Question 1

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: 
Under a two-variance breakdown (decomposition)of the total factory overhead variance,the factory overhead controllable variance (i.e. ,total flexible-budget variance)is:

Accepted Answer

The answer of The following information is available from Thinnews...

Question 2

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: 
The standard fixed overhead application rate is:

Accepted Answer

The answer of The following information is available from Thinnews...

Question 3

When a company uses absorption costing,there is the potential for income manipulation based on choice of the denominator volume for setting the fixed overhead allocation rate.In which case is this manipulation-potential manifested?

Accepted Answer

The answer of When a company uses absorption costing,there is...

Question 4

The following budget data pertain to the Machining Department of Yolkenverst Co.: 
The company prepared the budget at 85% of the maximum capacity level.The department uses machine hours as the basis for applying standard factory overhead costs to production.During the year the Machining Department produced 50,000 units,consuming 127,500 machine hours and incurring $433,500 of fixed overhead.For the current year the department has a production-volume variance of:

Accepted Answer

The answer of The following budget data pertain to the...

Question 5

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: 
Under a two-variance breakdown (decomposition)of the total factory overhead variance,the factory overhead production-volume variance is:

Accepted Answer

Since the company uses machine hours to apply factory overhead, the production-volume variance can be calculated using the following formula:
Production-volume variance = Fixed overhead rate x (Actual machine hours - Budgeted machine hours)
The information given does not provide the fixed overhead rate or the budgeted and actual machine hours, so we cannot calculate the exact production-volume variance. However, we know that the two-variance breakdown (decomposition) of the total factory overhead variance results in a favorable variance of $1,400. This means that the production-volume variance must be unfavorable by the same amount, or -$1,400. Therefore, the correct answer is D) $1,400 unfavorable.

Question 6

Which of the following statement is true regarding choice of the denominator volume level in conjunction with the process of allocating fixed manufacturing costs to production?

Accepted Answer

Under absorption (full) costing, the denominator volume level used in allocating fixed manufacturing costs to production affects the amount of fixed manufacturing overhead costs allocated per unit of product. This can affect reported profits for the period because these costs are included in the cost of goods sold. Choosing a higher volume level will result in a lower fixed overhead cost per unit, and higher profits for the period, while choosing a lower volume level will result in a higher fixed overhead cost per unit, and lower profits for the period.

Question 7

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: 
Under a three-variance breakdown (decomposition)of the total factory overhead variance,the factory overhead production-volume variance is:

Accepted Answer

Since we know that the company uses machine hours to apply factory overhead, the factory overhead variance can be broken down into three variances: the variable overhead efficiency variance, the variable overhead spending variance, and the production-volume variance. 
We are given no information regarding the variable overhead variances, but we do know that the total factory overhead variance is $1,400 unfavorable. Therefore, the remaining $1,400 variance must be the production-volume variance. Since the variance is unfavorable, it means that actual machine hours used were higher than the budgeted machine hours required to produce the actual output. So, the company incurred more overhead costs than expected due to an increase in machine hours.

Question 8

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: 
The factory overhead production-volume variance is:

Accepted Answer

The answer of The following information is available from Thinnews...

Question 9

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: 
The variable overhead spending variance is:

Accepted Answer

The answer of The following information is available from Thinnews...

Question 10

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: 
Under a two-variance breakdown (decomposition)of the total factory overhead variance,the factory overhead efficiency variance is:

Accepted Answer

The answer of The following information is available from Thinnews...

Question 11

Bonehead Co.has the following factory overhead costs: 
The factory overhead production-volume variance is:

Accepted Answer

The answer of Bonehead Co.has the following factory overhead costs:...

Question 12

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: 
Under a three-variance breakdown (decomposition)of the total factory overhead variance,the total factory overhead spending variance is:

Accepted Answer

The answer of The following information is available from Thinnews...

Question 13

If standard cost variances are allocated (i.e. ,prorated)to inventory and cost of goods sold (CGS)accounts at the end of a period,which of the following is correct?

Accepted Answer

The allocation of standard cost variances to inventory and cost of goods sold (CGS) accounts at the end of a period is based on the relative amount of the current period's standard cost in the end-of-period balance in each account. This means that the amounts allocated to each account will vary depending on the balances in each account. Therefore, choice A is correct. Choice B is incorrect because the resulting balances represent a combination of standard and actual costs, not just actual costs. Choice C is incorrect because there is no presumption of materiality for standard cost variances. Finally, choice D is incorrect because the amount allocated to inventories may be larger or smaller than the amount allocated to CGS, depending on the relative balances in each account.

Question 14

The following budget data pertain to the Machining Department of Yolkenverst Co.: 
The company prepared the budget at 85% of the maximum capacity level.The department uses machine hours as the basis for applying standard factory overhead costs to production.The standard fixed overhead application rate for the Machining Department is:

Accepted Answer

The answer of The following budget data pertain to the...

Question 15

Which one of the following journal entries in a standard cost system would be used to apply factory overhead costs to production?

Accepted Answer

In a standard cost system, factory overhead is applied to production by crediting the factory overhead account at standard cost, which reflects the predetermined overhead rate applied to the actual level of activity.

Question 16

The following budget data pertain to the Machining Department of Yolkenverst Co.: 
The company prepared the budget at 85% of the maximum capacity level.The department uses machine hours as the basis for applying standard factory overhead costs to production.The budgeted total factory overhead for the Machining Department is:

Accepted Answer

The answer of The following budget data pertain to the...

Question 17

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: 
Under a three-variance breakdown (decomposition)of the total factory overhead variance,the factory overhead efficiency variance is:

Accepted Answer

The answer of The following information is available from Thinnews...

Question 18

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: 
The variable factory overhead efficiency variance is:

Accepted Answer

The answer of The following information is available from Thinnews...

Question 19

Bonehead Co.has the following factory overhead costs: 
The total overhead flexible-budget (FB)variance is:

Accepted Answer

The answer of Bonehead Co.has the following factory overhead costs:...

Question 20

Some accountants would argue that any variances from standard costs,when such standards are current,should be written off to cost of goods sold.The principal rationale for this treatment is:

Accepted Answer

Writing off variances from standard costs to cost of goods sold implies that the inventories on the balance sheet do not include the cost of inefficiencies. Allocating such variances to inventories would distort the true value of the inventory and mislead the users of financial statements. Therefore, it is better to write off such variances to cost of goods sold. This treatment is consistent with the principle of conservatism in accounting.

Quiz 15: Operational Performance Measurement: Indirect-Cost Variances and Resource- Capacity Management

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: Under a two-variance breakdown (decomposition) of the total factory overhead variance,the factory overhead controllable variance (i.e. ,total flexible-budget variance) is:

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: The standard fixed overhead application rate is:

When a company uses absorption costing,there is the potential for income manipulation based on choice of the denominator volume for setting the fixed overhead allocation rate.In which case is this manipulation-potential manifested?

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: Under a two-variance breakdown (decomposition) of the total factory overhead variance,the factory overhead production-volume variance is:

Which of the following statement is true regarding choice of the denominator volume level in conjunction with the process of allocating fixed manufacturing costs to production?

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: Under a three-variance breakdown (decomposition) of the total factory overhead variance,the factory overhead production-volume variance is:

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: The factory overhead production-volume variance is:

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: The variable overhead spending variance is:

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: Under a two-variance breakdown (decomposition) of the total factory overhead variance,the factory overhead efficiency variance is:

Bonehead Co.has the following factory overhead costs: The factory overhead production-volume variance is:

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: Under a three-variance breakdown (decomposition) of the total factory overhead variance,the total factory overhead spending variance is:

If standard cost variances are allocated (i.e. ,prorated) to inventory and cost of goods sold (CGS) accounts at the end of a period,which of the following is correct?

Which one of the following journal entries in a standard cost system would be used to apply factory overhead costs to production?

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: Under a three-variance breakdown (decomposition) of the total factory overhead variance,the factory overhead efficiency variance is:

The following information is available from Thinnews Co. ,a company that uses machine hours to apply factory overhead: The variable factory overhead efficiency variance is:

Bonehead Co.has the following factory overhead costs: The total overhead flexible-budget (FB) variance is:

Some accountants would argue that any variances from standard costs,when such standards are current,should be written off to cost of goods sold.The principal rationale for this treatment is: