test bank - chapter11 flexible budgets

7/17/2019 Test Bank - Chapter11 Flexible Budgets

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Chapter 11

Flexible Budgets and Overhead Analysis

True/False

1.FEasy

A flexible budget is "flexible" in the sense that a budget can beprepared fr any level f activity! but nce a budget is set the budgetfigures are nt changed if actual activity later prves t be differentthan budgeted activity.

.FEasy

#n a perfr$ance reprt! actual csts shuld be c$pared t budgetedcsts at the riginal budgeted activity level.

%.TEasy

The verhead spending variance and the verhead efficiency variance areuseful nly if variable verhead really shuld be prprtinal t theactivity $easure that is being used in the flexible budget.

&.

F'ediu$

The variable verhead efficiency variance reflects h( efficiently

variable verhead resurces (ere used.

).TEasy

A reasn fr *eeping a cnstant den$inatr activity level is t$aintain stability in the a$unt f verhead cst that is applied teach unit f prduct $anufactured ver the perid.

+.T'ediu$

The fixed prtin f the predeter$ined verhead rate is used fr prductcsting purpses and has n significance in ter$s f cst cntrl.

,.FEasy

-hen chsing an activity $easure fr a flexible budget! it is best tchse an activity that is $easured in dllars.

.T'ediu$

#n a standard csting syste$! under r verapplied fixed verhead ise0ual t the su$ f the fixed verhead budget variance and the fixedverhead vlu$e variance.

.F'ediu$

#f the standard hurs all(ed fr the actual utput f the perid isgreater than the den$inatr level f activity 2in hurs3! then theverhead budget variance (ill be unfavrable.

14.F'ediu$

The fixed verhead budget variance is nt cntrllable by $anagers sincefixed csts are nt cntrllable.

Managerial Accounting, 9/e 141



11.F'ediu$

One cause f an unfavrable verhead vlu$e variance (uld be increasesin cst fr fixed verhead ite$s.

1.F

5ard

#f the den$inatr activity 2in hurs3 used t c$pute the predeter$inedverhead rate is e0ual t the actual activity 2in hurs3 fr the perid!

then there is n vlu$e variance.

1%.T'ediu$

6ince $anagers (ant stable unit cst figures! the accuntant creates anartificial stability s far as fixed csts are cncerned by applyingfixed csts t prducts as if the fixed csts (ere really variable.

1&.TEasy

A static budget is geared t(ard a single level f activity.

1).F'ediu$

1). The static budget is a gd tl fr assessing (hether variablecsts are under cntrl.

'ultiple Chice

1+.BEasy

-hich ne f the fll(ing variances is 'O6T cntrllable by aprductin supervisr7a. 'aterial price variance.b. 'aterial usage variance.c. Fixed verhead vlu$e variance.d. 8ariable verhead spending variance.

1,.9Easy

A $a:r (ea*ness f flexible budgets is that;a. they are geared nly t a single level f activity.b. they give subrdinates t $uch flexibility.c. they frce the $anager t c$pare actual csts at ne level factivity t budgeted csts at a different level f activity.d. nne f these.

1.9Easy

-hich f the fll(ing variances (uld be useful in calling attentin tpssible prble$s in the cntrl f spending n verhead ite$7

8ariable Fixed verhead verhead spending budget variance variancea. < <b. < =esc. =es <d. =es =es

1.C

Easy

-hich f the fll(ing variances (uld be useful in calling attentin tpssible prble$s in the cntrl f spending n verhead ite$s7

8ariable Fixed verhead verhead spending vlu$e variance variancea. < <b. < =esc. =es <d. =es =es

Managerial Accounting, 9/e142



4.B5ard

The higher the den$inatr level f activity;a. the higher the unit prduct cst.b. the l(er the unit prduct cst.c. the less li*ely is the ccurrence f a vlu$e variance.d. the $re prfitable peratins li*ely (ill be.

1.

B'ediu$

A decrease in den$inatr level f activity (ill;

a. decrease the fixed prtin f the predeter$ined verhead rate.b. increase the fixed prtin f the predeter$ined verhead rate.c. decrease the variable prtin f the predeter$ined verhead rate.d. increase the variable prtin f the predeter$ined verhead

rate.

.B5ard

The ecn$ic i$pact f the inability t reach a target den$inatr levelf activity (uld best be $easured by;a. the a$unt f the vlu$e variance.b. the cntributin $argin lst by failing t $eet the target

den$inatr level f activity.c. the a$unt f the fixed verhead budget variance.d. the a$unt f the variable verhead efficiency variance.

%.

C'ediu$

-hich f the fll(ing is nt crrect7

a. #f the den$inatr level f activity and the standard hursall(ed fr the utput f the perid are the sa$e! then there is nvlu$e variance.b. #f the den$inatr level f activity is greater than the

standard hurs all(ed fr the utput f the perid! then thevlu$e variance is unfavrable.

c. #f the den$inatr level f activity is greater than thestandard hurs all(ed fr the utput f the perid! then thevlu$e variance is favrable.

d. The vlu$e variance is the $st apprpriate $easure f theutili>atin f plant facilities.

&.CEasy

The fixed verhead vlu$e variance is due t;a. inefficient r efficient use f (hatever the den$inatr

activity is.

b. inefficient r efficient use f verhead resurces.c. a difference bet(een the den$inatr activity and the standardhurs all(ed fr the actual utput f the perid.d. a shift in the a$unt f hurs re0uired t prduce the actualutput.

).9Easy

-hich f the fll(ing variances is caused by a difference bet(een theden$inatr activity in the predeter$ined verhead rate and the standardhurs all(ed fr the actual prductin f the perid7a. variable verhead spending variance.b. variable verhead efficiency variance.c. fixed verhead budget variance.d. fixed verhead vlu$e variance.

+.

BEasyC?A adapted

@anta estaurant c$pares $nthly perating results (ith a static budget

prepared at the beginning f the year. -hen actual sales are less thanbudget! (uld the restaurant usually reprt favrable variances nvariable fd csts and fixed supervisry salaries7

Fd Csts 6upervisry 6alariesa. =es =esb. =es <c. < =esd. < <




,.A'ediu$C?A adapted

Overhead cst is applied t units based n direct labr hurs. FrApril! ttal verhead cst (as budgeted at 4!444 based n aden$inatr activity level f 4!444 direct labr hurs fr the $nth.The standard cst card indicates that each unit f finished prductre0uires direct labrhurs. The fll(ing data are available frAprils activity;

<u$ber f units prduced ............... !)44 9irect labr hurs (r*ed .............. 1!)44 Actual ttal verhead cst incurred .... ,!)44

-hat a$unt f ttal verhead cst (uld have been applied tprductin fr the $nth f April7a. ,+!444.b. ,!444.c. ,!)44.d. 4!444.




.CEasy

5art C$panys labr standards call fr )44 direct labr hurs tprduce )4 units f prduct. 9uring Octber the c$pany (r*ed +)direct labr hurs and prduced %44 units. The standard hurs all(edfr Octber (uld be;a. +) hurs.b. )44 hurs.

c. +44 hurs.d. )4 hurs.

.B5ard

At Dacbsn C$pany! indirect labr is a variable cst that varies (ithdirect labr hurs. @ast $nths perfr$ance reprt sh(ed that actualindirect labr cst ttaled )!,4 fr the $nth and that the assciatedspending variance (as &) F. #f &!144 direct labr hurs (ereactually (r*ed last $nth! then the flexible budget cst fr$ula frindirect labr $ust be 2per direct labr hur3;a. 4.4.b. 4.).c. 4.%4.d. 4.%).

%4.

A5ard

At Overland C$pany! $aintenance cst is exclusively a variable cst

that varies directly (ith $achinehurs. The perfr$ance reprt fr Dulysh(ed that actual $aintenance csts ttaled !44 and that theassciated spending variance (as 44 unfavrable. #f !444 $achinehurs (ere actually (r*ed during Duly! the budgeted $aintenance cstper $achinehur (as;a. 1.4.b. 1.).c. 1.,).d. 1.).

%1.C5ardC?A adapted

Tyr C$pany has a standard cst syste$ in (hich it applies$anufacturing verhead t units f prduct n the basis f direct labrhurs 29@5s3. The fll(ing infr$atin is available;

Actual ttal verhead csts ............. 1)!444

Actual fixed verhead csts ............ ,!44 Budgeted fixed verhead csts ........... ,!444 Actual hurs (r*ed ..................... %!)44 9@5s 6tandard hurs all(ed fr the utput ... %!44 9@5s 8ariable verhead rate .................. .)4 per 9@5

Based n these data! (hat is the variable verhead spending variance7a. 1!,44 favrable.b. ,)4 unfavrable.c. )4 favrable.d. 1!)44 unfavrable.

%.B5ard

-eb C$pany uses a standard cst syste$ in (hich $anufacturing verheadis applied t units f prduct n the basis f $achine hurs. 9uringFebruary! the c$pany used a den$inatr activity f 4!444 $achine

hurs in c$puting its predeter$ined verhead rate. 5(ever! nly ,)!444standard $achine hurs (ere all(ed fr the $nths actual prductin.#f the fixed verhead vlu$e variance fr February (as +!&44unfavrable! then the ttal budgeted fixed verhead cst fr the $nth(as;a. +!444.b. 14!&44.c. 144!444.d. !+44.




%%.9'ediu$

The Adla*e C$pany $a*es and sells a single prduct and uses a standardcst syste$. 9uring Octber! the c$pany budgeted %44!444 in$anufacturing verhead cst at a den$inatr activity f 4!444 $achinehurs. At standard! each unit f finished prduct re0uires ) $achinehurs. The fll(ing cst and activity (ere recrded during Octber;

Ttal actual $anufacturing verhead cst incurred ..... &!444

nits f prduct c$pleted ............................ %!44Actual $achinehurs (r*ed ........................... 1!&

The a$unt f verhead cst that the c$pany applied t (r* in prcessfr Octber (as;a. ,!%44.b. 1!%%4.c. &!444.d. )!444.

%&.B'ediu$

The predeter$ined verhead rate 2variable and fixed3 is ,.)4 per$achine hur and the den$inatr activity level is 1%)!444 $achinehurs. #f the variable prtin f the predeter$ined verhead rate is%.44 per $achine hurs! then the budgeted fixed factry verhead frthe year is;

a. %4!444.b. +4,!)44.c. &4)!444.d. 1!41!)44.




%).A'ediu$

'auve C$pany uses a standard cst syste$ in (hich it applies$anufacturing verhead t units f prduct n the basis f direct labrhurs 29@5s3. The fll(ing data pertain t last $nth;

Actual hurs (r*ed ............... !&44 9@5s Budgeted fixed verhead csts ..... 14!444

Actual fixed verhead csts ....... 14!&44 6tandard hurs all(ed ............ !)44 9@5s ?redeter$ined verhead rate ....... ) per 9@5

The fixed verhead budget variance is;a. &44 .b. )44 F.c. %44 F.d. %44 .

%+.A'ediu$

Daune C$pany uses a standard cst syste$ in (hich it applies$anufacturing verhead t units f prduct n the basis f direct labrhurs 29@5s3. The fll(ing data pertain t last $nths peratins;

Budgeted fixed verhead csts ....... )!444

Actual fixed verhead csts ......... )!)44 6tandard hurs all(ed fr utput ... !&44 9@5s ?redeter$ined verhead rate 2 variable % fixed3 .... ) per 9@5

The fixed verhead budget variance is;a. )44 .b. )44 F.c. !44 .d. 1!,44 .

%,.C5ard

5enley C$pany uses a standard cst syste$ in (hich it applies$anufacturing verhead t units f prduct n the basis f direct labrhurs. Fr the $nth f Danuary! the fixed $anufacturing verhead vlu$evariance (as !4 favrable. The c$pany uses a fixed $anufacturing

verhead rate f 1.) per direct labr hur. 9uring Danuary! thestandard direct labr hurs all(ed fr the $nths utput;a. exceeded den$inatr hurs by 1!444.b. fell shrt f den$inatr hurs by 1!444.c. exceeded den$inatr hurs by 1!44.d. fell shrt f den$inatr hur by 1!44.

%.C'ediu$C?A adapted

?atridge C$pany uses a standard cst syste$ in (hich it applies$anufacturing verhead t units f prduct n the basis f direct labrhurs. The infr$atin bel( is ta*en fr$ the c$panys flexible budgetfr $anufacturing verhead;

?ercent f capacity ......... ,4G 4G 4G 9irect labr hurs .......... 1!444 &!444 ,!444 8ariable verhead ........... &!444 &!444 )&!444

Fixed verhead .............. 14!444 14!444 14!444 Ttal verhead ............ 1)4!444 1)+!444 1+!4449uring the year! the c$pany perated at exactly 4G f capacity! butapplied $anufacturing verhead t prducts based n the 4G level. Thec$panys fixed verhead vlu$e variance fr the year (as;a. +!444 unfavrable.b. +!444 favrable.c. 1!444 unfavrable.d. 1!444 favrable.




%.A'ediu$C?A adapted

nin C$pany uses a standard cst accunting syste$. The fll(ingverhead csts and prductin data are available fr August;

6tandard fixed verhead rate ....... 1.44 per hur 6tandard variable verhead rate .... &.44 per hur 9en$inatr activity ............... &4!444 hurs Actual hurs ....................... %!)44 hurs

6tandard hurs all(ed fr utput .. %!444 hurs Overapplied verhead ............... !444

The ttal a$unt f verhead applied t (r* in prcess fr August (uldbe;a. 1)!444.b. 1,!444.c. 1,!)44.d. 1!)44.

eference; 111The 'urray C$pany $a*es and sells a single prduct. The c$pany recrded thefll(ing activity and cst data fr 'ay;

<u$ber f units c$pleted ............................... &)!444 units6tandard direct labrhurs all(ed per unit f prduct . 1.) 9@56Budgeted direct labrhurs 2den$inatr activity3 ...... ,!444 9@56Actual fixed verhead csts incurred .................... ++!4448lu$e variance ......................................... &!,)

The fixed prtin f the predeter$ined verhead rate is 4.) per direct labrhur.

&4.C5ardefer T;111

The a$unt f fixed verhead cntained in the c$panys verheadflexible budget fr 'ay (as;a. +&!1).b. +,!)44.c. +!&44.d. ,4!,).

&1.95ardefer T;111

The a$unt f fixed $anufacturing verhead cst applied t (r* inprcess during 'ay (as;a. +1!,).b. +!,44.c. &!,)4.d. +&!1).

&.B5ardefer T;111

The fixed verhead budget variance fr 'ay (as;a. !&44 .b. !&44 F.c. +!444 .d. +!444 F.

eference; 11

?llitt ?tat ?ac*ers has a flexible budget fr $anufacturing verhead that is basedn direct labr hurs. The fll(ing verhead csts appear n the flexible budget atthe 44!444 hur level f activity;

8ariable verhead csts 2ttal3; ?ac*ing supplies .......... 14!444 #ndirect labr ............ 14!444 Fixed verhead csts 2ttal3; tilities ................. 144!444 #nsurance ................. &4!444 ent ...................... 4!444




&%.9Easyefer T;11

At an activity level f 14!444 direct labr hurs! the flexible budget(uld sh( indirect labr cst f;a. 14!444.b. 14!444.c. 1&&!444.d. 1+!444.

&&.CEasyefer T;11

The flexible budget (uld sh( ttal variable verhead cst in dllarsper direct labr hur as;a. 4.+4.b. 4.4.c. 1.)4.d. 1.4.




&).9Easyefer T;11

At an activity level f 14!444 direct labr hurs! the flexible budget(uld sh( ttal budgeted fixed csts t be;a. 144!444.b. 1&&!444.c. 1)4!444.d. 1+4!444.

&+.BEasyefer T;11

At an activity level f 1+4!444 direct labr hurs! the flexible budget(uld sh( the budgeted a$unt fr utilities t be;a. 4!444.b. 144!444.c. 14!444.d. 1+4!444.

eference; 11%A $anufacturing c$pany has a standard csting syste$ based n $achinehurs 2'5s3 asthe $easure f activity. 9ata fr$ the c$panys flexible budget fr $anufacturingverhead are given bel(;

9en$inatr level f activity ................. +!144 '5s

Overhead csts at the den$inatr activity level; 8ariable verhead cst ...................... %)!4,) Fixed verhead cst ......................... ,,!,,)

The fll(ing data pertain t peratins fr the $st recent perid;

Actual hurs .................................. +!%44 '5s 6tandard hurs all(ed fr the actual utput .. )!& '5s Actual ttal variable verhead cst ........... %+!)&4 Actual ttal fixed verhead cst .............. ,+!,)

&,.9'ediu$efer T;

11%

-hat is the predeter$ined verhead rate t the nearest cent7a. 1,.1b. 1.)c. 1.44

d. 1.)4

&.9'ediu$efer T;11%

5( $uch verhead (as applied t prducts during the perid t thenearest dllar7a. 11!)4b. 11%!&1)c. 11+!))4d. 114!

&.A'ediu$efer T;11%

-hat (as the variable verhead spending variance fr the perid t thenearest dllar7a. %1) b. 1!&+) Fc. 1!&+) d. %1) F

)4.C'ediu$efer T;11%

-hat (as the variable verhead efficiency variance fr the perid t thenearest dllar7a. %44 Fb. 1!&+) c. 1!,+4 d. 1!,,)




)1.A'ediu$efer T;11%

-hat (as the fixed verhead budget variance fr the perid t thenearest dllar7a. 44 Fb. &) Fc. %!,%& Fd. %!&)4

).9'ediu$efer T;11%

-hat (as the fixed verhead vlu$e variance fr the perid t thenearest dllar7a. 1!%) b. !))4 Fc. %!4 d. 1!%)

eference; 11&The 9illn C$pany $a*es and sells a single prduct and uses a flexible budget frverhead t plan and cntrl verhead csts. Overhead csts are applied n the basisf direct labrhurs. The standard cst card sh(s that ) direct labrhurs arere0uired per unit. The 9illn C$pany had the fll(ing budgeted and actual data fr'arch;

Actual Budgetednits prduced ............... %%!44 %4!449irect labrhurs ........... 1+1!44 1)&!4448ariable verhead csts ...... 1&4!)44 1%!44Fixed verhead csts ......... 4!444 ,,!444

)%.B'ediu$efer T;11&

The variable verhead spending variance fr 'arch is;a. &!44 .b. 11!4+4 .c. 1&!,44 .d. 1,!%44 .

)&.9'ediu$

efer T;11&

The variable verhead efficiency variance fr 'arch is;a. 1!&44 F.b. +!1+4 .

c. 1!&44 .d. +!1+4 F.

)).C'ediu$efer T;11&

The fixed verhead budget variance fr 'arch is;a. 44 F.b. %!44 F.c. %!444 .d. ,!,)4 F.

)+.A'ediu$efer T;11&

The fixed verhead vlu$e variance fr 'arch is;a. ,!,)4 F.b. ,!,)4 .c. 1!))4 Fd. %!44 .

eference; 11)The Ferris C$pany applies $anufacturing verhead csts t prducts n the basis fdirect labr hurs. The standard cst card sh(s that % direct labr hurs arere0uired per unit f prduct. Fr August! the c$pany budgeted t (r* 4!444 directlabr hurs and t incur the fll(ing ttal $anufacturing verhead csts;

Ttal variable verhead csts ..... !444 Ttal fixed verhead csts ........ 11!44




9uring August! the c$pany c$pleted !444 units f prduct! (r*ed +!444 directlabr hurs! and incurred the fll(ing ttal $anufacturing verhead csts;

Ttal variable verhead csts ....... !44 Ttal fixed verhead csts .......... 11)!%44

The den$inatr activity in the predeter$ined verhead rate is 4!444 direct labr

hurs.

),.B'ediu$efer T;11)

Fr August! the variable verhead spending variance is;a. &!%44 F.b. &!%44 .c. +!)44 F.d. +!)44 .

).C'ediu$efer T;11)

Fr August! the variable verhead efficiency variance is;a. 1!44 F.b. 4.c. !44 .d. !44 F.

).

A'ediu$efer T;11)

Fr August! the fixed verhead budget variance is;

a. %!)44 F.b. %!)44 .c. %!44 F.d. %!44 .

+4.B'ediu$efer T;11)

Fr August! the fixed verhead vlu$e variance is;a. &!%44 .b. ,!4 .c. &!4 F.d. &!4 .




eference; 11+Hing C$pany esti$ated that it (uld perate its $anufacturing facilities at 44!444direct labr hurs fr the year and this served as the den$inatr activity in thepredeter$ined verhead rate. The ttal budgeted $anufacturing verhead fr the year(as !444!444! f (hich 1!+44!444 (as variable and &44!444 (as fixed. The standardvariable verhead rate (as per direct labr hur. The standard direct labr ti$e(as % direct labr hurs per unit. The actual results fr the year are presented

bel(;

Actual finished units .................... )4!444 Actual direct labr hurs ................ ,+&!444 Actual variable verhead ................. 1!+14!444 Actual fixed verhead .................... %!444

+1.C'ediu$C?A adaptedefer T;11+

The variable verhead spending variance fr the year is;a. !444 F.b. 14!444 .c. !444 .d. 114!444 .

+.

A'ediu$C?A adaptedefer T;11+

The variable verhead efficiency variance fr the year is;

a. !444 .b. 144!444 .c. 144!444 F.d. !444 F.

+%.A'ediu$C?A adaptedefer T;11+

!444 F.b. 14!444 .c. 1,!444 .d. ,&!444 F.

+&.B

'ediu$C?A adaptedefer T;11+

The fixed verhead vlu$e variance fr the year is;a. ,!444 .

b. )!444 .c. &1!++, .d. 1!444 F.




eference; 11,A $anufacturing c$pany that has nly ne prduct has established the fll(ingstandards fr its variable $anufacturing verhead. The c$pany uses $achinehurs asits $easure f activity.

6tandard hurs per unit f utput ...... .1 $achinehurs

6tandard variable verhead rate ........ 1&.%4 per $achinehur

The fll(ing data pertain t peratins fr the last $nth;

Actual hurs ........................... 1!,44 $achinehurs Actual ttal variable verhead cst .... &!4) Actual utput .......................... 44 units

+).C'ediu$efer T;11,

-hat is the variable verhead spending variance fr the $nth7a. 1!,% b. )) Fc. )) d. 1!,% F

++.

9'ediu$efer T;11,

-hat is the variable verhead efficiency variance fr the $nth7

a. 1!1, Fb. )+, Fc. 1!1, d. 1!1&&

eference; 11A $anufacturing c$pany that has nly ne prduct has established the fll(ingstandards fr its variable $anufacturing verhead. The c$pany uses direct labrhurs29@5s3 as its $easure f activity.

6tandard hurs per unit f utput ...... ,. 9@5s 6tandard variable verhead rate ........ 1&.4 per 9@5

The fll(ing data pertain t peratins fr the last $nth;

Actual direct labrhurs .............. )!144 9@5s Actual ttal variable verhead cst .... ,!1+) Actual utput .......................... +44 units

+,.9'ediu$efer T;11

-hat is the variable verhead spending variance fr the $nth7a. 14!1 b. )) c. 14!1 Fd. )) F




+.A'ediu$efer T;11

-hat is the variable verhead efficiency variance fr the $nth7a. 11!4,+ b. 11!4%, Fc. 11!4%, d. 1+

eference; 11aff C. has a standard cst syste$ in (hich $anufacturing verhead is applied tunits f prduct n the basis f direct labr hurs 29@5s3. The fll(ing standardsare based n 144!444 direct labr hurs;

8ariable verhead .......... 9@5s I % per 9@5 J + per unit Fixed verhead ............. 9@5s I & per 9@5 J per unit

The fll(ing infr$atin pertains peratins during 'arch;

nits actually prduced ............... %!444 Actual direct labr hurs (r*ed ...... 4!444

Actual $anufacturing verhead incurred;

8ariable verhead ................... )4!444 Fixed verhead ...................... %&!444

+.B'ediu$C?A adaptedefer T;11

Fr 'arch! the variable verhead spending variance (as;a. +!444 F.b. 14!444 .c. 1!444 .d. !444 F.

,4.A'ediu$C?A adaptedefer T;

11

Fr 'arch! the fixed verhead vlu$e variance (as;a. +!444 .b. +!444 F.c. 4!444 .d. 4!444 F.




eference; 1114A furniture $anufacturer has a standard csting syste$ based n $achinehurs 2'5s3 asthe $easure f activity. 9ata fr$ the c$panys flexible budget fr $anufacturingverhead are given bel(;

9en$inatr level f activity ................. %!%44 '5s

Overhead csts at the den$inatr activity level; 8ariable verhead cst ...................... %1!&) Fixed verhead cst ......................... &4!&)


Actual hurs .................................. %!&44 '5s 6tandard hurs all(ed fr the actual utput .. %!4, '5s Actual ttal variable verhead cst ........... %!4 Actual ttal fixed verhead cst .............. %!,)

,1.A'ediu$efer T;

1114

-hat is the predeter$ined verhead rate t the nearest cent7a. 1.4b. 1.4c. 1.1+

d. 1.+

,.C'ediu$efer T;1114

5( $uch verhead (as applied t prducts during the perid t thenearest dllar7a. ,&!&+4b. ,!,4c. +,!&4d. ,1!))

,%.B'ediu$efer T;1114

-hat (as the fixed verhead budget variance fr the perid t thenearest dllar7a. !+,) b. 1!&)4 Fc. %!+1 Fd. 1!,4 F

,&.A'ediu$efer T;1114

-hat (as the fixed verhead vlu$e variance fr the perid t thenearest dllar7a. !,4 b. 1!) Fc. !11 d. %!&)




eference; 1111A $anufacturer f playgrund e0uip$ent has a standard csting syste$ based n $achinehurs 2'5s3 as the $easure f activity. 9ata fr$ the c$panys flexible budget fr$anufacturing verhead are given bel(;

9en$inatr level f activity ................. %!444 '5s

Fixed verhead cst ........................... &4!+)4


Actual hurs .................................. %!&44 '5s 6tandard hurs all(ed fr the actual utput .. %!1, '5s Actual ttal fixed verhead cst .............. &1!+44

,).B'ediu$efer T;1111

-hat is the predeter$ined fixed verhead rate t the nearest cent7a. 1.&b. 1%.))c. 1%.,d. 11.+

,+.

B'ediu$efer T;1111

5( $uch fixed verhead (as applied t prducts during the perid t the

nearest dllar7a. &4!+)4b. &!1c. &1!+44d. &+!4,4

,,.B'ediu$efer T;1111

-hat (as the fixed verhead budget variance fr the perid t thenearest dllar7a. &!&,4 b. )4 c. !,4 Fd. 1!%1

,.B

'ediu$efer T;1111

-hat (as the fixed verhead vlu$e variance fr the perid t thenearest dllar7

a. !)+ Fb. !%%1 Fc. %!4 d. )!&4 F




eference; 111The Claus C$pany $a*es and sells a single prduct and uses standard csting. 9uringDanuary! the c$pany actually used !,44 direct labrhurs 29@5s3 and prduced %!444units f prduct. The standard cst card fr ne unit f prduct includes thefll(ing;

8ariable factry verhead; %.4 9@5s I &.44 per [email protected] factry verhead; %.4 9@5s. I %.)4 per 9@5.

Fr Danuary! the c$pany incurred !444 f actual fixed verhead csts and recrdeda ,) favrable vlu$e variance.

,.B5ardefer T;111

The budgeted fixed factry verhead cst fr Danuary is;a. %1!)44.b. %4!+).c. %!%,).d. %%!)4.

4.C5ard

efer T;111

The den$inatr level f activity in direct labrhurs 29@5s3 used byClaus in setting the predeter$ined verhead rate fr Danuary is;a. !)44 9@5s.

b. !)4 [email protected]. !,)4 [email protected]. 14!)44 9@5s.

eference; 111%A $anufacturer f industrial e0uip$ent has a standard csting syste$ based n $achinehurs 2'5s3 as the $easure f activity. 9ata fr$ the c$panys flexible budget fr$anufacturing verhead are given bel(;

9en$inatr level f activity ................. %!44 '5s Overhead csts at the den$inatr activity level; 8ariable verhead cst ...................... %%!%&) Fixed verhead cst ......................... +1!&)


Actual hurs .................................. %!44 '5s 6tandard hurs all(ed fr the actual utput .. %!) '5s Actual ttal variable verhead cst ........... %!)+) Actual ttal fixed verhead cst .............. +4!+,)

1.B'ediu$efer T;111%

-hat is the predeter$ined verhead rate t the nearest cent7a. %.1b. &.%4c. &.%4d. %.1

.C

'ediu$efer T;111%

5( $uch verhead (as applied t prducts during the perid t thenearest dllar7

a. %!&4b. &!,,4c. +!4%&d. &!,,4

eference; 111&A $anufacturer f industrial e0uip$ent has a standard csting syste$ based n directlabrhurs 29@5s3 as the $easure f activity. 9ata fr$ the c$panys flexible budgetfr $anufacturing verhead are given bel(;




9en$inatr level f activity ................. !444 9@5s Overhead csts at the den$inatr activity level; 8ariable verhead cst ...................... )+!&44 Fixed verhead cst ......................... 144!44


Actual hurs .................................. ,!44 9@5s 6tandard hurs all(ed fr the actual utput .. ,!,%) 9@5s Actual ttal variable verhead cst ........... )&!14 Actual ttal fixed verhead cst .............. 144!44

%.B'ediu$efer T;111&

-hat is the predeter$ined verhead rate t the nearest cent7a. 1.%4b. 1.+)c. 1.4d. 4.1)

&.A'ediu$efer T;

111&

5( $uch verhead (as applied t prducts during the perid t thenearest dllar7a. 1)1!%b. 1)&!&14

c. 1),!44d. 1)%!,4

eference; 111)9ri Castings is a :b rder shp that uses a standard cst syste$ t accunt fr itsprductin csts. 'anufacturing verhead csts are applied t prductin n the basisf direct labr hurs.

).C'ediu$C'A adaptedefer T;111)

9ris chice f a prductin vlu$e as a den$inatr fr calculatingits predeter$ined verhead rate;a. has n effect n the fixed prtin f this rate (hich is used frapplying csts t prductin.b. has an effect n the variable prtin f this rate (hich is usedfr applying csts t prductin.

c. has n effect n the fixed verhead budget variance.d. has n effect n the fixed verhead vlu$e variance.

+.95ardC'A adaptedefer T;111)

A vlu$e variance (ill exist fr 9ri in a $nth (here;a. prductin vlu$e differs fr$ sales vlu$e.b. actual direct labr hurs differ fr$ standard hurs all(ed.c. there is a budget variance in fixed verhead csts.d. the fixed verhead applied t units f prduct n the basis fstandard hurs all(ed differs fr$ the budgeted fixed verhead.

,.B'ediu$C'A adaptedefer T;

111)

The a$unt f fixed verhead that 9ri (uld apply t finishedprductin (uld be;a. the actual direct labr hurs ti$es the standard fixed verheadrate per direct labr hur.b. the standard hurs all(ed fr the actual units f finished

utput ti$es the standard fixed verhead rate per direct labrhur.c. the standard units f utput fr the actual direct labr hurs(r*ed ti$es the standard fixed verhead rate per unit f utput.d. the actual fixed verhead cst per direct labr hur ti$es thestandard hurs all(ed.

eference; 111+Dessep Crpratin has a standard cst syste$ in (hich $anufacturing verhead isapplied t units f prduct n the basis f direct labr hurs. The c$pany has




prvided the fll(ing data cncerning its fixed $anufacturing verhead csts in'arch;

9en$inatr hurs ...................... 1)!444 hurs Actual hurs (r*ed .................... 1&!444 hurs 6tandard hurs all(ed fr the utput .. 1!444 hurs Flexible budget fixed verhead cst .... &)!444

Actual fixed verhead csts ............ &!444

.BEasyefer T;111+

The fixed verhead budget variance is;a. 1!444 .b. %!444 .c. !444 .d. !444 F.

.C'ediu$efer T;111+

The fixed verhead vlu$e variance is;a. %!444 .b. %!444 F.c. !444 .d. +!444 .




eference; 111,An utdr barbecue grill $anufacturer has a standard csting syste$ based n directlabrhurs 29@5s3 as the $easure f activity. 9ata fr$ the c$panys flexible budgetfr $anufacturing verhead are given bel(;

9en$inatr level f activity ................. %!%44 9@5s

Fixed verhead cst ........................... +!)


Actual hurs .................................. %!&44 9@5s 6tandard hurs all(ed fr the actual utput .. %!&4 9@5s Actual ttal fixed verhead cst .............. !)

4.9'ediu$efer T;111,

-hat (as the fixed verhead budget variance fr the perid t thenearest dllar7a. 1++ b. & Fc. )) Fd. 1!&44

1.A'ediu$efer T;111,

-hat (as the fixed verhead vlu$e variance fr the perid t thenearest dllar7a. , Fb. % Fc. 1+% Fd. 1) F

eference; 111An utdr barbecue grill $anufacturer has a standard csting syste$ based n $achinehurs 2'5s3 as the $easure f activity. 9ata fr$ the c$panys flexible budget fr$anufacturing verhead are given bel(;

9en$inatr level f activity ................. &!+44 '5s Fixed verhead cst ........................... )4!1&4


Actual hurs .................................. )!444 '5s 6tandard hurs all(ed fr the actual utput .. &!,&% '5s Actual ttal fixed verhead cst .............. &!+4

.C'ediu$efer T;111

-hat (as the fixed verhead budget variance fr the perid t thenearest dllar7a. )!14 b. !)4% Fc. 1!&)4 Fd. %!44

%.

B'ediu$efer T;111

-hat (as the fixed verhead vlu$e variance fr the perid t the

nearest dllar7a. !41 b. 1!)) Fc. 1!&+ Fd. &!%+4 F

eference; 111The Tate C$pany uses a standard csting syste$ in (hich $anufacturing verhead isapplied t units f prduct n the basis f direct labr hurs 29@5s3. The c$panyrecrded the fll(ing csts and activity fr 6epte$ber;




Cst; Actual fixed verhead csts incurred .. +1!&44 8lu$e variance ....................... !)4 nfavrable Fixed prtin f the predeter$ined verhead rate ....................... 4.) per 9@5 Activity;

<u$ber f units c$pleted ............. !44 6tandard direct labr hurs all(ed per unit f prduct ................. .) 9@5s 9en$inatr activity................... +4!444 9@5s

&.C'ediu$efer T;111

The a$unt f fixed $anufacturing verhead cst applied t (r* inprcess during 6epte$ber (as;a. +1!&44.b. ),!444.c. )&!1)4.d. )!)4.

).

B

5ardefer T;111

The a$unt f fixed verhead cst cntained in the c$panyKs flexiblebudget fr $anufacturing verhead fr 6epte$ber (as;a. +1!&44.

b. ),!444.c. +4!444.d. )!))4.




Essay

+.5ard

The 're C$pany prduces and sells a single prduct. A standard cstcard fr the prduct fll(s;

6tandard Cst Cardper unit f prduct;

9irect $aterials! & yards at &.44 ........ 1+.44 9irect labr! 1.) hurs at 14.44 ......... 1).44 8ariable verhead! 1.) hurs at %.44 ..... &.)4 Fixed verhead! 1.) hurs at ,.44 ........ 14.)4

6tandard cst per unit .................... &+.44

The c$pany $anufactured and sld 1!444 units f prduct during theyear. A ttal f ,4!44 yards f $aterial (as purchased during theyear at cst f &.4 per yard. All f this $aterial (as used t$anufacture the 1!444 units. The c$pany recrds sh(ed n beginningr ending inventries fr the year.

The c$pany (r*ed !)4 direct labrhurs during the year at a cstf .,) per hur. Overhead cst is applied t prducts n the basis

f direct labrhurs. The den$inatr activity level 2direct labrhurs3 (as !)44 hurs. Budgeted fixed verhead csts as sh(n n theflexible budget (ere 1),!)44! (hile actual fixed verhead csts (ere1)+!444. Actual variable verhead csts (ere 4!444.

e0uired;

a. C$pute the direct $aterials price and 0uantity variances frthe year.b. C$pute the direct labr rate and efficiency variances fr theyear.c. C$pute the variable verhead spending and efficiency variancesfr the year.d. C$pute the fixed verhead budget and vlu$e variances fr theyear.

Ans(er;

a. 9irect $aterials price and 0uantity variances; AL 2A? 6?3 J 9irect 'aterials ?rice 8ariance ,4!44 yds. 2&.4 &.443 J 1&!4&4 .

6? 2AL 6L3 J 9irect 'aterials Luantity 8ariance &.44 2,4!44 yds. ,!444 yds.M3 J ,!44 F M1!444 units N & yards per unit J ,!444 yards.

b. 9irect labr rate and efficiency variances; A5 2A 63 J 9irect @abr ate 8ariance !)4 hrs. 2.,) 14.443 J ,!%1.)4 F

6 2A5 653 9irect @abr Efficiency 8ariance 14.44 2!)4 ,!444M3J !)44 M1!444 units N 1.) hrs. per unit J ,!444 hurs

c. 8ariable verhead spending and efficiency variances; Actual 8ariable Overhead Cst.................... 4!444 Actual 5urs N 6tandard ate; !)4 hrs. N %.44 J ......................... ,!,)4 6pending 8ariance................................ !)4

Actual 5urs N 6tandard ate;




!)4 hrs. N %.44 J ......................... ,!,)4 6tandard 5urs N 6tandard ate; ,!444 hrs. N %.44 J .. ...................... 1!444 Efficiency 8ariance.............................. +!,)4

d. Fixed verhead budget and vlu$e variances; Actual Fixed Overhead Cst....................... 1)+!444

Flexible Budget Fixed Overhead Cst.............. 1),!)44 Budget 8ariance.................................. 1!)44 F

Flexible Budget Fixed Overhead Cst.............. 1),!)44 Fixed Cst Applied t -r* in ?rcess; 1!444 N 1.) hrs. N ,.44 J ............... 1!444 8lu$e 8ariance.................................. %1!)44 F

,.'ediu$

Flic* C$pany uses a standard cst syste$ in (hich $anufacturingverhead is applied t units f prduct n the basis f direct labrhurs. The c$panys ttal budgeted variable and fixed $anufacturingverhead csts at the den$inatr level f activity are 4!444 frvariable verhead and %4!444 fr fixed verhead. The predeter$inedverhead rate! including bth fixed and variable c$pnents! is .)4per direct labrhur. The standards call fr t( direct labrhurs

per unit f utput prduced. @ast year! the c$pany prduced 11!)44units f prduct and (r*ed !444 direct labrhurs. Actual csts(ere !)44 fr variable verhead and %1!444 fr fixed verhead.

e0uired;

a. -hat is the den$inatr level f activity7b. -hat (ere the standard hurs all(ed fr the utput last

year7c. -hat (as the variable verhead spending variance7d. -hat (as the variable verhead efficiency variance7e. -hat (as the fixed verhead budget variance7f. -hat (as the fixed verhead vlu$e variance7

Ans(er;

a. Ttal verhead at the den$inatr level f activity 2a3....................... )4!444 ?redeter$ined verhead rate 2b3............... .)4/9@5

9en$inatr level f activity 2a3 ÷ 2b3....... 4!444 9@5s

b. Actual utput ........... 11!)44 units 6tandard 9@5 per unit ... x 9@5 per unit 6tandard 9@5s all(ed ... %!444 9@5s

c. C$putatin f variable verhead spending variance; 6pending variance J 2A5 x A3 2A5 x 63 J 2!)443 2!444 9@5s x 1.44M3 J )44 M 4!444 4!444 9@5s J 1.44

d. C$putatin f variable verhead efficiency variance; 6pending variance J 2A5 x 63 265 x 63 J 2!444 9@5s x 1.443 P

2%!444 9@5sM x 1.443 J 1!444 F M 9@5s per unit x 11!)44 units J %!444 9@5s

e. C$putatin f the fixed verhead budget variance; Budget variance J Actual fixed verhead P Flexible budget fixed verhead J %1!444 %4!444




J 1!444

f. C$putatin f the fixed verhead vlu$e variance; 8lu$e variance J Fixed prtin f predeter$ined verhead rate x 29en$inatr hurs P 6tandard hurs all(ed3 J 1.)4M 24!444 9@5 %!444 9@53

J &!)44 F M%4!444 4!444 9@5 J 1.)4

.5ard

=u have :ust been hired as the cntrller f the Eastern 9ivisin fQlbal 'anufacturing. ?erfr$ance recrds fr last year areinc$plete! (ith nly the fll(ing data available;

8ariable verhead rate .......... %.44 per direct labrhur Budgeted fixed verhead ......... &!44 Ttal actual verhead cst ...... +!)44 Fixed verhead budget variance .. ,!44 unfavrable 8ariable verhead efficiency variance ........... 1)!444 unfavrable Actual direct labrhurs (r*ed ))!444 direct labrhurs 9en$inatr activity level ...... )%!444 direct labrhurs

6tandard hurs per unit ......... direct labrhurs

e0uired;

?repare a c$plete analysis f $anufacturing verhead fr the pastyear. #ndicate actual! standard! and den$inatr activity levelsRvariable verhead spending and efficiency variancesR and fixedverhead budget and vlu$e variances.

Ans(er;

Budgeted fixed vhd rate J Fixed verhead/9en$inatr 0uantity J &!44/)%!444 direct labrhurs J 1.+4/direct labrhur

Actual fixed verhead J Budgeted fixed verhead Budget variance J &!44 ,!44 J !444

Actual variable vhd J Ttal actual verhead P Actual fixed verhead J +!)44 !444 J 1,4!)44

Actual variable vhd rate J Actual variable vhd/Actual hurs J 1,4!)44/))!444 J %.14

6pending variance J A5 2A 63

J ))!444 2%.14 %.443 J )!)44

65 N 6 J A5 N 6 verhead efficiency variance J ))!444 N %.44 1)!444 J 1)!444

6tandard hurs all(ed J 265 N 63/6 J 1)4!444/%.44 J )4!444 hurs




Actual units prduced J 6tandard hurs all(ed/hurs per unit J )4!444 hurs/ hurs per unit J )!444 units

8lu$e variance J Budgeted fixed 265 N 63 J &!44 2)4!444 N 1.+43 J &!44 4!444

J &!44

6u$$ary;

Actual hurs ............... )!444 hurs

6tandard hurs all(ed ..... )4!444 hurs

9en$inatr hurs .......... )%!444 hurs

6pending variance .......... )!)44 Efficiency variance ........ 1)!444

Budget variance ............ ,!44

8lu$e variance ............ &!44

.'ediu$

6ucher C$pany uses a standard cst syste$ in (hich $anufacturingverhead csts are applied t units f prduct n the basis f $achinehurs. The c$panys cndensed flexible budget fr $anufacturing verheadis given bel(;

?er 'achine 5urs 'achine 5ur 4!444 )!444 %4!444

8ariable verhead csts % +4!444 ,)!444 4!444Fixed verhead csts %44!444 %44!444 %44!444 Ttal verhead csts %+4!444 %,)!444 %4!444

The den$inatr level f activity is %4!444 $achine hurs. 6tandardscall fr .) $achine hurs per unit f utput. Actual activity and$anufacturing verhead csts fr the year are given bel(;

nits prduced ............ 1!44 units 'achinehurs used ........ %1!+44 $achine hurs Overhead csts incurred; 8ariable csts ......... +!444 Fixed csts ............ ,!444




e0uired;

a. -hat are the standard hurs all(ed fr the utput7b. -hat (as the variable verhead spending variance7c. -hat (as the variable verhead efficiency variance7d. -hat (as the fixed verhead budget variance7

e. -hat (as the fixed verhead vlu$e variance7

Ans(er;a. 1!44 units x .) $achine hurs per unit J %!444 $achine

hurs

b. C$putatin f variable verhead spending variance; 6pending variance J 2A5 x A3 2A5 x 63 J 2+!4443 2%1!+44 '5s x %3 J 1!44

c. C$putatin f variable verhead efficiency variance; 6pending variance J 2A5 x 63 265 x 63 J 2%1!+44 '5s x %3 2%!444 '5s x %3 J 1!44 F

d. C$putatin f the fixed verhead budget variance; Budget variance J Actual fixed verhead Flexible budget fixed verhead J ,!444 %44!444 J %!444 F

e. C$putatin f the fixed verhead vlu$e variance; 8lu$e variance J Fixed prtin f predeter$ined verhead rate x 29en$inatr hurs P 6tandard hurs all(ed3 J 14M 2%4!444 '5 %!444 '53 J 4!444 F M%44!444 %4!444 '5 J 14

144.Easy The fll(ing verhead data are fr a depart$ent in a large c$pany.

Actual csts 6tatic incurred budget Activity level 2in units3 )4 4

8ariable csts; #ndirect $aterials ...... !,&) ,!+%& ?(er ................... !4+) 1!,% Fixed csts; 6upervisin ............. 1!)+4 1!+44 ent .................... ,!14 ,!%44




e0uired;

?repare a reprt that (uld be useful in assessing h( (ell csts (erecntrlled in this depart$ent.

Ans(er;

Cst Budget fr$ula Actual based n per unit csts actual f activity incurred activity 8ariance8ariable csts; #ndirect $aterials .. %&.,4 !,&) !+,) ,4 ?(er ............... ,.4 !4+) 1!,) 4 Ttal variable cst &.+4 14!14 14!+)4 1+4

Fixed csts; 6upervisin ......... 1!)+4 1!+44 &4 F ent ................ ,!14 ,!%44 4 F Ttal fixed cst .. !,,4 !44 1%4 F

Ttal cst ............ 1!)4 1!))4 %4

141.Easy

The fll(ing verhead data are fr a depart$ent in a large c$pany.

Actual csts 6tatic incurred budget Activity level 2in units3 &4 &4

8ariable csts; 6upplies ................ 1+!,%& 1+!&& Electricity ............. 1!4+ 1!4)+ Fixed csts; 6upervisin ............. !),4 !+44 9epreciatin ............ )!,4 )!44

e0uired;

?repare a reprt that (uld be useful in assessing h( (ell csts (erecntrlled in this depart$ent.

Ans(er; Cst Budget fr$ula Actual based n per unit csts actual f activity incurred activity 8ariance8ariable csts; 6upplies ............ %).%4 1+!,%& 1+!&& 14 F Electricity ......... .4 1!4+ 1!4)+ %4 F Ttal variable cst %,.)4 1,!,+4 1!444 &4 F

Fixed csts; 6upervisin ......... !),4 !+44 %4 F

9epreciatin ........ )!,4 )!44 4 F Ttal fixed cst .. 1&!%)4 1&!&44 )4 F

Ttal cst ............ %!114 %!&44 4 F

14.5ard

<va Crpratin prduces a single prduct and uses a standard cstsyste$ t help cntrl csts. Overhead is applied t prductin n thebasis f $achinehurs. Accrding t the c$panys flexible budget!the fll(ing verhead csts shuld be incurred at an activity levelf 1!444 $achinehurs 2the den$inatr activity level chsen fr thecurrent year3;




8ariable verhead csts ....................... &)!444 Fixed verhead csts .......................... 14!444 Ttal verhead csts .......................... 1)%!444

9uring the current year! the fll(ing perating results (ererecrded;

Actual $achinehurs (r*ed ................... 1)!444 6tandard $achinehurs all(ed ................ 1+!444 Actual variable verhead cst incurred ........ %!444 Actual fixed verhead cst incurred ........... 14,!144

At the end f the year! the c$panys 'anufacturing Overhead accuntsh(ed ttal debits fr actual verhead csts f 1&)!144 and ttalcredits fr verhead actually applied f 1%+!444. The difference2!1443 represents underapplied verhead! the cause f (hich$anage$ent (uld li*e t *n(.

e0uired;

a. C$pute the predeter$ined verhead rate that (uld have been used

during the year! sh(ing separately the variable and fixed c$pnentsf the rate.b. 6h( h( the 1%+!444 f "Applied Csts" (as c$puted.c. Analy>e the !144 underapplied verhead figure in ter$s f thevariable verhead spending and efficiency variances and the fixedverhead budget and vlu$e variances.

Ans(er;

a. The predeter$ined verhead rate! (ith variable and fixedele$ents identified;

&)!444/1!444 J .)4 14!444/1!444 J +.44 .)4

b. Applied verhead fr the perid;

6tandard hurs all(ed N Ttal verhead rate J 1+!444 hrs N .)4 J 1%+!444

c. 8ariable verhead variances;

6pending variance; Actual variable verhead cst ................... %!444 Actual hurs N 6tandard rate; 1)!444 hurs N .)4 J ..................... %,!)44 6pending variance ............................... )44

Efficiency variance; Actual hurs N 6tandard rate; 1)!444 hurs N .)4 J ..................... %,!)44 6tandard hurs all(ed N 6tandard rate; 1+!444 hurs N .)4 J ..................... &4!444 Efficiency variance ............................. !)44 F

Fixed verhead variances;

Budget variance; Actual fixed verhead cst ...................... 14,!144




Flexible budget fixed verhead cst ............. 14!444 Budget variance ................................. 44 F

8lu$e variance; Flexible budget fixed verhead cst.............. 14!444 Fixed verhead applied t (r* in prcess; 1+!444 N +.44 J ........................... +!444

8lu$e variance. ................................ 1!444

?rf f variances;8ariable verhead spending variance.................. )44 8ariable verhead efficiency variance................ !)44 FFixed verhead budget variance....................... 44 FFixed verhead vlu$e variance....................... 1!444 nderapplied verhead................................ !144

14%.5ard

-arner 'anufacturing has established the fll(ing $aster flexible budgetfr the current year;

6ales in nits 4!444 14!444 1+4!4446ales................... 1!44!444 1!44!444 !&44!444

@ess variable expenses;a( $aterials........... 1)!444 !444 %4&!4449irect labr............ 1+4!444 &4!444 %4!444'anufacturing verhead.. 14!444 14!444 &4!444Ttal variable expenses &%!444 +&!444 +&!444Cntributin $argin..... ,+!444 1!1)!444 1!)%+!444@ess fixed expenses;'anufacturing verhead.. %44!444 %44!444 %44!4446elling and ad$inistrative........ 1!444 1!444 1!444Ttal fixed expenses.... &!444 &!444 &!444<et inc$e.............. ,+!444 ++4!444 1!4&&!444

'anufacturing verhead is applied n the basis f $achinehurs. Atstandard! each unit f prduct re0uires ne $achinehur t c$plete.

e0uired;

a. The den$inatr activity level is 14!444 units. -hat are thepredeter$ined variable and fixed $anufacturing verhead rates7b. Actual data fr the year (ere as fll(s;

Actual variable $anufacturing verhead cst ....... 1)!)44Actual fixed $anufacturing verhead cst .......... %4)!444Actual $achinehurs incurred ..................... 114!444nits prduced and sld ........................... 14)!444

C$pute the variable verhead spending and efficiency variances andthe fixed verhead budget and vlu$e variances fr the year.




Ans(er;

a. ?redeter$ined variable vhd rate J ,4!444 ÷ 14!444 $achinehurs J 1.)4 per $achinehur

?redeter$ined fixed verhead rate J %44!444 ÷ 14!444 $achinehurs J .)4 per $achinehur

b. 8ariable verhead variances; 6pending variance J A5 2A 63 J 114!444 21.&) 1.)43 J )!)44 F

A J 1)!)44 ÷ 114!444 actual hurs J 1.&) per hur

Efficiency variance J 6 2A5 653 J 1.)4 2114!444 14)!4443 J ,!)44

6 J 14)!444 units N 1 hur per unit J 14)!444 hurs.

Fixed verhead variances; Budget variance J Actual fixed verhead

Budgeted fixed verhead J %4)!444 %44!444 J )!444

8lu$e variance J Fixed rate 29en$inatr hrs. 6tandard hrs.3 J .)4 214!444 14)!4443 J %,!)44

6tandard hurs J 14)!444 units N 1 hur per unit.

14&.5ard

-attis 'anufacturing has established the fll(ing $aster flexiblebudget;

6ales in nits 144!444 1)4!444 44!4446ales..................... 1!)44!444 !)4!444 %!444!444@ess variable expenses;a( $aterials............. 4!444 %%4!444 &&4!4449irect labr.............. &4!444 %+4!444 &4!444'anufacturing verhead.... 14!444 ,4!444 %+4!4446elling and ad$inistrative 144!444 1)4!444 44!444Ttal variable expenses .. ,&4!444 1!114!444 1!&4!444Cntributin $argin....... ,+4!444 1!1&4!444 1!)4!444@ess fixed expenses;'anufacturing verhead.... %%,!)44 %%,!)44 %%,!)44

6elling and ad$inistrative )4!444 )4!444 )4!444Ttal fixed expenses...... ),!)44 ),!)44 ),!)44<et inc$e................ 1,!)44 ))!)44 %!)44

'anufacturing verhead is applied n the basis f $achinehurs. Atstandard! each unit f prduct re0uires ne $achinehur t c$plete.

e0uired;

a. The den$inatr activity level is 1)4!444 units. -hat are thepredeter$ined variable and fixed $anufacturing verhead rates7




b. Actual data fr the year (ere as fll(s; Actual variable $anufacturing verhead cst ....... 11!+4 Actual fixed $anufacturing verhead cst .......... %&%!444 Actual $achinehurs incurred ..................... 1+!444 nits prduced and sld ........................... 14!444 C$pute the variable verhead spending and efficiency variances and

the fixed verhead budget and vlu$e variances fr the year.

Ans(er;

a. ?redeter$ined variable vhd rate J ,4!444 ÷ 1)4!444 $achinehurs J 1.4 per $achinehur

?redeter$ined fixed verhead rate J %%,!)44 ÷ 1)4!444 $achinehurs J .) per $achinehur

b. 8ariable verhead variances; 6pending variance J A5 2A 63 J 1+!444 21.+ 1.43

J 1)!14 F

A J 11!+4 ÷ 1+!444 actual $achinehurs J 1.+

Efficiency variance J 6 2A5 653 J 1.4 21+!444 14!4443 J 14!44

6 J 14!444 units N 1 hur per unit J 14!444 hurs.

Fixed verhead variances; Budget variance J Actual fixed verhead

Budgeted fixed verhead J %&%!444 %%,!)44 J )!)44

8lu$e variance J Fixed rate 29en$inatr hrs. 6tandard hrs.3 J .) 21)4!444 14!4443 J +,!)44

6tandard hurs J 14!444 units N 1 hr. per unit.

14).5ard

Tractn Crpratin uses a standard csting syste$ in (hich $anufacturingverhead csts are applied t prducts n the basis f $achine ti$e.

e0uired;

a. 6everal nu$bers and labels have been $itted fr$ the analysis ffixed verhead bel(. 6upply the $issing nu$bers and labels.

Fixed Overhead Cst Applied t SSSSSSS7SSSSSSSSS Flexible Budget -r* in ?rcess SSSSSSS7SSSSSSSSS Fixed Overhead Cst %4!144 '5 x 1.4 SSSSSSS7SSSSSSSSS SSSSSSSSSS7SSSSSSSSS SSSSSSSSSS7SSSSSSSSS Budget variance! 7 1!4 7




SSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS Ttal variance! % F SSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS

b. 6uppse that + $inutes f $achine ti$e is standard per unit fprductin. 5( $any units (ere actually prduced in the situatinabve7

c. Again suppse that + $inutes f $achine ti$e is standard per unitf prductin. 5( $any units f prductin (ere assu$ed (hen thepredeter$ined applicatin rate fr fixed verhead (asestablished7

Ans(er;a. Fixed Overhead Cst Applied t Actual Fixed Flexible Budget -r* in ?rcess Overhead Cst Fixed Overhead Cst %4!144 '5 x 1.4 %)!4 %&!444 %+!+ SSSSSSSSSSSSSSSS SSSSSSSSSSSSSSSSSSS SSSSSSSSSSSSSSSSSSS

Budget variance! 8lu$e variance! 1!4 !+ F SSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS Ttal variance! % F SSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS

C$putatins in this rder;

2<te; -hen used in the bel( algebraic fr$ulas! favrable variancesare negative and favrable variances are psitive.3

8lu$e variance J Ttal variance Budget variance J % F 1!4

J % 1!4 J !+ J !+ F

Fixed verhead applied J %4!144 '5 N 1.4 J %+!+

Flexible budget fixed verhead J Fixed verhead applied 8lu$e variance J %+!+ !+ F J %+!+ !+ J %&!444

Actual fixed verhead J Fixed verhead applied Ttal variance

J %+!+ % F J %+!+ % J %)!4

b. 6tandard '5 all(ed fr prductin! ............. %4!144 6tandard hurs all(ed per unit ................. 4.1 nits prduced ........................... %!41!444

c. Fixed verhead in flexible budget! 2a3 abve .... %&!444 6tandard cst per $achine hur .................. 1.4 '5 assu$ed in flexible budget ............ %44!444




6tandard hurs all(ed per unit ................. 4.1 nits assu$ed in flexible budget ......... %!444!444

test bank - chapter11 flexible budgets

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