Test bank managerial accounting by garrison 13e chapter 11

The fixed manufacturing overhead budget variance equals: A Actual fixed manufacturing overhead cost--Applied fixed manufacturing Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thin

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6 The overhead spending variance is not affected by excessive usage or waste of

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8 A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours The

company's choice of the denominator level of activity affects the fixed overhead volume variance

Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5; 6 Level: Medium

9 The higher the denominator activity level used to compute the predetermined overheadrate, the higher the predetermined overhead rate

Ans: False AACSB: Analytic AICPA BB: Critical Thinking

AICPA FN: Reporting LO: 5 Level: Easy

10 In a standard costing system, if the actual fixed manufacturing overhead cost exceeds the budgeted fixed manufacturing overhead cost for the period, then fixed

manufacturing overhead cost would be underapplied for the period

AICPA FN: Reporting LO: 5 Level: Hard

11 When fixed manufacturing overhead cost is applied to work in process, it is treated as

if it were a variable cost

Ans: True AACSB: Analytic AICPA BB: Critical Thinking

AICPA FN: Reporting LO: 5 Level: Medium

12 A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours The

company's choice of the denominator level of activity has no effect on the variable portion of the predetermined overhead rate

Ans: True AACSB: Analytic AICPA BB: Critical Thinking

13 There can be a volume variance for either variable manufacturing overhead or fixed manufacturing overhead

Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Medium

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14 If the denominator level of activity is less than the standard hours allowed for the output of the period, then the volume variance is unfavorable, indicating an

overutilization of available facilities

15 A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours A fixed overhead volume variance will necessarily occur in a month in which actual direct labor-hours differ from standard hours allowed

Multiple Choice Questions

16 The purpose of a flexible budget is to:

A) allow management some latitude in meeting goals

B) eliminate fluctuations in production reports by ignoring variable costs

C) compare actual and budgeted results at virtually any level of activity

D) reduce the time to prepare the annual budget

Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking

AICPA FN: Reporting LO: 1 Level: Easy Source: CPA; adapted

17 When using a flexible budget, a decrease in activity within the relevant range:

A) decreases variable cost per unit

B) decreases total costs

C) increases total fixed costs

D) increases variable cost per unit

Ans: B AACSB: Analytic AICPA BB: Critical Thinking

AICPA FN: Reporting LO: 1 Level: Easy Source: CPA; adapted

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18 The activity base that is used for a flexible budget for an overhead cost should be:A) direct labor-hours.

B) units of output

C) expressed in dollars, if possible

D) the cause of the overhead cost

Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking

19 A budget that is based on the actual activity of a period is known as a:

A) continuous budget

B) flexible budget

C) static budget

D) master budget

Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking

20 The fixed manufacturing overhead budget variance equals:

A) Actual fixed manufacturing overhead cost Applied fixed manufacturing

Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking

21 Which of the following variances is least significant from a standpoint of cost control?A) materials price variance

B) labor efficiency variance

C) fixed overhead volume variance

D) variable overhead spending variance

Ans: C AACSB: Analytic AICPA BB: Critical Thinking

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22 The manufacturing overhead variance that is a measure of capacity utilization is:A) the overhead spending variance.

B) the overhead efficiency variance

C) the overhead budget variance

D) the overhead volume variance

Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking

23 If the denominator activity is less than the standard hours allowed for the actual output, one would expect that:

A) the variable overhead efficiency variance would be unfavorable

B) the fixed overhead volume variance would be favorable

C) the fixed overhead budget variance would be unfavorable

D) the variable overhead efficiency variance would be favorable

24 The volume variance is nonzero whenever:

A) standard hours allowed for the output of a period differ from the denominator level of activity

B) actual hours differ from the denominator level of activity

C) standard hours allowed for the output of a period differ from the actual hours during the period

D) actual fixed overhead costs incurred during a period differ from budgeted fixed overhead costs as contained in the flexible budget

Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking

25 A volume variance is computed for:

A) both variable and fixed overhead

B) variable overhead only

C) fixed overhead only

D) direct labor costs as well as overhead costs

Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking

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26 Which of the following standard cost variances would usually be least controllable by

a production supervisor?

A) Fixed overhead volume variance

B) Variable overhead efficiency variance

C) Direct labor efficiency variance

D) Materials usage (quantity) variance

Ans: A AACSB: Analytic AICPA BB: Critical Thinking

AICPA FN: Reporting LO: 6 Level: Hard Source: CPA; adapted

27 The following costs appear in Malgorzata Company's flexible budget at an activity level of 15,000 machine-hours:

Total CostIndirect materials $7,800

Ans: D AACSB: Analytic AICPA BB: Critical Thinking

Solution:

Budgeted number of machine hours: 15,000

Cost Formula (per machine-hour)

Activity (in machine-hours):

12,000Variable costs:

Indirect materials $0.52* $6,240

Fixed costs:

Factory rent $18,000

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28 Mongelli Family Inn is a bed and breakfast establishment in a converted 100-year-old mansion The Inn's guests appreciate its gourmet breakfasts and individually decoratedrooms The Inn's overhead budget for the most recent month appears below:

Activity level 90 guests

Variable overhead costs:

Total overhead cost $7,739

The Inn's variable overhead costs are driven by the number of guests

What would be the total budgeted overhead cost for a month if the activity level is 99 guests? Assume that the activity levels of 90 guests and 99 guests are within the same relevant range

A) $7,793.90

B) $61,541.00

C) $8,512.90

D) $7,739.00

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Budgeted number of guests: 90

Cost Formula(per guest)

Activity (in guests):

99Overhead Costs

Supplies ($234 ÷ 90 guests) $2.60 $ 257.40

Laundry ($315 ÷ 90 guests) 3.50 346.50

Total variable overhead cost $6.10 603.90

Fixed overhead costs:

Utilities 220.00

Salaries and wages 4,290.00

Depreciation 2,680.00

Total fixed overhead cost 7,190.00

Total budgeted overhead cost $7,793.90

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29 Kerekes Manufacturing Corporation has prepared the following overhead budget for next month.

Activity level 2,500 machine-hours

The company's variable overhead costs are driven by machine-hours

What would be the total budgeted overhead cost for next month if the activity level is 2,400 machine-hours rather than 2,500 machine-hours? Assume that the activity levels

of 2,500 machine-hours and 2,400 machine-hours are within the same relevant range.A) $59,830.00

B) $59,280.00

C) $60,380.00

D) $61,750.00

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Budgeted variableoverhead costs

hours

Machine-Permachine-hourSupplies $12,250 2,500 $4.90Indirect labor $22,000 2,500 $8.80Budgeted number of machine-hours: 2,500

Cost Formula(per MH)

Activity (in MHs):

2,400Overhead Costs

Supplies $ 4.90 $11,760

Indirect labor 8.80 21,120

Total variable overhead cost $13.70 13,880

Supervision 15,500

Utilities 5,500

Depreciation 6,500

Total fixed overhead cost 27,500

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30 Sharifi Hospital bases its budgets on patient-visits The hospital's static budget for October appears below:

Budgeted number of patient-visits 8,500

Budgeted variable overhead costs:

Supplies (@$4.70 per patient-visit) $ 39,950

Laundry (@$7.80 per patient-visit) 66,300

Total variable overhead cost 106,250

Budgeted fixed overhead costs:

Wages and salaries 50,150

Occupancy costs 84,150

Total budgeted overhead cost $240,550

The total overhead cost at an activity level of 9,200 patient-visits per month should be:A) $260,360

B) $250,070

C) $249,300

D) $240,550

Solution:

Budgeted number of patient-visits: 8,500

Cost Formula(per patient-visit)

Activity (in patientvisits):

9,200Overhead Costs

Supplies $ 4.70 $ 43,240

Laundry 7.80 71,760

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31 Ostler Hotel bases its budgets on guest-days The hotel's static budget for April

appears below:

Budgeted number of guest-days 8,700

Budgeted variable overhead costs:

Supplies (@$7.00 per guest-day) $ 60,900

Laundry (@$3.80 per guest-day) 33,060

Total variable overhead cost 93,960

Budgeted fixed overhead costs:

Total budgeted overhead cost $213,150

The total overhead cost at an activity level of 9,700 guest-days per month should be:A) $213,150

B) $237,650

C) $223,950

D) $224,920

Solution:

Budgeted number of guest-days: 8,700

Cost Formula(per guest-day)

Activity (in guest-days):

9,700Overhead Costs

Supplies $ 7.00 $ 67,900

Laundry 3.80 36,860

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32 Riggs Enterprise's flexible budget cost formula for indirect materials, a variable cost,

is $0.45 per unit of output If the company's performance report for last month shows a

$90 favorable variance for indirect materials and if 8,700 units of output were

produced last month, then the actual costs incurred for indirect materials for the monthmust have been:

A) $4,005

B) $3,915

C) $3,825

D) $3,735

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33 Chmielewski Medical Clinic measures its activity in terms of patient-visits Last month, the budgeted level of activity was 1,560 patient-visits and the actual level of activity was 1,530 patient-visits The clinic's director budgets for variable overhead costs of $1.10 per patient-visit and fixed overhead costs of $19,900 per month The actual variable overhead cost last month was $1,400 and the actual fixed overhead costwas $21,720 In the clinic's flexible budget performance report for last month, what would have been the variance for the total overhead cost?

A) $33 F

B) $1,504 U

C) $1,537 U

D) $283 F

Solution:

Budgeted number of patient-visits: 1,560

Actual number of patient-visits: 1,530

CostFormula(perpatient-visit)

ActualCostsIncurredfor 1,530patient-visits

BudgetBased on1,530patient-visits VarianceVariable overhead costs $1.10 $1,400 $1,683 $ 283 FFixed overhead costs $21,720 $19,900 1,820 U

$1,537 U

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34 Rodriques Tile Installation Corporation measures its activity in terms of square feet of tile installed Last month, the budgeted level of activity was 1,630 square feet and the actual level of activity was 1,720 square feet The company's owner budgets for supplycosts, a variable overhead cost, at $3.40 per square foot The actual supply cost last month was $6,750 In the company's flexible budget performance report for last month, what would have been the variance for supply costs?

A) $353 U

B) $306 U

C) $902 U

D) $1,208 U

Solution:

Budgeted number of square feet: 1,720

Actual number of square feet: 1,630

CostFormula(persquarefoot)

ActualCostsIncurredfor 1,720squarefeet

BudgetBased on1,720square feet VarianceVariable overhead costs

(Supply costs) $3.40 $6,750 $5,848 $902 U

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35 Rodabaugh Natural Dying Corporation measures its activity in terms of skeins of yarn dyed Last month, the budgeted level of activity was 15,900 skeins and the actual level

of activity was 16,100 skeins The company's owner budgets for dye costs, a variable overhead cost, at $0.87 per skein The actual dye cost last month was $14,800 In the company's flexible budget performance report for last month, what would have been the variance for dye costs?

A) $967 U

B) $174 U

C) $184 U

D) $793 U

Solution:

Budgeted number of skeins: 15,900

Actual number of skeins: 16,100

CostFormula(perskein)

ActualCostsIncurredfor16,100skeins

BudgetBased on16,100skeins VarianceVariable overhead costs (Dye

costs) $0.87 $14,800 $14,007 $793 U

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36 Andress Footwear Corporation's flexible budget cost formula for supplies, a variable overhead cost, is $2.17 per unit of output The company's flexible budget performance report for last month showed a $4,531 unfavorable variance for supplies During that month, 19,700 units were produced Budgeted activity for the month had been 19,400 units The actual costs incurred for indirect materials must have been closest to:

A) $2.17

B) $2.63

C) $2.67

D) $2.40

Solution:

Budgeted number of units produced: 19,400

Actual number of units produced: 19,700

CostFormula(per unitproduced)

ActualCostsIncurredfor19,700unitsproduced

BudgetBased on19,700unitsproduced VarianceVariable overhead costs

(Supplies) $2.17 X $42,749 $4,531 UActual costs − Budgeted costs = Supplies variance

X − $42,749 = $4,531

X = $47,280

Per unit cost = Total actual costs ÷ Number of units produced

Per unit cost = $47,280 ÷ 19,700 = $2.40

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37 Ocker Corporation's flexible budget performance report for last month shows that actual indirect materials cost, a variable overhead cost, was $28,420 and that the variance for indirect materials cost was $3,828 unfavorable During that month, the company worked 11,600 machine-hours Budgeted activity for the month had been 11,300 machine-hours The cost formula per machine-hour for indirect materials cost must have been closest to:

A) $2.85

B) $2.18

C) $2.78

D) $2.12

Solution:

Budgeted number of machine-hours: 11,300

Actual number of machine-hours: 11,600

CostFormula(perMH)

ActualCostsIncurredfor11,600machine-hours

BudgetBased on11,600machine-hours VarianceVariable overhead costs

(Indirect materials) Y $28,420 X $3,828 U

Actual costs − Budgeted costs = Indirect materials variance

$28,420 − X = $3,828

X = $24,592

Y = Per machine-hour cost =

Per machine-hour cost = Actual cost ÷ Machine-hours =

Per machine-hour cost = $24,592 ÷ 11,600 = $2.12

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38 Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) The company hasprovided the following data for the most recent month:

Budgeted level of activity 9,700 MHs

Actual level of activity 9,900 MHs

Cost formula for variable manufacturing overhead cost $6.30 per MHBudgeted fixed manufacturing overhead cost $49,000

Actual total variable manufacturing overhead $60,390

Actual total fixed manufacturing overhead $47,000

What was the variable overhead spending variance for the month?

A) $2,000 favorable

B) $720 favorable

C) $1,260 unfavorable

D) $1,980 favorable

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39 Teall Corporation has a standard cost system in which it applies manufacturing

overhead to products on the basis of standard machine-hours (MHs) The company hasprovided the following data for the most recent month:

What was the fixed overhead budget variance for the month?

A) $4,000 unfavorable

B) $4,000 favorable

C) $570 favorable

D) $570 unfavorable

Solution:

Budget variance = Actual fixed overhead cost − Budgeted fixed overhead cost

= $54,000 − $50,000 = $4,000 U

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40 Alapai Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) The company hasprovided the following data for the most recent month:

What was the total of the variable overhead spending and fixed overhead budget variances for the month?

A) $3,720 favorable

B) $2,280 unfavorable

C) $1,840 favorable

D) $1,880 unfavorable

Fixed overhead budget variance

= Actual fixed overhead costs − Budgeted fixed overhead cost

= $37,000 − $40,000 = $3,000 F

Total overhead variance = $720 F + $3,000 F = $3,720 F

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41 Bartoletti Fabrication Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) The company's cost formula for variable manufacturing overhead is $4.60 per MH The company had budgeted its fixed manufacturing overhead cost at $65,000 for the month During the month, the actual total variable manufacturing overhead was

$22,080 and the actual total fixed manufacturing overhead was $63,000 The actual level of activity for the period was 4,600 MHs What was the total of the variable overhead spending and fixed overhead budget variances for the month?

B) $1,080 favorable

C) $920 unfavorable

D) $920 favorable

= Actual fixed overhead costs − Budgeted fixed overhead cost

= $63,000 − $65,000 = $2,000 F

Total overhead variance = $920 U + $2,000 F = $1,080 F

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42 Amirault Manufacturing Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) The company's cost formula for variable manufacturing overhead is $4.00 per MH During the month, the actual total variable manufacturing overhead was $18,040 and the actual level of activity for the period was 4,100 MHs What was the variable overhead spending variance for the month?

A) $410 favorable

C) $1,640 favorable

D) $410 unfavorable

43 Goolden Electronics Corporation has a standard cost system in which it applies

manufacturing overhead to products on the basis of standard machine-hours (MHs) The company had budgeted its fixed manufacturing overhead cost at $58,000 for the month and its level of activity at 2,500 MHs The actual total fixed manufacturing overhead was $61,200 for the month and the actual level of activity was 2,600 MHs What was the fixed overhead budget variance for the month to the nearest dollar?A) $880 unfavorable

B) $880 favorable

C) $3,200 favorable

Solution:

= Actual fixed overhead cost − Budgeted fixed overhead cost

= $61,200 − $58,000 = $3,200 U

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44 Wadding Corporation applies manufacturing overhead to products on the basis of standard machine-hours For the most recent month, the company based its budget on 3,600 machine-hours Budgeted and actual overhead costs for the month appear below:

OriginalBudgetBased

on 3,600Machine-Hours

ActualCostsVariable overhead costs:

Total overhead cost $69,940 $72,120

The company actually worked 3,900 machine-hours during the month The standard hours allowed for the actual output were 3,890 machine-hours for the month What was the overall variable overhead efficiency variance for the month?

A) $760 favorable

B) $104 unfavorable

C) $180 favorable

D) $656 favorable

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Variableoverhead costs

hours

Machine-Per hourSupplies $11,160 3,600 $3.10

(1)BudgetBased on3,900MHs(AH ×SR)

(2)BudgetBased on3,890 MHs(SH × SR)

(1) − (2)EfficiencyVarianceOverhead Costs

Supplies $ 3.10 $12,090 * $12,059 $ 31 UIndirect labor 7.30 28,470 ** $28,397 73 U

*3,900 machine-hours × $3.10 per machine-hour = $12,090

**3,900 machine-hours × $7.30 per machine-hour = $28,470

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45 Mongar Corporation applies manufacturing overhead to products on the basis of standard machine-hours Budgeted and actual overhead costs for the most recent month appear below:

Original Budget Actual CostsVariable overhead costs:

Supplies $ 7,980 $ 8,230

Indirect labor 29,820 29,610

Total variable overhead cost $37,800 $37,840

The original budget was based on 4,200 machine-hours The company actually worked4,350 machine-hours during the month and the standard hours allowed for the actual output were 4,190 machine-hours What was the overall variable overhead efficiency variance for the month?

A) $130 unfavorable

B) $950 favorable

C) $1,310 favorable

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Variableoverhead costs

hours

Machine-Per hourSupplies $7,980 4,200 $1.90

(1)BudgetBased

on 4,350MHs(AH ×SR)

(1) − (2)EfficiencyVarianceVariable overhead costs:

Supplies $1.90 $8,265 * $7,961 $ 304 UIndirect labor $7.10 $30,885 ** $29,749 1,136 U

$1,440 U

*4,350 machine-hours × $1.90 per machine-hour = $8,265

**4,350 machine-hours × $7.10 per machine-hour = $30,885

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46 Pleiss Corporation applies manufacturing overhead to products on the basis of

standard machine-hours The company's cost formula for variable overhead cost is

$2.40 per machine-hour The actual variable overhead cost for the month was $5,240 The original budget for the month was based on 2,100 machine-hours The company actually worked 2,270 machine-hours during the month The standard hours allowed for the actual output of the month totaled 2,280 machine-hours What was the variable overhead efficiency variance for the month?

A) $24 favorable

B) $232 favorable

C) $208 favorable

D) $432 unfavorable

(1)BudgetBased on2,270 MHs(AH × SR)

(1) − (2)EfficiencyVarianceVariable overhead costs $2.40 $5,448 $5,472 $24 F

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47 Pyrdum Corporation produces metal telephone poles In the most recent month, the company budgeted production of 3,500 poles Actual production was 3,800 poles According to standards, each pole requires 4.6 machine-hours The actual machine-hours for the month were 17,800 machine-hours The budgeted indirect labor is $5.40 per machine-hour The actual indirect labor cost for the month was $96,712 The variable overhead efficiency variance for indirect labor is:

A) $2,320 U

B) $1,728 F

C) $2,320 F

D) $1,728 U

B) $10,045 U

C) $2,844 F

D) $2,844 U

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49 The following data have been provided by Moretta Corporation, a company that produces forklift trucks:

Budgeted production 3,400 trucks

Standard machine-hours per truck 2.9 machine-hours

Budgeted supplies cost $1.50 per machine-hour

Actual production 3,800 trucks

Actual machine-hours 10,930 machine-hours

Actual supplies cost (total) $17,496

The variable overhead efficiency variance for supplies cost is:

A) $135 U

B) $135 F

C) $966 U

D) $966 F

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50 Ronda Manufacturing Company uses a standard cost system with machine-hours as the activity base for overhead Last year, Ronda incurred $840,000 of fixed

manufacturing overhead and generated a $42,000 favorable fixed overhead budget variance The following data relate to last year's operations:

Denominator activity level in machine-hours 21,000

Standard machine-hours allowed for actual output 20,000

Actual number of machine-hours incurred 22,050

What amount of total fixed manufacturing overhead cost did Ronda apply to

production last year?

A) $837,900

B) $840,000

C) $926,100

D) $972,405

AICPA FN: Reporting LO: 5; 6 Level: Hard

Solution:

Predetermined overhead rate =

$882,000 ÷ 21,000 denominator machine-hours = $42 per machine-hour

Fixed overhead applied to production =

20,000 standard hours × $42 per machine-hour = $840,000

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51 Blue Company's standards call for 2,500 direct labor-hours to produce 1,000 units During May only 900 units were produced and the company worked 2,400 direct labor-hours The standard hours allowed for May production would be:

A) 2,500 hours

B) 2,400 hours

C) 2,250 hours

D) 1,800 hours

Solution:

Standard direct labor-hours per unit = 2,500 direct labor-hours ÷ 1,000 units

= 2.5 direct labor-hours per unit

Standard hours allowed = 2.5 direct labor hours per unit × 900 units

= 2,250 hours

52 Diehl Company uses a standard cost system in which it applies manufacturing

overhead to units of product on the basis of standard direct labor-hours The

company's total applied factory overhead was $315,000 last year when the company used 32,000 direct labor-hours as the denominator activity If the variable factory overhead rate was $8 per direct labor-hour, and if 30,000 standard labor-hours were allowed for the output of the year, then the total budgeted fixed factory overhead for the year must have been:

A) $60,000

B) $80,000

C) $90,000

D) $100,000

Solution:

Predetermined overhead rate = $315,000 ÷ 30,000 DLHs = $10.50 per DLH

Fixed portion of predetermined overhead rate

= Total predetermined overhead rate − Variable overhead rate

= $10.50 per DLH − $8.00 per DLH = $2.50 per DLH

Budgeted fixed overhead = 32,000 DLHs × $2.50 per DLH = $80,000

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53 The Marlow Company uses a standard cost system and applies manufacturing

overhead to products on the basis of standard direct labor-hours The denominator activity is set at 40,000 direct labor-hours per year Budgeted fixed manufacturing overhead cost is $40,000 per year, and 0.5 direct labor-hours are required to

manufacture one unit The standard cost card would indicate fixed manufacturing overhead cost per unit to be:

A) $1.00

B) $2.00

C) $1.50

D) $0.50

Solution:

Actual units produced = Total direct labor-hours ÷ Standard direct labor-hours per unit

= 40,000 ÷ 0.5 = 80,000 units

Fixed manufacturing overhead cost per unit = $40,000 ÷ 80,000 units = $0.50 per unit

54 Bakos Corporation's abbreviated flexible budget for two levels of activity appears below:

Cost Formula(per machine-hour)

Activity (in machine-hours)2,800 2,900Total variable overhead cost $8.80 $ 24,640 $ 25,520

Total fixed overhead cost 100,688 100,688

If the denominator level of activity is 2,800 machine-hours, the variable element in thepredetermined overhead rate would be:

A) $44.76

B) $35.96

C) $43.52

D) $8.80

Solution:

Variable element = Total variable overhead cost ÷ Actual machine-hours

= $24,640 ÷ 2,800 machine-hours = $8.80 per machine-hour

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55 Recht Corporation's summary flexible budget for two levels of activity appears below:

If the denominator level of activity is 1,200 machine-hours, the fixed element in the predetermined overhead rate would be:

A) $14.95

B) $930.00

C) $24.25

D) $9.30

Solution:

Fixed element = Total fixed overhead ÷ Actual machine-hours

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56 Billa Corporation's abbreviated flexible budget for two levels of activity appears below:

If the denominator level of activity is 4,700 machine-hours, the predetermined

overhead rate would be:

A) $11.70

B) $72.68

C) $84.38

D) $1,170.00

Solution:

Predetermined overhead rate = Total overhead cost ÷ Actual machine-hours

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57 At the beginning of last year, Monze Corporation budgeted $600,000 of fixed

manufacturing overhead and chose a denominator level of activity of 100,000 direct labor-hours At the end of the year, Monze's fixed overhead budget variance was

$8,000 unfavorable Its fixed overhead volume variance was $21,000 favorable Actual direct labor-hours for the year were 96,000 What was Monze's actual fixed overhead for last year?

A) $563,000

B) $579,000

C) $608,000

D) $592,000

Solution:

= Actual fixed overhead cost − Budgeted fixed overhead cost

= Actual fixed overhead cost − $600,000 = $8,000 U

Actual fixed overhead = $8,000 + $600,000 = $608,000

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58 Mclellan Corporation applies manufacturing overhead to products on the basis of standard machine-hours Budgeted and actual overhead costs for the month appear below:

The company based its original budget on 6,100 machine-hours The company

actually worked 6,480 machine-hours during the month The standard hours allowed for the actual output of the month totaled 6,370 machine-hours What was the overall fixed overhead budget variance for the month?

A) $500 favorable

B) $500 unfavorable

C) $1,570 favorable

Solution:

= ($14,350 + $4,740 + $7,510) − ($14,500 + $5,200 + $7,400)

= $26,600 − $27,100 = $500 F

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59 Songster Corporation applies manufacturing overhead to products on the basis of standard machine-hours Budgeted and actual overhead costs for the most recent month appear below:

Original Budget Actual CostsFixed overhead costs:

Supervision $14,100 $13,650

Utilities 5,300 5,060

Factory depreciation 7,200 7,470

actually worked 3,700 machine-hours during the month The standard hours allowed for the actual output of the month totaled 3,820 machine-hours What was the overall fixed overhead budget variance for the month?

A) $2,432 favorable

C) $420 favorable

D) $420 unfavorable

Solution:

= $26,180 − $26,600 = $420 F

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60 Maertz Corporation applies manufacturing overhead to products on the basis of standard machine-hours The budgeted fixed overhead cost for the most recent month was $10,890 and the actual fixed overhead cost for the month was $10,540 The company based its original budget on 3,300 machine-hours The standard hours allowed for the actual output of the month totaled 3,240 machine-hours What was the overall fixed overhead budget variance for the month?

A) $198 unfavorable

B) $350 unfavorable

C) $198 favorable

D) $350 favorable

actually worked 4,800 machine-hours during the month The standard hours allowed for the actual output of the month totaled 4,980 machine-hours What was the overall fixed overhead volume variance for the month?

B) $3,150 favorable

D) $1,260 favorable

Trang 40

Fixed portion of predetermined overhead rate

= Total budgeted fixed overhead ÷ Budgeted machine-hours

Original Budget Actual CostsFixed overhead costs:

Supervision $ 9,880 $ 9,970

Utilities 4,160 4,440

Factory depreciation 21,320 21,190

Total fixed overhead cost $35,360 $35,600

actually worked 2,280 machine-hours during the month The standard hours allowed for the actual output of the month totaled 2,080 machine-hours What was the overall fixed overhead volume variance for the month?

A) $4,352 favorable

D) $7,072 favorable

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