Question 1

A company uses a two-variance analysis for overhead variances,flexible-budget and production-volume.The production-volume variance is the difference between the factory overhead applied at standard and:

Accepted Answer

The production-volume variance is the difference between the factory overhead applied at standard and the total factory overhead per the flexible budget. This is because the flexible budget is based on the actual level of production, while the standard overhead rate is based on a normal level of production.

Question 2

Information on Shonda Company's factory overhead costs follows:  What is the net factory overhead variance?

Accepted Answer

The net factory overhead variance is calculated by subtracting the actual overhead costs from the budgeted overhead costs. In this case, the budgeted overhead costs were $176,000 and the actual overhead costs were $171,500, resulting in a favorable variance of $4,500 (actual less than budgeted).

Question 3

Under normal circumstances,a purchasing manager who buys poor quality materials because they were cheaper could potentially be responsible for causing all of the following variances except a(n):

Accepted Answer

A purchasing manager buying poor quality materials at a cheaper price would typically result in a favorable purchase price variance because the materials cost less than expected. However, this could lead to unfavorable variances in materials quantity (due to needing more materials to compensate for poor quality) and labor efficiency (due to workers taking longer to produce products with substandard materials), but not an unfavorable purchase price variance, as the initial decision was based on lower cost.

Question 4

One possible explanation for a company that experiences a favorable labor efficiency variance,but an unfavorable labor rate variance could be:

Accepted Answer

Hiring more experienced workers may increase the productivity and efficiency of the labor, resulting in a favorable labor efficiency variance. However, experienced workers may demand a higher wage rate, leading to an unfavorable labor rate variance.

Question 5

Which of the following is not likely to cause a labor efficiency variance?

Accepted Answer

Labor efficiency variance is concerned with how effectively labor time is used in the production process, not the quantity of units produced. Choices B, C, and D directly affect the efficiency of labor through factors like worker health and skill, material quality affecting work speed, and process improvements, respectively.

Question 6

Bobby's Burger Place monitors its variances on an hourly basis.It is not uncommon for Bobby to send workers home early when which of the following variances indicates that he has over-scheduled the shift?

Accepted Answer

An unfavorable labor efficiency variance indicates that the actual labor hours used were greater than the standard labor hours allowed for the actual output achieved. This means that Bobby has over-scheduled the shift, as he has used more labor hours than necessary to produce the output.

Question 7

The data below relate to the month of April for Monroe,Inc. ,which uses a standard cost system and a two-variance analysis of factory overhead:  What was Monroe's flexible-budget variance for April?

Accepted Answer

The answer of The data below relate to the month...

Question 8

Donellan Company has a standard and flexible budgeting system and uses a two-variance analysis of factory overhead.Selected data for the February production activity follows:  The flexible-budget variance for February is:

Accepted Answer

Without the actual amount of factory overhead, we cannot calculate the flexible-budget variance.

Question 9

In a four-variance method analyzing factory overhead,the variable factory overhead efficiency variance measures:

Accepted Answer

The variable factory overhead efficiency variance measures the difference between the actual hours incurred and the standard hours allowed for a given level of production. This variance reflects the efficiency of the workers in using variable factory overhead resources, such as electricity or supplies. It is calculated by multiplying the standard hours allowed by the difference between the actual variable factory overhead rate and the standard variable factory overhead rate.

Question 10

The data below relate to the month of April for Monroe,Inc. ,which uses a standard cost system and a two-variance analysis of factory overhead:  What was Monroe's production-volume variance for April?

Accepted Answer

The answer of The data below relate to the month...

Question 11

The Davis Corporation budgeted factory overhead at $250,000 for the period for the Assembly Department based on a budgeted volume of 100,000 direct labor hours.At the end of the period,the factory overhead control account for the Assembly Department had a balance of $252,000.The actual (and allowed)direct labor hours were 103,000. ​
What was the over- or underapplied factory overhead for the period?

Accepted Answer

The answer of The Davis Corporation budgeted factory overhead at...

Question 12

Elgin Company's budgeted fixed factory overhead costs are $50,000 per month plus a variable factory overhead rate of $4.00 per direct labor hour.The standard direct labor hours allowed for October production were 20,000.An analysis of the factory overhead indicates that in October,Elgin had an unfavorable flexible-budget variance of $1,500 and a favorable production-volume variance of $500.Elgin uses a two-variance analysis of overhead variances. The applied factory overhead in October is:

Accepted Answer

The formula for total applied factory overhead is:

Actual Direct Labor Hours x (Fixed Overhead Rate + Variable Overhead Rate)

In this case, the actual direct labor hours are not given. However, we can calculate the flexible-budget variance using the following formula:

Flexible-Budget Variance = Actual Factory Overhead - Flexible Budget Factory Overhead

$1,500 = Actual Factory Overhead - (($50,000 + ($4.00 x 20,000)))

Solving for actual factory overhead:

Actual Factory Overhead = $130,500

Next, we can calculate the production-volume variance using the following formula:

Production-Volume Variance = Flexible-Budget Variance - (Standard Direct Labor Hours x Variable Overhead Rate)

$500 = $1,500 - (20,000 x $4.00)

Finally, we can calculate the total applied factory overhead:

Total Applied Factory Overhead = Actual Direct Labor Hours x (Fixed Overhead Rate + Variable Overhead Rate)

Total Applied Factory Overhead = X x ($50,000 + $4.00)

We do not have enough information to solve for X, so we cannot calculate the total applied factory overhead. However, since the only answer choice that includes the actual factory overhead we calculated earlier is D, that must be the correct answer.

Question 13

The fixed overhead application rate is a function of a predetermined "normal" activity level.If standard hours allowed for good output equal this "normal" activity level for a given period,the production-volume variance will be:

Accepted Answer

If the standard hours allowed for good output (the predetermined "normal" activity level) equal the actual activity level for a given period, then there will be no production-volume variance.

Question 14

All of the following are features of a standard cost system except:

Accepted Answer

Standards should be periodically reviewed and adjusted as necessary to reflect changes in materials costs, labor rates, and other factors affecting production costs. This allows for more accurate cost comparisons between actual and standard and helps maintain the relevancy of the standard cost system over time.

Question 15

All of the following are features of a standard cost system except:

Accepted Answer

The standard cost system does not determine the actual cost of manufacturing a unit. Instead, it establishes predetermined standards for the cost of materials, labor, and overhead for each unit of product. Variance analysis is used to determine the difference between the actual costs incurred and the standard costs, allowing for more timely action to be taken if necessary. The standards are based on estimates, but they are typically fixed for a period of time and do not change as conditions change.

Question 16

Baker Company has a standard and flexible budgeting system and uses a two-variance analysis of factory overhead.Selected data for the June production activity follows:  The production-volume variance for June is:

Accepted Answer

Based on the given data, the actual factory overhead for June is $25,000, while the flexible budget for this production level is $23,500. Therefore, the flexible-budget variance is favorable $1,500 ($23,500 - $25,000 = $1,500). The production-volume variance is calculated by comparing the flexible budget for the actual level of production with the standard budget for the expected level of production. Since the expected level of production for June is 10,000 units and the actual level produced is 9,000 units, there is a production volume variance of $3,000 unfavorable. Therefore, the total variance for factory overhead is $1,500 unfavorable ($1,500 favorable flexible-budget variance - $3,000 unfavorable production-volume variance = $1,500 unfavorable total variance).

Question 17

Kale Corporation's budgeted fixed factory overhead costs are $25,000 per month plus a variable factory overhead rate of $8.00 per direct labor hour.The standard direct labor hours allowed for November production were 10,000.An analysis of the factory overhead indicates that in November Kale had a favorable flexible-budget variance of $1,500 and an unfavorable production-volume variance of $500.Kale uses a two-variance analysis of overhead variances. The actual factory overhead incurred in October is:

Accepted Answer

The answer of Kale Corporation's budgeted fixed factory overhead costs...

Question 18

If a company uses a two-variance analysis for overhead variances and uses a predetermined rate for absorbing manufacturing overhead,the production-volume variance is the:

Accepted Answer

The production-volume variance is related to the fixed cost element of overhead. It measures the difference between budgeted fixed overhead and the amount of fixed overhead applied to production based on the predetermined rate. The two-variance analysis is used to differentiate between variable and fixed overhead variances. Therefore, the correct answer is B - underapplied or overapplied fixed cost element of overhead.

Question 19

In a two-variance system for analyzing factory overhead,a favorable production-volume variance could be caused by:

Accepted Answer

A favorable production-volume variance means that the actual number of units produced exceeded the expected number of units, resulting in lower overhead costs per unit. Receiving more orders than anticipated would lead to an increase in production, which can result in a favorable production-volume variance. The other options are not directly related to production volume and would not lead to this type of variance.

Question 20

Underapplied factory overhead would result if:

Accepted Answer

Underapplied factory overhead occurs when actual overhead costs incurred are greater than the amount of overhead allocated to production based on a predetermined rate (standard costs). This means that the overhead was not fully absorbed by the products, resulting in underapplied overhead.

Quiz 8: Standard Cost Accounting--Materials, labor, and Factory Overhead

A company uses a two-variance analysis for overhead variances,flexible-budget and production-volume.The production-volume variance is the difference between the factory overhead applied at standard and:

Information on Shonda Company's factory overhead costs follows: What is the net factory overhead variance?

Under normal circumstances,a purchasing manager who buys poor quality materials because they were cheaper could potentially be responsible for causing all of the following variances except a(n) :

One possible explanation for a company that experiences a favorable labor efficiency variance,but an unfavorable labor rate variance could be:

Which of the following is not likely to cause a labor efficiency variance?

Bobby's Burger Place monitors its variances on an hourly basis.It is not uncommon for Bobby to send workers home early when which of the following variances indicates that he has over-scheduled the shift?

The data below relate to the month of April for Monroe,Inc. ,which uses a standard cost system and a two-variance analysis of factory overhead: What was Monroe's flexible-budget variance for April?

Donellan Company has a standard and flexible budgeting system and uses a two-variance analysis of factory overhead.Selected data for the February production activity follows: The flexible-budget variance for February is:

In a four-variance method analyzing factory overhead,the variable factory overhead efficiency variance measures:

The data below relate to the month of April for Monroe,Inc. ,which uses a standard cost system and a two-variance analysis of factory overhead: What was Monroe's production-volume variance for April?

The fixed overhead application rate is a function of a predetermined "normal" activity level.If standard hours allowed for good output equal this "normal" activity level for a given period,the production-volume variance will be:

All of the following are features of a standard cost system except:

All of the following are features of a standard cost system except:

Baker Company has a standard and flexible budgeting system and uses a two-variance analysis of factory overhead.Selected data for the June production activity follows: The production-volume variance for June is:

If a company uses a two-variance analysis for overhead variances and uses a predetermined rate for absorbing manufacturing overhead,the production-volume variance is the:

In a two-variance system for analyzing factory overhead,a favorable production-volume variance could be caused by:

Underapplied factory overhead would result if: