text { hours })\\\text { Direct materials } & \$ 80,000 & \$ 87,000 \\\text { Direct labour } & 160,000 & 174,000 \\\text { Rent } & 48,000 & 50,000 \\\text { Total } & \$ 288,000 & \$ 311,000\end{array}$

-Refer to the Figure.What is the flexible budget variance for the first quarter?

A)$1,000 U
B)$1,000 F
C)$23,000 U
D)$23,000 F

Question 75

Hyphen Corporation uses a standard costing system. Information for the month of June is as follows:
The factory overhead rate is based on a normal volume of 12,000 direct labour hours. Standard cost data at 12,000 direct labour hours were as follows:
$\begin{array}{lr}\text { Actual manufacturing overhead costs }(\$ 26,000 \text { is fixed) }&\$80,000\\\text { Direct labour: }\\\text { Actual hours worked } & 12,000 \text { hours } \\\text { Standard hours allowed for actual production } & 10,000 \text { hours } \\\text { Average actual labour cost per hour } & \$ 18\end{array}$ $\begin{array}{lr}\text { Variable factory overhead } & \$ 48,000 \\\text { Fixed factory overhead } & 24,000 \\\text { Total factory overhead } & \$ 72,000\end{array}$

-Refer to the Figure.What is the variable overhead efficiency variance for Hyphen?

A)$2,000 (U)
B)$4,000 (U)
C)$8,000 (U)
D)$20,000 (U)

Question 76

Just Bags produces leather purses. Just Bags has developed a static budget for the first quarter, which is based on 20,000 direct labour hours. During the quarter, the actual activity was 22,000 direct labour hours. Data for the first quarter are summarized as follows:
$\begin{array}{lrr}&\text { Static budget } & \text { Actual costs } \\&(20,000 \text { hours }) & (22,000 \text { hours })\\\text { Direct materials } & \$ 80,000 & \$ 87,000 \\\text { Direct labour } & 160,000 & 174,000 \\\text { Rent } & 48,000 & 50,000 \\\text { Total } & \$ 288,000 & \$ 311,000\end{array}$

-Refer to the Figure.What is the flexible budget amount for the first quarter?

A)$261,000
B)$288,000
C)$311,000
D)$312,000

Question 77

Bridgestone Company has developed the following flexible budget formulas for its four overhead items:
Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however, this year 15,000 units were produced with the following actual costs:

Refer to the Figure.When using an after-the-fact flexible budget,what is the variance for power?

A)$1,000 U
B)$1,000 F
C)$1,600 U
D)$3,000 U

Question 78

Jewel Company calculates its predetermined rates using practical volume, which is 300,000 units. The standard cost system allows two direct labour hours per unit produced. Overhead is applied using direct labour hours. The total budgeted overhead is $3,200,000 of which $900,000 is fixed overhead. The actual results for the year are as follows:
$\begin{array}{ll}\text { Units produced: } & 280,000 \\\text { Direct labour: } & 570,000 \text { hours }@\$ 9 \text { per hour } \\\text { Variable overhead: } & \$ 2,320,000 \\\text { Fixed overhead: } & \$ 872,000\end{array}$

-Refer to the Figure.What is the predetermined variable overhead rate?

A)$1.50 per direct labour hour
B)$3.00 per direct labour hour
C)$3.83 per direct labour hour
D)$5.50 per direct labour hour

Question 79

Cannon Company's standard fixed overhead cost is $5 per direct labour hour on the basis of budgeted fixed costs of $500,000. The standard allows one direct labour hour per unit. During the current year, Cannon produced 110,000 units of product, incurred $550,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labour.
Refer to the Figure.What is the standard activity level on which Cannon based its fixed overhead rate?

A)50,000 direct labour hours
B)100,000 direct labour hours
C)105,000 direct labour hours
D)110,000 direct labour hours

Question 80

Kelsey, Inc. produces plastic grocery bags. Kelsey has developed a static budget for the month of August, which is based on 8,000 direct labour hours. During the quarter, the actual activity was 9,000 direct labour hours. Data for August are summarized as follows:

Refer to the Figure.Which of the following can be concluded when comparing the static budget to the actual costs?

A)The manager spent more than should have been spent.
B)Immediate action is needed to reduce costs.
C)The plant manager was clearly not efficient.
D)The salary of the plant supervisor is fixed.