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Cost Accounting: A Managerial Emphasis, 16e (Horngren)
Chapter 8 Flexible Budgets, Overhead Cost Variances, and Management Control
8.1 Objective 8.1
1) Compared to variable overhead costs planning, fixed overhead cost planning has an additional
strategic issue beyond undertaking only essential activities and efficient operations. That additional
requirement is best described as:
A) focusing on the highest possible quality
B) increasing the linearity between total costs and volume of production
C) choosing the appropriate level of capacity that will benefit the company in the long-run
D) identifying essential value-adding activities
Answer: C
Diff: 2
Objective: 1
AACSB: Analytical thinking
2) Effective planning of variable overhead costs means that managers must

A) increase the expenditures in the variable overhead budgets
B) focus on activities that add value for the customer and eliminate nonvalue-added activities
C) increase the linearity between total costs and volume of production
D) identify the product advertising requirements and factor those into the variable overhead budget
Answer: B
Diff: 1
Objective: 1
3) Which of the following is a true statement of energy costs?

A) Energy costs are not controllable
B) Strategies to reduce energy costs will not impact variable cost budgets.
C) Energy costs are a fixed cost of doing business for a manufacturer.
D) Energy costs are a growing component of variable overhead costs.
Answer: D
Diff: 2
Objective: 1
4) Fixed overhead costs include ________.

A) the cost of sales commissions
B) Leasing of machinery used in a factory
C) energy costs
D) indirect materials
Answer: B
Diff: 1
Objective: 1
1
Copyright © 2018 Pearson Education, Inc.
5) Effective planning of fixed overhead costs includes ________.
A) planning day-to-day operational decisions
B) eliminating value-added costs
C) determining which products are to be produced
D) choosing the appropriate level of investment in productive assets
Answer: D
Diff: 2
Objective: 1
6) Effective planning of variable overhead costs includes ________.

A) choosing the appropriate level of investment
B) eliminating value-added costs
C) redesigning products or processes to use fewer resources
D) reorganizing management structure
Answer: C
Diff: 2
Objective: 1
7) Most of the decisions determining the level of fixed overhead costs to be incurred will be made
________.
A) by the end of a budget period
B) by the middle of a budget period
C) on a day-to-day ongoing basis
D) at the start of a budget period
Answer: D
Diff: 1
Objective: 1
8) The major challenge when planning fixed overhead is ________.

A) calculating total costs
B) calculating the cost-allocation rate
C) choosing the appropriate level of capacity
D) choosing the appropriate planning period
Answer: C
Diff: 1
Objective: 1
9) An effective plan for variable overhead costs will eliminate activities that do not add value.
Answer: TRUE
Diff: 1
Objective: 1
2
10) At the start of the budget period, management will have made most decisions regarding the level of
fixed overhead costs to be incurred.
Answer: TRUE
Diff: 2
Objective: 1
11) The planning of fixed overhead costs differs from the planning of variable overhead costs in terms of
timing.
Answer: TRUE
Diff: 2
Objective: 1
12) The costs related to buildings (such as rent and insurance), equipment (such as lease payments or
straight-line depreciation), and salaried labor in a factory are all examples of cost items that would be
part of the fixed overhead budget.
Answer: TRUE
Explanation: The costs mentioned are all fixed overhead costs.
Diff: 1
Objective: 1
8.2 Objective 8.2
1) Which of the following mathematical expression is used to calculate budgeted variable overhead cost
rate per output unit?
A) Budgeted output allowed per input unit × Budgeted variable overhead cost rate per input unit
B) Budgeted input allowed per output unit ÷ Budgeted variable overhead cost rate per input unit
C) Budgeted output allowed per input unit ÷ Budgeted variable overhead cost rate per input unit
D) Budgeted input allowed per output unit × Budgeted variable overhead cost rate per input unit
Answer: D
Diff: 2
Objective: 2
2) While calculating the costs of products and services, a standard costing system ________.
A) allocates overhead costs on the basis of the actual overhead-cost rates
B) uses standard costs to determine the cost of products
C) does not keep track of overhead cost
D) traces direct costs to output by multiplying the standard prices or rates by the actual quantities
Answer: B
Diff: 2
Objective: 2
3
3) Which of the following best defines standard costing?
A) It is the same as actual costing but done in real time.
B) It is a system that traces direct cost to output by multiplying actual process or rates by actual quantities
of inputs + allocates overhead by on the basis of actual quantities of the allocation base used.
C) It is a system that traces direct costs to output produced by multiplying the standard prices or rates by
the standard quantities of inputs allowed for the actual output produced.
D) It is a system that allocates overhead costs on the basis of standard overhead cost rates times the actual
quantities of the allocation based used.
Answer: C
Diff: 1
Objective: 2
4) Which of the following is the mathematical expression for the budgeted fixed overhead cost per unit of
cost allocation base?
A) Budgeted fixed overhead cost per unit of cost allocation base = Actual total costs in fixed overhead cost
pool ÷ Budgeted total quantity of cost allocation base
B) Budgeted fixed overhead cost per unit of cost allocation base = Budgeted total costs in fixed overhead
cost pool ÷ Budgeted total quantity of cost allocation base
C) Budgeted fixed overhead cost per unit of cost allocation base = Actual total costs in fixed overhead cost
pool ÷ Actual total quantity of cost allocation base
D) Budgeted fixed overhead cost per unit of cost allocation base = Budgeted total costs in fixed overhead
cost pool ÷ Actual total quantity of cost allocation base
Answer: B
Diff: 2
Objective: 2
5) In flexible budgets the costs that are not "flexed" because they remain the same within a relevant range
of activity (such as sales or output) are called ________.
A) total overhead costs
B) total budgeted costs
C) fixed costs
D) variable costs
Answer: C
Diff: 1
Objective: 2
4
6) Really Great Corporation manufactures industrial-sized landscaping trailers and uses budgeted
machine-hours to allocate variable manufacturing overhead. The following information pertains to the
company's manufacturing overhead data:
Budgeted output units 40,000 units

Budgeted machine-hours 10,000 hours
Budgeted variable manufacturing overhead costs for 40,000 units $310,000
Actual output units produced 36,500 units

Actual machine-hours used 14,600 hours
Actual variable manufacturing overhead costs $350,400
What is the budgeted variable overhead cost rate per output unit?
A) $9.60
B) $12.40
C) $7.75
D) $31.00
Answer: C
Explanation: Machine hour per unit = 10,000 ÷ 40,000 = 0.25
Budgeted cost per machine hour = $310,000 ÷ 10,000 = $31.00
Budgeted cost per unit = $31.00 × 0.25 = $7.75
Diff: 2
Objective: 2
AACSB: Application of knowledge
7) Home Plate Corporation manufactures baseball uniforms and uses budgeted machine-hours to allocate
variable manufacturing overhead. The following information pertains to the company's manufacturing
overhead data:


A) $6.26
B) $6.00
C) $17.00
D) $18.00
Answer: C
Explanation: $119,000/7,000 = $17.00
Diff: 2
Objective: 2
5
8) Healthy Earth Products Inc. produces fertilizer and distributes the product by using company trucks.
The controller of the company uses budgeted fleet hours to allocate variable manufacturing overhead.
The following information relates to the company's manufacturing overhead data:
Budgeted output units 800 truckloads

Budgeted fleet hours 520 hours
Budgeted pounds of fertilizer 28,000,000 pounds
Budgeted variable manufacturing overhead costs for 800 loads $93,600.00
Actual output units produced and delivered 760 truckloads

Actual fleet hours 460 hours
Actual pounds of fertilizer produced and delivered 29,400,000 pounds
Actual variable manufacturing overhead costs $91,200.00
A) $114.00
B) $117.00
C) $123.16
D) $120.00
Answer: B
Explanation: Budgeted fleet hours per unit = 520 ÷ 800= 0.65
Budgeted cost per fleet hour = $93,600.00 ÷ 520 = $180
Budgeted cost per unit = $180 × 0.65 = $117.00
Diff: 2
Objective: 2
9) Standard costing is a costing system that allocates overhead costs on the basis of the standard
overhead-cost rates times the standard quantities of the allocation bases allowed for the actual outputs
produced.
Answer: TRUE
Diff: 1
Objective: 2
10) Fixed costs automatically increase or decrease with the level of activity within a relevant range of
activity.
Answer: FALSE
Explanation: Fixed costs do not automatically increase or decrease with the level of activity within the
relevant range.
Diff: 1
Objective: 2
6
11) Standard costing is a cost system that allocates overhead costs on the basis of overhead cost rates
based on actual overhead costs times the standard quantities of the allocation bases allowed for the actual
outputs produced.
Answer: FALSE
Explanation: Standard costing is a costing system that traces direct costs to output produced by
multiplying the standard prices or rates by the standard quantities of inputs allowed for actual outputs
produced.
Diff: 2
Objective: 2
12) Computing standard costs at the start of the budget period results in a complex record keeping
system.
Answer: FALSE
Explanation: Computing standard costs at the start of the budget period simplifies record keeping
because no records are needed of the actual overhead costs or of the actual quantities of the cost-
allocation bases used.
Diff: 2
Objective: 2
13) List the four steps to develop budgeted variable overhead cost-allocation.
Answer: Step 1: Choose the period to be used for the budget.
Step 2: Select the cost-allocation bases to use in allocating the variable overhead costs to the output
produced.
Step 3: Identify the variable overhead costs associated with each cost-allocation base.
Step 4: Compute the rate per unit of each cost-allocation base used to allocate the variable overhead costs
to the output produced.
Diff: 2
Objective: 2
14) What is a standard costing system?

Answer: Standard costing is a costing system that (1) traces direct costs to output produced by
multiplying the standard prices or rates by the standard quantities of inputs allowed for actual outputs
produced and (2) allocates overhead costs on the basis of the standard overhead-cost rates times the
standard quantities of the allocation bases allowed for the actual outputs produced.
Diff: 2
Objective: 2
7
8.3 Objective 8.3
1) The variable overhead spending variance measures the difference between ________, multiplied by the
actual quantity of variable overhead cost-allocation base used.
A) the actual variable overhead cost per unit and the budgeted variable overhead cost per unit
B) the standard variable overhead cost rate and the budgeted variable overhead cost rate
C) the actual variable overhead cost per unit and the budgeted fixed overhead cost per unit
D) the actual quantity per unit and the budgeted quantity per unit
Answer: A
Diff: 2
Objective: 3
2) A $5,000 unfavorable flexible-budget variance indicates that ________.

A) the flexible-budget amount exceeded actual variable manufacturing overhead by $5,000
B) the actual variable manufacturing overhead exceeded the flexible-budget amount by $5,000
C) the flexible-budget amount exceeded standard variable manufacturing overhead by $5,000
D) the standard variable manufacturing overhead exceeded the flexible-budget amount by $5,000
Answer: B
Diff: 2
Objective: 3
3) Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to allocate
variable manufacturing overhead. The following information relates to the company's manufacturing
overhead data:


What is the flexible-budget amount for variable manufacturing overhead?

A) $358,785
B) $409,185
C) $384,060
D) $336,755
Answer: B
Explanation: Budgeted machine hours per unit = 17,085 ÷ 28,475 = 0.6
Budgeted machine hours allowed for 32,475 units = 32,475 × 0.6= 19,485
Budgeted variable overhead rate per machine hour = $358,785 ÷ 17,085 = $21.00
Flexible-budget amount = 19,485 × $21.00 = $409,185
Diff: 2
Objective: 3
8
overhead data:


What is the flexible-budget variance for variable manufacturing overhead?

A) $35,309 unfavorable
B) $52,909 unfavorable
C) $35,309 favorable
D) $52,909 favorable
Answer: A
Budgeted machine hours allowed for 45,500 units = 45,500 × 0.4 = 18,200
Flexible-budget variance = $435,709 − $400,400 = $35,309 unfavorable
Diff: 3
Objective: 3
9
overhead data:


What is the amount of the budgeted variable manufacturing overhead cost per unit? (Do not round any
intermediary calculations. Round your final answer to the nearest cent.)
A) $8.91
B) $8.06
C) $8.80
D) $8.16
Answer: C
Budgeted variable manufacturing overhead cost per unit = 0.4 × $22.00 = $8.80
Diff: 3
Objective: 3
10
6) Lancelot Corporation manufactures tennis gear and uses budgeted machine-hours to allocate variable
manufacturing overhead. The following information relates to the company's manufacturing overhead
data:


What is the flexible-budget amount for variable manufacturing overhead?

A) $250,000
B) $306,000
C) $288,000
D) $235,294
Answer: B
Explanation: Budgeted machine hours per unit = 24,000 ÷ 8,000 = 3
Budgeted machine hours allowed for 8,500 units = 8,500 × 3 = 25,500
Diff: 3
Objective: 3
11
data:



B) $49,000 favorable
C) $70,000 unfavorable
D) $70,000 favorable
Answer: A
Budgeted machine hours allowed for 3,350 units = 3,350 × 5 = 16,750
Flexible-budget variance = $250,000 − $201,000 = $49,000 U
Diff: 3
Objective: 3
12
data:


What is the amount of the budgeted variable manufacturing overhead cost per unit?
A) $2.40 per unit
B) $6.98 per unit
C) $7.20 per unit
D) $25.51 per unit
Answer: C
Budgeted variable manufacturing overhead cost per unit = 3 × $2.40 = $7.20
Diff: 3
Objective: 3
13
9) J&J Materials and Construction Corporation produces mulch and distributes the product by using
dump trucks. The company uses budgeted fleet hours to allocate variable manufacturing overhead. The
following information pertains to the company's manufacturing overhead data:

Budgeted variable manufacturing overhead costs for 690 loads $94,392

What is the flexible-budget amount for variable manufacturing overhead? (Round intermediary
calculations two decimal places and your final answer to the nearest whole dollar.)
A) $81,801
B) $94,392
C) $86,184
D) $89,592
Answer: C
Explanation: Budgeted fleet hours per unit = 621 ÷ 690 = 0.9
Budgeted fleet hours allowed for 630 truckloads = 630 × 0.9 = 567
Budgeted variable overhead rate per machine hour = $94,392 ÷ 621 = $152.00
Flexible-budget amount = 567 × $152.00 = $86,184
Diff: 2
Objective: 3
14
10) J&J Materials and Construction Corporation produces fertilizer and distributes the product by using



A) $4,800 favorable
C) $2,139 favorable
D) $2,139 unfavorable
Answer: D
Budgeted fleet hours allowed for 615 truckloads = 615 × 0.7 = 430.5
Budgeted variable overhead rate per machine hour = $72,590.00 ÷ 476 = $152.50
Flexible-budget amount = 430.5 × $152.50 = $65,651.3
Flexible-budget variance = $67,790.00 − $65,651.3 = $2,139 U
Diff: 3
Objective: 3
15
11) J&J Materials and Construction Corporation produces mulch and distributes the product by using


What is the budgeted variable manufacturing overhead cost per unit?

A) $154.50 per unit
B) $177.13 per unit
C) $130.54 per unit
D) $123.60 per unit
Answer: D
Budgeted variable overhead rate per machine hour = $87,756.00 ÷ 568 = $154.50
Budgeted variable manufacturing overhead cost per unit = 0.8 × $154.50 = $123.60
Diff: 3
Objective: 3
12) The variable overhead flexible-budget variance can be further explained by calculating the:
A) price variance and the efficiency variance
B) static-budget variance and sales-volume variance
C) spending variance and the efficiency variance
D) sales-volume variance and the spending variance
Answer: C
Diff: 1
Objective: 3
16
13) Teddy Company uses a standard cost system. In May, $234,000 of variable manufacturing overhead
costs were incurred and the flexible-budget amount for the month was $240,000. Which of the following
variable manufacturing overhead entries would have been recorded for May?
A) Accounts Payable Control and other accounts 240,000
Work-in-Process Control 240,000
B) Work-in-Process Control 240,000
Variable Manufacturing Overhead Allocated 240,000
C) Work-in-Process Control 234,000
Accounts Payable Control and other accounts 234,000
D) Accounts Payable Control and other accounts 234,000
Variable Manufacturing Overhead Control 234,000
Answer: B
Diff: 2
Objective: 3
14) A company is using a standard cost system and receives its electricity bill. Electricity is considered a
variable cost of operations for this company. The bill is for $15,000 and will be paid next month. Which
of the following entries would be the correct recording of the electricity bill?
A) Work-in-Process Control $15,000
Variable Overhead Allocated $15,000
B) Variable Overhead Control $15,000
Accounts payable $15,000
C) Work-in-Process Control $15,000
Accounts Payable $15,000
D) Variable Overhead Control $15,000
Answer: B
Diff: 2
Objective: 3
15) When machine-hours are used as an overhead cost-allocation base, the most likely cause of a
favorable variable overhead spending variance is ________.
A) excessive machine breakdowns
B) the production scheduler efficiently scheduled jobs
C) a decline in the cost of energy
D) strengthened demand for the product
Answer: C
Diff: 2
Objective: 3
17
16) The variable overhead efficiency variance measures the difference between the ________, multiplied
by the budgeted variable overhead cost per unit of the cost-allocation base.
A) budgeted quantity of the cost-allocation base used and the budgeted quantity of the cost-allocation
base that should have been used to produce the actual output
B) actual quantity of the cost-allocation base used and the budgeted quantity of the cost-allocation base
that should have been used to produce the actual output
C) actual cost incurred and the budgeted quantity of the cost-allocation base that should have been used
to produce the actual output
D) budgeted cost and the actual cost used to produce the actual output
Answer: B
Diff: 2
Objective: 3
17) When variable overhead efficiency variance is favorable, it can be safely assumed that the ________.
A) actual rate per unit of the cost-allocation base is higher than the budgeted rate
B) actual quantity of the cost-allocation base used is higher than the budgeted quantity
C) actual rate per unit of the cost-allocation base is lower than the budgeted rate
D) actual quantity of the cost-allocation base used is lower than the budgeted quantity
Answer: D
Diff: 2
Objective: 3
18) Lazy Guy Corporation manufactured 4,000 chairs during June. The following variable overhead data
relates to June:
Budgeted variable overhead cost per unit $10.00

Actual variable manufacturing overhead cost $49,000
Flexible-budget amount for variable manufacturing overhead $46,800
Variable manufacturing overhead efficiency variance $720 unfavorable
What is the variable overhead flexible-budget variance?

A) $2,200 favorable
B) $1,480 favorable
Answer: C
Diff: 2
Objective: 3
18
19) Lazy Guy Corporation manufactured 6,000 chairs during June. The following variable overhead data
relates to June:
Budgeted variable overhead cost per unit $10.00

Actual variable manufacturing overhead cost $52,800
Flexible-budget amount for variable manufacturing overhead $46,900
Variable manufacturing overhead efficiency variance $790 unfavorable
What is the variable overhead spending variance?

A) $5,110 favorable
B) $5,900 favorable
Answer: D
Explanation: Variable overhead flexible-budget variance = $52,800 - $46,900 = $5,900 (U)
Variable overhead spending variance = $5,900 (U) − $790 (U) = $5,110 (U)
Diff: 3
Objective: 3
20) Outdoor Gear Corporation manufactured 5,000 coolers during October. The following variable
overhead data relates to October:
Variable overhead spending variance $1,310 Unfavorable

Variable overhead efficiency variance $192 Unfavorable
Budgeted machine hours allowed for actual output 615 machine hours
Actual cost per machine hour $27
Budgeted cost per machine hour $24
Calculate the actual machine hours used by Stark during October.

A) 623 hours
B) 615 hours
C) 607 hours
D) 622 hours
Answer: A
Explanation: (Actual machine hours − 615 budgeted machine hours) × $24 = $192
Actual machine hours = 8 hours + 615 hours = 623 hours
Diff: 2
Objective: 3
19
21) Outdoor Gear Corporation manufactured 1,000 coolers during October. The following variable
overhead data relates to October:
Variable overhead spending variance $1,300 Unfavorable

Variable overhead efficiency variance $182 Unfavorable
Budgeted machine hours allowed for actual output 608 machine hours
Actual cost per machine hour $28
Budgeted cost per machine hour $26
Calculate the variable overhead flexible-budget variance.

B) $1,118 favorable
D) $1,482 favorable
Answer: C
Explanation: Variable overhead flexible-budget variance = $1,300 (U) + $182 (U) = $1,482 (U)
Diff: 3
Objective: 3
22) Zitrik Corporation manufactured 90,000 buckets during February. The variable overhead cost-
allocation base is $5.10 per machine-hour. The following variable overhead data pertain to February:
Actual Budgeted
Production 90,000 units 90,000 units
Machine-hours 9,800 hours 9,000 hours
Variable overhead cost per machine-hour $5.25 $5.10
What is the actual variable overhead cost?

A) $472,500
B) $459,000
C) $51,450
D) $49,980
Answer: C
Explanation: Actual variable overhead cost = 9,800 mh × $5.25 = $51,450
Diff: 2
Objective: 3
20
Actual Budgeted
What is the flexible-budget amount?

A) $54,000
B) $50,000
C) $50,500
D) $54,540
Answer: B
Explanation: Flexible-budget amount = 10,000 mh × $5.00 = $50,000
Diff: 2
Objective: 3
Actual Budgeted

A) $1,050 favorable
D) $1,000 favorable
Answer: C
Explanation: Variable overhead spending variance = ($5.55 − $5.45) × 10,500 mh = $1,050 unfavorable
Diff: 3
Objective: 3
21
Actual Budgeted
What is the variable overhead efficiency variance?

B) $2,675 favorable
C) $2,650 favorable
D) $2,675 unfavorable.
Answer: A
Explanation: Variable overhead efficiency variance = [9,500 − 9,000] × $5.30 = $2,650 unfavorable
Diff: 3
Objective: 3
26) Cold Products Corporation manufactured 34,000 ice chests during September. The variable overhead
cost-allocation base is $14.50 per machine-hour. The following variable overhead data pertain to
September:
Actual Budgeted
Variable overhead cost per machine-hour: $14.00 $14.50

A) $156,600
B) $177,480
C) $212,800
D) $220,400
Answer: C
Explanation: 15,200 mh × $14.00 = $212,800
Diff: 2
Objective: 3
22
September:
Actual Budgeted

A) $90,000
B) $121,500
C) $318,600
D) $324,000
Answer: B
Explanation: 27,000 × (6,000/20,000) × $15.00 = $121,500
Diff: 2
Objective: 3
September:
Actual Budgeted

A) $3,040 favorable
Answer: A
Explanation: ($13.25 - $13.45) × 15,200 mh = $3,040 favorable
Diff: 3
Objective: 3
23
September:
Actual Budgeted

A) $6,750 favorable
Answer: B
Explanation: [13,500 - (27,000 × 7,800/26,000) mh] × $11.75 = $63,450 unfavorable
Diff: 3
Objective: 3
30) Russo Corporation manufactured 17,000 air conditioners during November. The overhead cost-
allocation base is $34.75 per machine-hour. The following variable overhead data pertain to November:
Actual Budgeted

A) $439,450
B) $476,000
C) $449,144
D) $486,500
Answer: A
Explanation: 12,925 mh × $34.00 = $439,450
Diff: 2
Objective: 3
24
Actual Budgeted

A) $441,394
B) $399,000
C) $396,000
D) $475,200
Answer: B
Explanation: 15,000 x (14,400 / 18,000) x 33.25 = 399,000
Diff: 2
Objective: 3
Actual Budgeted

A) $3,600.00 unfavorable
B) $3,325.00 unfavorable
C) $3,600.00 favorable
D) $3,325.00 favorable
Answer: D
Explanation: ($34.00- $34.25) × 13,300 mh = $3,325.00 favorable
Diff: 3
Objective: 3
25
allocation rate is $35.50 per machine-hour. The following variable overhead data pertain to November:
Actual Budgeted

A) $6,212.50 favorable
D) $4,750.00 unfavorable
Answer: A
Explanation: [8,325 - (17,000 × 9,500/19,000) mh] × $35.50 = $6,212.50 favorable
Diff: 3
Objective: 3
Actual Budgeted
What is the total variable overhead variance?

Answer: C
Explanation: Actual variable overhead - Flexible budgeted variable overhead
(12,700 mh × $34.00) - [21,000 × (13,800/23,000) mh × $34.50]
$431,800 - $434,700 = $2,900.00 favorable
Diff: 3
Objective: 3
26
35) The variable overhead efficiency variance is computed ________ and interpreted ________ the direct-
cost efficiency variance.
A) the same as; the same as
B) the same as; differently than
C) differently than; the same as
D) differently than; differently than
Answer: B
Diff: 2
Objective: 3
36) Mendel Company makes the following journal entry:

Variable Manufacturing Overhead Efficiency Variance 7,000
Variable Manufacturing Overhead Spending Variance 57,000
Which of the following statements is true of the given journal entry?

A) A variable manufacturing overhead cost of $179,000 is written-off.
B) An unfavorable spending variance of $57,000 is recorded.
C) A favorable efficiency variance of $7,000 is recorded.
D) A favorable flexible-budget variance of $50,000 is recorded.
Answer: D
Diff: 2
Objective: 3
37) The balances in the variable overhead control account and the variable overhead control account are
$120,000 and $125,000 respectively. The variable overhead spending variance is $6,000 and the variable
overhead efficiency variance is $11,000. Which of the following entries would be required to record the
variances in a standard costing system?
A) Cost of Goods Sold $5,000
Variable Overhead Spending $6,000
Variable Overhead Efficiency Variance $11,000
B) Work-in-Process $5,000
Variable Overhead Spending $6,000
C) Variable Overhead Allocated $120,000
Variable Overhead Spending Variance $11,000
Variable Overhead Control $125,000
D) Variable Overhead Control $120,000
Variable Overhead Spending Variance $11,000
Answer: C
Diff: 2
Objective: 3
27
38) Osium Company made the following journal entry:

Variable Manufacturing Overhead Efficiency Variance 80,000
Variable Manufacturing Overhead Spending Variance 30,000
Which of the following statements is true of the given journal entry?

A) Osium overallocated variable manufacturing overhead.
B) A $30,000 unfavorable spending variance was recorded.
C) Work-in-Process is currently overstated.
D) A $80,000 unfavorable efficiency variance was recorded.
Answer: D
Diff: 2
Objective: 3
39) Which of the following is the correct mathematical expression is used to calculate variable overhead
efficiency variance?
A) (Actual rate − Budgeted rate) × Budgeted quantity
B) (Actual quantity × Budgeted rate) - (Budgeted input quantity allowed for actual output × Budgeted
rate)
C) (Actual quantity ÷ Budgeted rate) − (Budgeted quantity ÷ Budgeted rate)
D) (Actual quantity ÷ Budgeted rate) × Budgeted quantity allowed for actual output
Answer: B
Diff: 1
Objective: 3
40) Marshall Company uses a standard cost system. In March, $270,000 of variable manufacturing
overhead costs were incurred and the flexible-budget amount for the month was $310,000. Which of the
following variable manufacturing overhead entries would have been recorded for March?
A) Accounts Payable Control and other accounts 310,000
Work-in-Process Control 310,000
B) Variable Manufacturing Overhead Allocated 310,000
Accounts Payable and other accounts 310,000
C) Work-in-Process Control 270,000
D) Variable Manufacturing Overhead Control 270,000
Answer: D
Diff: 2
Objective: 3
28
41) All of the following are possible causes of actual machine hours exceeding budgeted machine hours
except:
A) Poor scheduling
B) Actual leasing costs for the machine were higher than expected
C) Machines were not maintained in good operating condition
D) Budgeted standards were set to tight
Answer: B
Diff: 2
Objective: 3
42) Which of the following journal entries is used to record actual variable overhead costs incurred?
A) Accounts Payable
Variable Overhead Control
B) Variable Overhead Control
Accounts Receivable
C) Work-in-Process Control
Variable Overhead Control
D) Variable Overhead Control
Accounts Payable and various other accounts
Answer: D
Explanation:
Diff: 1
Objective: 3
43) When variances are immaterial, which of the following statements is true of the journal entry to write-
off the variable overhead variance accounts?
A) Cost of Goods Sold account will always be debited.
B) Unfavorable efficiency variance will be credited.
C) Favorable efficiency variance will be credited.
D) Cost of Goods Sold account will always be credited.
Answer: B
Diff: 2
Objective: 3
44) The flexible budget highlights the differences between budgeted costs and budgeted quantities versus
actual costs and actual quantities for the budgeted output level.
Answer: TRUE
Diff: 1
Objective: 3
29
45) Managers can always view a favorable variable overhead spending variance as desirable.
Answer: FALSE
Explanation: Managers should not always view a favorable variable overhead spending variance as
desirable. For example, the variable overhead spending variance would be favorable if managers
purchased lower-priced, poor-quality indirect materials. These decisions, however, are likely to hurt
product quality and harm the long-run prospects of the business.
Diff: 2
Objective: 3
46) The variable overhead efficiency variance is the difference between actual quantity of the
cost-allocation base used and budgeted quantity of the cost-allocation base allowed for actual output,
multiplied by the budgeted variable overhead cost per unit of the cost-allocation base.
Answer: TRUE
Diff: 1
Objective: 3
47) Tightly budgeted machine time standards can lead to unfavorable variable overhead efficiency
variance.
Answer: TRUE
Diff: 1
Objective: 3
48) If budgeted and actual machine hours are equal, spending variance will always be nil.
Answer: FALSE
Explanation: Even if budgeted and actual machine hours are equal, spending variance can occur. Because
even though the company used the correct number of machine-hours, the energy consumed per machine-
hour could be higher than budgeted.
Diff: 2
Objective: 3
49) Unskilled work force can lead to unfavorable efficiency variance.

Answer: TRUE
Diff: 1
Objective: 3
50) Causes of a favorable variable overhead efficiency variance might include using lower-skilled
workers than expected.
Answer: FALSE
Explanation: Possible causes of a favorable variable overhead efficiency variance might include using
higher-skilled workers that are more efficient than expected.
Diff: 1
Objective: 3
30
51) If the production planners set the budgeted machine hours standards too tight, one could anticipate
there would be a favorable variable overhead efficiency variance.
Answer: FALSE
Explanation: If the production planners set the budgeted machine hours standards too tight, one could
anticipate there would be an unfavorable variable overhead efficiency variance.
Diff: 1
Objective: 3
52) Comfort Company manufactures pillows. The 2015 operating budget is based on production of 25,000
pillows with 0.75 machine-hour allowed per pillow. Budgeted variable overhead per hour was $25.
Actual production for 2015 was 27,000 pillows using 19,050 machine-hours. Actual variable costs were
$23 per machine-hour.
Required:
Calculate the variable overhead spending and efficiency variances.
Answer: Budgeted variable overhead = $25 × (25,000 × 0.75) machine-hours = $468,750
Spending variance = ($25 − $23) × 19,050 = $38,100 favorable
Efficiency variance = [19,050 − (27,000 × 0.75)] × $25 = $30,000 favorable

Diff: 3
Objective: 3
53) Skytalk Company manufactures weathervanes. The 2015 operating budget is based on the production
of 5,300 weathervanes with 1.25 machine-hour allowed per weathervane. Variable manufacturing
overhead is anticipated to be $145,750.
Actual production for 2015 was 5,250 weathervanes using 6,050 machine-hours. Actual variable costs
were $21.75 per machine-hour.
Required:
Calculate the variable overhead spending and the efficiency variances.
Answer: Budgeted variable overhead per hour = $145,750 ÷ (5,300 × 1.25) machine-hours = $22
Spending variance = ($21.75 − $22) × 6,050 = $1,512.50 favorable
Efficiency variance = [6,050 − (5,300 × 1.25)] × $22 = $12,650 favorable

Diff: 3
Objective: 3
31
54) Briefly explain the meaning of the variable overhead efficiency variance and the variable overhead
spending variance.
Answer: The variable overhead efficiency variance is the difference between actual quantity of the cost-
allocation base used and the budgeted amount of the cost allocation base that should have been used to
produce the actual output, multiplied by budgeted variable overhead cost per unit of the cost-allocation
base. The efficiency variance for variable overhead cost is based on the efficiency with which the cost
allocation base was used to make the actual output.
The variable overhead spending variance is the difference between the actual variable overhead cost per
unit of the cost-allocation base and the budgeted variable overhead cost per unit of the cost-allocation
base, multiplied by actual quantity of the variable overhead cost-allocation base used for actual output.
The meaning of this variance hinges on an explanation of why the per unit cost of the allocation base is
lower or higher than the amount budgeted. Some explanations might include different-than-budgeted
prices for the individual inputs to variable overhead or perhaps more efficient usage of some of the
variable overhead items.
Diff: 2
Objective: 3
55) Define variable overhead spending variance. Briefly explain why a favorable variable overhead
spending variance may not always be desirable.
Answer: The variable overhead spending variance is the difference between the actual variable overhead
cost per unit of the cost-allocation base and the budgeted variable overhead cost per unit of the cost-
allocation base, multiplied by the actual quantity of the variable overhead cost-allocation base used for
the actual output. Variable overhead costs include costs of energy, machine maintenance, indirect
materials, and indirect labor. If a favorable variable overhead spending variance had been obtained by
the managers of the company purchasing low-priced, poor-quality indirect materials, hired less talented
supervisors, or performed less machine maintenance there could be negative future consequences. The
long-run prospects for the business may suffer as the company ends up putting out a lower quality
product, or it may end up having very large equipment repairs as a result of cutting corners in the short
term. Hence, manager should not always view a favorable variable overhead spending variance as
desirable.
Diff: 2
Objective: 3
56) Can the variable overhead efficiency variance

a. be computed the same way as the efficiency variance for direct-cost items?
b. be interpreted the same way as the efficiency variance for direct-cost items? Explain.
Answer:
a. Yes, the variable overhead efficiency variance can be computed the same way as the efficiency
variance for direct-cost items.
b. No, the interpretations are different. The variable overhead efficiency variance focuses on the
quantity of allocation-base used, while the efficiency variance for direct-cost items focuses on the quantity
of materials and labor-hours used.
Diff: 2
Objective: 3
32
8.4 Objective 8.4
1) When machine-hours are used as an overhead cost-allocation base and annual leasing costs for
equipment unexpectedly increase, the most likely result would be to report a(n) ________.
A) unfavorable variable overhead spending variance
B) favorable variable overhead efficiency variance
C) unfavorable fixed overhead flexible-budget variance
D) favorable production-volume variance
Answer: C
Diff: 2
Objective: 4
2) The amount reported for fixed overhead on the static budget is also reported ________.
A) as actual fixed costs
B) as allocated fixed overhead costs
C) as flexible budget costs
D) as committed variable costs
Answer: C
Diff: 1
Objective: 4
3) An unfavorable fixed overhead spending variance indicates that ________.

A) there was more excess capacity than planned
B) the price of fixed overhead items cost more than budgeted
C) the fixed overhead cost-allocation base was not used efficiently
D) the denominator level was more than planned
Answer: B
Diff: 2
Objective: 4
4) Which of the following is the correct mathematical expression to calculate the fixed overhead spending
variance?
A) Static-budget amount — Flexible-budget amount
B) Actual costs incurred — Flexible-budget amount
C) Static-budget amount — Fixed overhead allocated for actual output
D) Flexible-budget amount — Fixed overhead allocated for actual output
Answer: B
Diff: 1
Objective: 4
33
5) For fixed manufacturing overhead, there is no ________.
A) spending variance
B) efficiency variance
C) flexible-budget variance
D) production-volume variance
Answer: B
Diff: 1
Objective: 4
6) Advanced Manufacturing Company reported:

Actual fixed overhead $430,000
Fixed manufacturing overhead spending variance $19,000 favorable
Fixed manufacturing production-volume variance $24,000 unfavorable
To isolate these variances at the end of the accounting period, John would debit Fixed Manufacturing
Overhead Allocated for ________.
A) $411,000
B) $425,000
C) $430,000
D) $435,000
Answer: B
Explanation: $430,000 + $19,000 - $24,000 = $425,000
Diff: 2
Objective: 4
7) Castleton Corporation manufactured 36,000 units during March. The following fixed overhead data
relates to March:
Actual Static Budget

Fixed overhead costs for March $164,700 $156,400

A) $170,379.31
B) $156,400.00
C) $165,600.00
D) $164,700.00
Answer: B
Explanation: $156,400, the same lump sum as the static budget
Diff: 2
Objective: 4
34
relates to March:

What is the amount of fixed overhead allocated to production?

A) $128,210.13
B) $117,000.00
C) $125,500.00
D) $123,000.00
Answer: D
Explanation: Fixed overhead cost per machine hour = $117,000 ÷ 5,850 = $20
Machine hours per unit = 5,850 ÷ 39,000 = 0.15
Fixed overhead cost per unit = $20 × 0.15 = $3.00
Fixed overhead allocated = 41,000 × $3.00 = $123,000.00
Diff: 3
Objective: 4
relates to March:

What is the fixed overhead spending variance?

B) $8,260.00 favorable
C) $8,260.00 unfavorable
Answer: C
Explanation: Fixed overhead spending variance = $139,510 actual costs − $131,250 budgeted cost =
$8,260.00 unfavorable
Diff: 2
Objective: 4
35
10) Davidson Corporation manufactured 52,400 units during September. The following fixed overhead
data relates to September:

Fixed overhead costs for September $108,900 $109,200

A) $108,900
B) $110,040
C) $109,200
D) $52,400
Answer: C
Diff: 2
Objective: 4


A) $171,990
B) $170,220
C) $170,520
D) $58,500
Answer: A
Fixed overhead allocated = 58,500 × $2.94 = $171,990
Diff: 3
Objective: 4
36


B) $400 favorable
C) $400 unfavorable
D) $1,056 favorable
Answer: B
Diff: 2
Objective: 4
13) Hockey Accessories Corporation manufactured 22,400 duffle bags during March. The following fixed
overhead data pertain to March:

Fixed overhead cost for March $451,700 $460,000

A) $451,700
B) $472,321
C) $460,000
D) $448,000
Answer: C
Diff: 2
Objective: 4
37


A) $621,000
B) $634,500
C) $639,711
D) $612,779
Answer: A
Fixed overhead allocated = 23,000 × $27.00 = $621,000
Diff: 3
Objective: 4

What is the amount of fixed overhead spending variance?

B) $3,460 favorable
D) $8,500 favorable
Answer: D
Explanation: Fixed overhead spending variance = $176,300 actual costs − $184,800 budgeted cost = $8,500
favorable
Diff: 3
Objective: 4
38
16) Fixed overhead costs for March for a factory were Salaries of $44,000, depreciation of $10,000, and
property taxes of $4,000. Which of the following journal entries would be correct?
A) Fixed Overhead Control $58,000
B) Depreciation Expense $10,000
Salaries Expense $44,000
Fixed Overhead Control $4,000
Accumulated Depreciation $10,000
Cash $44,000
C) Work-in-Process $58,000
Salaries Payable $44,000
D) Fixed Overhead Control $58,000
Salaries Payable $44,000
Answer: D
Diff: 2
Objective: 4
17) Which of the following is the correct mathematical expression to calculate the fixed overhead
production-volume variance?
A) static-budget amount − flexible-budget amount
B) flexible-budget amount − actual costs incurred
C) actual costs incurred − fixed overhead allocated for actual output
D) budgeted fixed overhead − fixed overhead allocated for actual output
Answer: D
Diff: 1
Objective: 4
18) Which of the following journal entries is used to record fixed overhead costs allocated?
A) Fixed Overhead Allocated
Work-in-Process Control
B) Work-in-Process Control
Fixed Overhead Allocated
C) Fixed Overhead Control
Work-in-Process Control
D) Fixed Overhead Allocated
Fixed Overhead Control
Answer: B
Diff: 1
Objective: 4
39
19) Bismith Company reported:
Actual fixed overhead $700,000
Fixed manufacturing overhead spending variance $40,000 unfavorable
Fixed manufacturing production-volume variance $30,000 unfavorable
To record the write-off of these variances at the end of the accounting period, Bismith would ________.
A) credit Fixed Manufacturing Overhead Allocated for $700,000
B) debit Fixed Manufacturing Overhead Spending Variance for $40,000
C) credit Fixed Manufacturing Production-Volume Variance for $30,000
D) debit Fixed Manufacturing Control for $700,000
Answer: B
Diff: 2
Objective: 4
20) Radon Corporation manufactured 37,500 units during March. The following fixed overhead data
pertain to March:

What is the fixed overhead production-volume variance?

Answer: B
Explanation: Fixed cost per machine hour = $204,000 ÷ 10,200 = $20
Fixed cost per unit = $20 × 0.3 = $6.00
Fixed overhead allocated = 37,500 × $6.00 = $225,000.00
Fixed overhead production-volume variance = $204,000 − $225,000.00 =$21,000.00 F
Diff: 3
Objective: 4
40
21) Radon Corporation manufactured 38,100 units during March. The following fixed overhead data
pertain to March:


A) $24,800.00 favorable
D) $24,800.00 unfavorable
Answer: C
Explanation: Fixed overhead spending variance = $289,100 − $280,000 = $9,100.00 unfavorable
Diff: 3
Objective: 4
22) If the production planners set the budgeted machine hours standards too loose, one could anticipate
there would be a favorable fixed overhead efficiency variance.
Answer: FALSE
Explanation: There is no efficiency variance for fixed costs because a given lump sum of fixed costs will
be unaffected by how efficiently machine-hours are used to produce output in a given budget period.
Diff: 2
Objective: 4
23) If the company's fixed overhead spending variance was unfavorable it could be attributed to higher
plant-leasing costs.
Answer: TRUE
Diff: 1
Objective: 4
24) Allocated fixed overhead can be expressed in terms of allocation-base units or in terms of the
budgeted fixed cost per unit.
Answer: TRUE
Diff: 1
Objective: 4
25) Lump-sum fixed costs of acquiring capacity decrease automatically if the capacity needed turns out to
be less than the capacity acquired.
Answer: FALSE
Explanation: Lump-sum fixed costs represent the costs of acquiring capacity. These costs do not decrease
automatically if the capacity needed turns out to be less than the capacity acquired.
Diff: 2
Objective: 4
41
26) When forecasting fixed costs, managers should concentrate on total lump-sum costs instead of
unitized fixed overhead costs.
Answer: TRUE
Diff: 1
Objective: 4
27) A favorable fixed overhead flexible-budget variance indicates that actual fixed costs exceeded the
lump-sum amount budgeted.
Answer: FALSE
Explanation: A favorable fixed overhead flexible-budget variance indicates that actual fixed costs were
less than the lump-sum amount budgeted.
Diff: 2
Objective: 4
28) Fixed costs for the period are by definition a lump sum of costs that remain unchanged and therefore
the fixed overhead spending variance is always zero.
Answer: FALSE
Explanation: Fixed costs for the period are by definition a lump sum of costs, but they can and do change
from the amount that was originally budgeted.
Diff: 2
Objective: 4
29) An unfavorable production-volume variance indicates an overallocation of fixed overhead costs.

Answer: FALSE
Explanation: A favorable production-volume variance indicates an overallocation of fixed overhead
costs. An unfavorable production-volume variance indicates an underallocation of fixed overhead costs.
Diff: 2
Objective: 4
30) Favorable overhead variances are always recorded with credits in a standard cost system.
Answer: TRUE
Diff: 1
Objective: 4
31) If fixed overhead cost variances are always written off to Cost of Goods Sold, operating income can
be manipulated for either financial reporting or income tax purposes.
Answer: TRUE
Diff: 1
Objective: 4
42
32) Prorated allocation of production-volume variance results in a higher operating income for current
year than if the entire favorable production-volume variance were credited to Cost of Goods Sold.
Answer: FALSE
Explanation: Proration of production-volume variance results in a lower operating income for current
year than if the entire favorable production-volume variance were credited to Cost of Goods Sold.
Diff: 2
Objective: 4
33) Prorated allocation of production-volume variance has the effect of approximating the allocation of
fixed costs based on actual costs and actual output.
Answer: TRUE
Diff: 1
Objective: 4
34) Neon Company manufactured 2,500 units during April with a total overhead budget of $55,000.
However, while manufacturing the 2,500 units the microcomputer that contained the month's cost
information broke down. With the computer out of commission, the accountant has been unable to
complete the variance analysis report. The information missing from the report is lettered in the
following set of data:
Variable overhead:
Standard cost per unit: 1.2 labor hour at $10 per hour
Actual costs: $26,250 for 2,250 hours
Flexible budget: a
Total flexible-budget variance: b
Variable overhead spending variance: c
Variable overhead efficiency variance: d
Fixed overhead:
Budgeted costs: e
Actual costs: f
Flexible-budget variance: $200 favorable
Required:
Compute the missing elements in the report represented by the lettered items.
43
Answer:
a. 2,500 × 1.2 × $10 = $30,000
b. $26,250 − $30,000 = $3,750 favorable
c. $26,250 − (2,250 × $10) = $3,750 unfavorable
d. (($2,500 × 1.2) − 2,250) × $10 = $7,500 favorable
e. $55,000 − $30,000 = $25,000
f. $25,000 − $200 favorable = $24,800

Diff: 3
Objective: 3, 4
35) Time and Again Company makes clocks. The fixed overhead costs for 2017 total $900,000. The
company uses direct labor-hours for fixed overhead allocation and anticipates 200,000 hours during the
year for 330,000 units. An equal number of units are budgeted for each month.
During June, 32,000 clocks were produced and $72,000 was spent on fixed overhead.
Required:
a. Determine the fixed overhead rate for 2017 based on units of input.
b. Determine the fixed overhead static-budget variance for June.
c. Determine the production-volume overhead variance for June.
Answer:
a. Fixed overhead rate = ($900,000 ÷ 200,000) = $4.50 per hour
b. Fixed overhead static budget variance = $72,000 − ($900,000/12) = $3,000 favorable
c. Budgeted fixed overhead rate per output unit = $900,000/330,000 = $2.73
Production-volume overhead variance = (27,500 − 32,000) × $2.73 = $12,285 favorable

Diff: 3
Objective: 4
44
36) Timely Products Company makes watches. The fixed overhead costs for 2017 total $648,000. The
company uses direct labor-hours for fixed overhead allocation and anticipates 21,600 hours during the
year for 540,000 units. An equal number of units are budgeted for each month.
During October, 48,000 watches were produced and $52,000 was spent on fixed overhead.
Required:
a. Determine the fixed overhead rate for 2017 based on the units of input.
b. Determine the fixed overhead static-budget variance for October.
c. Determine the production-volume overhead variance for October.
Answer:
a. Fixed overhead rate = ($648,000 ÷ 21,600) = $30 per unit
b. Fixed overhead static budget variance = $52,000 − ($648,000 ÷ 12) = $2,000 favorable
c. Budgeted fixed overhead rate per output unit = $648,000 / 540,000 = $1.20
Production-volume overhead variance = (48,000 - (540,000 ÷ 12)) × $1.20 = $3,600 favorable
Diff: 3
Objective: 4
37) Explain why there is no efficiency variance for fixed manufacturing overhead costs.
Answer: There is no efficiency variance for fixed overhead costs because a given lump sum of fixed costs
will be unaffected by how efficiently machine-hours are used to produce output in a given budget period.
Diff: 2
Objective: 4
38) 'Managers should be wary of using the same unitized fixed overhead costs for planning and control
purposes'. Do you agree with this argument? Give reasons for your answer.
Answer: Yes. Managers should always be careful to distinguish the true behavior of fixed costs from the
manner in which fixed costs are assigned to products. In particular, although fixed costs are unitized and
allocated for inventory costing purposes, managers should be wary of using the same unitized fixed
overhead costs for planning and control purposes. When forecasting fixed costs, managers should
concentrate on total lump-sum costs instead of unitized costs. Similarly, when managers are looking to
assign costs for control purposes or identify the best way to use capacity resources fixed in the short run,
the use of unitized fixed costs often leads to incorrect decisions.
Diff: 2
Objective: 4
39) Explain why there is no production-volume variance for variable manufacturing overhead costs.
Answer: There is no production-volume variance for variable overhead costs because the amount of
variable overhead allocated is always the same as the flexible-budget amount.
Diff: 2
Objective: 4
45
40) Abby Company has just implemented a new cost accounting system that provides two variances for
fixed manufacturing overhead. While the company's managers are familiar with the concept of spending
variances, they are unclear as to how to interpret the production-volume overhead variances. Currently,
the company has a production capacity of 54,000 units a month, although it generally produces only
46,000 units. However, in any given month the actual production is probably something other than
46,000.
Required:
a. Does the production-volume overhead variance measure the difference between the 54,000 and
46,000, or the difference between the 46,000 and the actual monthly production? Explain.
b. What advice can you provide the managers that will help them interpret the production-volume
overhead variances?
Answer:
a. It is the difference between the 46,000 and the actual production level for the period. The difference
between the 54,000 and the 46,000 is the unused capacity that was planned for the period. The difference
between the 46,000 and the actual level was not planned.
b. When actual outputs are less than the denominator level, the production-volume variance is
unfavorable. This is opposite the label given other variances that have a favorable label when costs are
less than the budgeted amount; therefore, caution is needed.
The production-volume variance is favorable when actual production exceeds what was planned for the
period. This actually provides for a cost per unit amount that was less than budgeted using the planned
denominator.
Diff: 2
Objective: 4
41) Explain how fixed manufacturing overhead costs are treated under Generally Accepted Accounting
Principles?
Answer: Under Generally Accepted Accounting Principles (GAAP), fixed manufacturing overhead costs
are allocated as an inventoriable cost to the output units produced. Every output unit manufactured will
include the fixed overhead cost per unit along with other costs. That is, for purposes of allocating fixed
overhead costs to products, these costs are viewed as if they had a variable-cost behavior pattern.
Diff: 1
Objective: 4
46
42) What are the arguments for prorating a production-volume variance that has been deemed to be
material among work-in-process, finished goods, cost and cost of goods sold as opposed to writing it all
off to cost of goods sold?
Answer: If variances are always written off to cost of goods sold, a company could set its standards to
either increase (for financial reporting purposes) or decrease (for tax purposes) operating incomes. The
proration method has the effect of approximating the allocation of fixed costs based on actual costs and
actual output so it is not susceptible to the manipulation of operating income based on the choice of the
denominator level.
Diff: 2
Objective: 4
43) Explain two concerns when interpreting the production-volume variance as a measure of the
economic cost of unused capacity.
Answer: The first concern would be the fact that management might have maintained some extra
capacity to meet uncertain demand surges that are important to satisfy. If these surges are not occurring
in a given year an unfavorable production-volume variance might occur.
The second concern would be to note that this variance only focuses on fixed overhead costs, and ignores
the possibility that price decreases might have been necessary to spur the extra demand to make use of
any idle capacity.
Diff: 2
Objective: 4
8.5 Objective 8.5
1) Which of the following statements is true of variable overhead costs?

A) Variable overhead costs always have unused capacity.
B) Variable overhead costs have no production-volume variance.
C) Variable overhead costs have no spending variance.
D) Variable overhead costs have no efficiency variance.
Answer: B
Diff: 2
Objective: 5
2) Fixed overhead costs ________.

A) never have any unused capacity
B) have no spending variance
C) have no efficiency variance
D) have no production-volume variance
Answer: C
Diff: 1
Objective: 5
47
3) When variable overhead spending variance is unfavorable, it can be safely assumed that ________.
A) actual rate per unit of cost-allocation base is higher than budgeted rate
B) actual quantity of cost-allocation base used is higher than budgeted quantity
C) actual rate per unit of cost-allocation base is lower than budgeted rate
D) actual quantity of cost-allocation base used is lower than budgeted quantity
Answer: A
Diff: 2
Objective: 5
4) When fixed overhead spending variance is unfavorable, it can be safely assumed that ________.
A) flexible budget amount is higher than actual costs incurred
B) fixed overhead allocated for actual output is lower than actual costs incurred
C) flexible budget amount is lower than actual costs incurred
D) fixed overhead allocated for actual output is higher than actual costs incurred
Answer: C
Diff: 2
Objective: 5
5) Which of the following statements is true of fixed overhead cost variances?

A) The difference between actual costs and flexible budget costs will give the production volume
variance.
B) The difference between actual costs and static budget costs will give the production volume variance.
C) The difference between flexible budget costs and allocated overhead costs will give the production
volume variance.
D) The difference between static budget costs and flexible budget costs will give the production volume
variance.
Answer: C
Diff: 2
Objective: 5
48
6) Skizone Company's 4-Variance Analysis:
Spending Variance Efficiency Variance Production-Volume

Variance
Variable overhead $6,900 F $16,000 U No variance
Fixed overhead (a) No variance $44,000 U
If Skizone's combined 4-Variance Analysis shows an unfavorable spending variance of $2,900, what is the
fixed overhead spending variance (a)?
A) $9,800 favorable
D) $4,000 favorable
Answer: C
Explanation: Fixed overhead spending variance = $2,900 U − $6,900 F = $9,800 U
Diff: 2
Objective: 5
7) Skizone Company's 4-Variance Analysis:
Spending Variance Efficiency Variance Production-Volume

Variance
Variable overhead $6,900 F $11,000 U No variance
Fixed overhead (a) No variance $45,000 U
Which of the following statements is true of Skizone's overhead variances?

A) Budgeted variable overhead rate is higher than actual variable overhead rate.
B) Static fixed overhead amount is higher than flexible fixed overhead amount.
C) Budgeted variable overhead rate is lower than actual variable overhead rate.
D) Static fixed overhead amount is lower than flexible fixed overhead amount.
Answer: A
Diff: 3
Objective: 5
8) Variances Spending Efficiency Volume

Variable manufacturing overhead $7,900 F $34,000 U (B)
Fixed manufacturing overhead $28,300 U (A) $80,000 U
The above table is a ________.

A) 4-variance analysis
B) 3-variance analysis
C) 2-variance analysis
D) 1-variance analysis
Answer: A
Diff: 2
Objective: 5
49
In the above table, the amounts for (A) and (B), respectively, are ________.
A) $25,600 U; $115,000 U
B) $25,600 U; Zero
C) Zero; $115,000 U
D) Zero; Zero
Answer: D
Diff: 3
Objective: 5

In a combined 3-variance analysis, the total spending variance would be ________.

A) $20,600 F
B) $30,800 U
C) $20,600 U
D) $45,200 F
Answer: C
Explanation: Spending variance = $7,200 F + $27,800 U = $20,600 U
Diff: 3
Objective: 5

The total production-volume variance should be ________.

A) $90,000 F
B) $90,000 U
C) $118,300 F
D) $118,300 U
Answer: B
Explanation: Total production-volume variance = $90,000 U + 0 = $90,000
Diff: 3
Objective: 5
50
The total overhead variance should be ________.

A) $154,000 F
B) $139,000 U
C) $154,000 U
D) $139,000 F
Answer: B
Explanation: Total overhead variance = $7,500 F + $27,500 U + $38,000 U + $81,000 U = $139,000 U
Diff: 2
Objective: 5
13) Variable overhead has no production-volume variance.

Answer: TRUE
Explanation:
Diff: 1
Objective: 5
14) The accounting for 3-variance analysis is simpler than the 4-variance analysis, but some
information is lost because the variable and fixed overhead spending variances are combined
into a single total overhead spending variance.
Answer: TRUE
Diff: 1
Objective: 5
15) The following overhead variances would result in a total-overhead variance of $15,000 favorable:
spending variance $5,000 U, efficiency variance $20,000 F, and production-volume variance $30,000 U.
Answer: FALSE
Explanation: It would be $15,000 unfavorable.
Diff: 1
Objective: 5
16) At the end of the fiscal year, the fixed overhead spending variance is always prorated among work-in-
process control, finished goods control, and cost of goods sold on the basis of the fixed overhead
allocated to these accounts.
Answer: FALSE
Explanation: At the end of the fiscal year, the fixed overhead spending variance is written off to cost of
goods sold if it is immaterial in amount; otherwise it is prorated among work-in-process control, finished
goods control, and cost of goods sold on the basis of the fixed overhead allocated to these accounts.
Diff: 1
Objective: 5
51
17) Wainwright has budgeted construction overhead for August of $435,000 for fixed costs. Actual costs
for the month totaled for $450,000 for fixed. Allocated fixed overhead totaled $430,000. The company
tracks each item in an overhead control account before allocations are made to individual jobs. The fixed
overhead spending variance for August was $15,000 unfavorable for fixed.
Required:
a. Make journal entries for the actual costs incurred.
b. Make journal entries to record the variances for August.
Answer:
a.
Fixed Overhead Control 450,000
Accumulated Depreciation, etc. 450,000
To record actual fixed construction overhead
b.
Fixed Overhead Allocated 430,000

Fixed Overhead Spending Variance 15,000
Fixed Overhead Production-Volume Variance 5,000
Fixed Overhead Control 450,000
To record variances for the period
Diff: 3
Objective: 5
52
18) Different management levels in Bates, Inc., require varying degrees of managerial accounting
information. Because of the need to comply with the managers' requests, four different variances for
manufacturing overhead are computed each month. The information for the September overhead
expenditures is as follows:

Budgeted fixed manufacturing overhead $20,000
Budgeted variable manufacturing overhead $5 per direct labor hour
Budgeted direct manufacturing labor hours 2 hours per unit
Fixed manufacturing costs incurred $26,000
Direct manufacturing labor hours used 7,200
Variable manufacturing costs incurred $35,600
Actual units manufactured 3,400
Required:
a. Compute a 4-variance analysis for the plant controller.
b. Compute a 3-variance analysis for the plant manager.
c. Compute a 2-variance analysis for the corporate controller.
d. Compute the flexible-budget variance for the manufacturing vice president.
Answer:
a. 4-variance analysis:
Variable overhead spending variance = $35,600 - (7,200 × $5) = $400 favorable
Variable overhead efficiency variance = $5 × (7,200 - 6,800*) = $2,000 unfavorable
*3,400 units × 2 hours = 6,800 hours
Fixed overhead spending variance = $26,000 - $20,000 = $6,000 unfavorable
Fixed overhead production-volume variance = $20,000 - (3,400 × 2 × $3.125*) = $1,250 favorable
*$20,000/(3,200 units × 2 hours) = $3.125
b. 3-variance analysis:
Spending variance = $400 favorable + $6,000 unfavorable = $5,600 unfavorable
Efficiency variance = $2,000 unfavorable
Production-volume variance = $1,250 favorable
c. 2-variance analysis:
Flexible-budget variance = $400 F + $2,000 U + $6,000 U = $7,600 unfavorable
Production-volume variance = $1,250 favorable
53
d. 1-variance analysis: Flexible
Actual Budget Variances
Fixed overhead $26,000 $21,250 * $4,750 U
Variable overhead 35,600 34,000 ** 1,600 U
Flexible-budget variance $6,350 U
*$3.125 × 3,400 × 2 = $21,250

**3,400 × 2 × $5 = $34,000
Diff: 3
Objective: 5
19) Explain why managers of small businesses prefer 3-variance analysis over 4-variance analysis.
Answer: Managers of small businesses understand their operations better based on personal
observations and nonfinancial measures. They find less value in doing the additional measurements
required for 4-variance analyses. For example, to simplify their costing systems, small companies may not
distinguish variable overhead incurred from fixed overhead incurred because making this distinction is
often not clear-cut. Many costs such as supervision, quality control, and materials handling have both
variable- and fixed-cost components that may not be easy to separate. Managers may therefore use a less
detailed analysis that combines the variable overhead and fixed overhead into a single total overhead
cost.
Diff: 2
Objective: 5
8.6 Objective 8.6
1) The fixed overhead cost variance can be further subdivided into the ________.
A) price variance and the efficiency variance
B) spending variance and flexible-budget variance
C) production-volume variance and the efficiency variance
D) flexible-budget variance and the production-volume variance
Answer: D
Diff: 1
Objective: 6
2) The production-volume variance may also be referred to as the ________.

A) flexible-budget variance
B) denominator-level variance
C) spending variance
D) efficiency variance
Answer: B
Diff: 1
Objective: 6
54
3) Which of the following is a component of sales-volume variance?
A) Net-income volume variance
B) Operating-income volume variance
C) Taxable-income volume variance
D) Budgeted revenue variance
Answer: B
Diff: 2
Objective: 6
4) Under standard costing, ________.

A) fixed overhead costs are treated as if they are a variable cost
B) fixed overhead costs are treated as if they are a fixed cost
C) variable overhead costs are treated as if they are a fixed cost
D) fixed overhead costs are treated as if they are a sunk cost
Answer: A
Diff: 1
Objective: 6
5) An unfavorable production-volume variance ________.

A) is not a good measure of a lost production opportunity
B) indicates that the company had reduced its per unit fixed overhead cost to improve sales
C) measures the amount of extra fixed costs planned for but not used
D) takes into account the effect of additional revenues due to maintaining higher prices
Answer: C
Diff: 2
Objective: 6
6) Which of the following is not true of the 3 level variance analysis of operating income?
A) Level 1 shows the static budget variance for operating income
B) Level 2 shows the direct material price and efficiency variances
C) Level 2 shows the sales-volume variance for operating income
D) Level 3 shows the fixed overhead production volume variance as a component of the sales-volume
variance for operating income
Answer: D
Diff: 1
Objective: 6
7) The production volume variance arises only for variable overhead costs.
Answer: FALSE
Explanation: The production volume variance arises only for fixed overhead costs.
Diff: 1
Objective: 6
55
8) The production-volume variance is a component of the sales-volume variance.
Answer: TRUE
Diff: 1
Objective: 6
9) The level 3 components for the fixed overhead variance are the fixed overhead spending variance and
the fixed overhead production volume variance.
Answer: FALSE
Explanation: The fixed manufacturing overhead variance has no components and is also the fixed
overhead spending variance. The fixed overhead production volume variance is a component of the
sales-volume variance.
Diff: 2
Objective: 6
10) A favorable production-volume variance arises when manufacturing capacity planned for is NOT
used.
Answer: FALSE
Explanation: An unfavorable production-volume variance arises when manufacturing capacity planned
for is not used.
Diff: 1
Objective: 6
11) An unfavorable production-volume variance always infers that management made a bad planning
decision regarding the plant capacity.
Answer: FALSE
Explanation: An unfavorable production-volume variance does not always infer that management made
a bad planning decision regarding the plant capacity.
Diff: 2
Objective: 6
12) What are the two components of sales-volume variance? Explain why sales-volume variance could be
helpful to managers.
Answer: The sales-volume variance is comprised of the operating income volume variance and the
production volume variance. Production volume variance is the difference between the budgeted fixed
overhead and the fixed overhead allocated on the basis of actual output produced. Operating income
volume variance is the difference between the static-budget operating income and the budgeted
operating income for actual sales. The sales-volume variance is useful because it helps managers
understand the significant changes in contribution margin, which will occur as a result of selling fewer
(or more) units than called for by the budgeted level. It assumes that the fixed costs remain at the
budgeted level and can be helpful to managers as they perform sensitivity analysis to see the effects of
potential changes in sales volume (up or down). Based on this type of information, they could potentially
make more informed decisions on pricing and other strategies.
Diff: 3
Objective: 6
56
8.7 Objective 8.7
1) Raposa, Inc., produces a special line of plastic toy racing cars. Raposa, Inc., produces the cars in
batches. To manufacture a batch of the cars, Raposa, Inc., must set up the machines and molds. Setup
costs are batch-level costs because they are associated with batches rather than individual units of
products. A separate Setup Department is responsible for setting up machines and molds for different
styles of car.
Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to
the number of setup-hours. The following information pertains to June 2015:
Actual Static-budget
Amounts Amounts
Units produced and sold 15,700 11,950
Batch size (number of units per batch) 325 265
Setup-hours per batch 3 4.25
Variable overhead cost per setup-hour $48 $45
Total fixed setup overhead costs $11,310 $9,010
Calculate the efficiency variance for variable overhead setup costs. (Round all intermediary calculations
two decimal places and your final answer to the nearest whole number.)
B) $435 unfavorable
C) $4,810 favorable
D) $435 favorable
Answer: C
Explanation: {[(15,700/ 325) × 3] - [(15,700 / 265) × 4.25] } × $45 = $4,810 (F)
Diff: 3
Objective: 7
57
styles of car.
Amounts Amounts
Setup-hours per batch 3 4
Calculate the spending variance for variable overhead setup costs. (Round all intermediary calculations
B) $2,313 favorable
C) $682 unfavorable
D) $682 favorable
Answer: C
Explanation: (14,550 / 320) × 3 × ($38 - $43) = $682 (U)
Diff: 3
Objective: 7
58
styles of car.
Amounts Amounts
Calculate the flexible-budget variance for variable overhead setup costs. (Round all intermediary
calculations two decimal places and your final answer to the nearest whole number.)
A) $312 favorable
B) $2,490 favorable
C) $312 unfavorable
Answer: B
Explanation: Price variance: ((14,800 / 285) x 2) x (48 - 45) = 312 (U)
Efficiency variance: (((14,800 / 245) x 2.75) – ((14,800 / 285) x 2)) x 45 = 2,802 (F)
Flexible-budget variance: 2,802 (F) - 312 (U) = 2,490 (F)
Diff: 3
Objective: 7
59
styles of car.
Amounts Amounts
Calculate the spending variance for fixed setup overhead costs.

D) $2,200 favorable
Answer: B
Explanation: $16,050 - $13,850 = $2,200 (U)
Diff: 3
Objective: 7
60
styles of car.
Amounts Amounts
Calculate the production-volume variance for fixed overhead setup costs. (Round all intermediary
calculations to two decimal places and your final answer to the nearest whole number.)
B) $99 unfavorable
C) $4,537 favorable
D) $99 favorable
Answer: C
Explanation: Normal setup hours = (11,850 / 230) × 7 = 360.64 hours
OH rate = $16,286 / 360.64 = $45.16 per setup hour
[(15,150 / 230) × 7 × $45.16] - $16,286 = $4,537 favorable
Diff: 3
Objective: 7
61
6) Bristol Fabricators, Inc., produces air purifiers in batches. To manufacture a batch of the purifiers,
Bristol Fabricators, Inc, Inc., must set up the machines and assembly line tooling. Setup costs are batch-
level costs because they are associated with batches rather than individual units of products. A separate
Setup Department is responsible for setting up machines and tooling for different models of the air
purifiers.
Budget Actual
Amounts Amounts
Calculate the efficiency variance for variable overhead setup costs. (Round all intermediary calculations
A) $315 favorable
B) $218 favorable
C) $533 unfavorable
D) $533 favorable
Answer: A
Explanation: {[(12,000 / 390) × 5] - [(12,000 / 450) × 6] } × $51 = $315 (F)
Diff: 3
Objective: 7
62
Bristol Fabricator, Inc., must set up the machines and assembly line tooling. Setup costs are batch-level
costs because they are associated with batches rather than individual units of products. A separate Setup
Department is responsible for setting up machines and tooling for different models of the air purifiers.
Budget Actual
Amounts Amounts
Calculate the spending variance for variable overhead setup costs. (Round all intermediary calculations
A) $651 unfavorable
B) $651 favorable
C) $951 unfavorable
D) $951 favorable
Answer: C
Explanation: (13,000 / 410) × 5 × ($44 - $50) = $951 (U)
Diff: 3
Objective: 7
63
Bristol Fabricators, Inc., must set up the machines and assembly line tooling. Setup costs are batch-level
Budget Actual
Amounts Amounts
Calculate the flexible-budget variance for variable overhead setup costs. (Round all intermediary
calculations two decimal places and your final answer to the nearest whole number.)
A) $1,178 favorable
B) $1,222 favorable
Answer: D
Explanation: Price variance: ((11,000 / 405) x 7.5) x (53 - 47) = 1,222 (U)
Efficiency variance: (((11,000 / 430) x 8) – ((11,000 / 405) x 7.5)) x 47 = 44 (F)
Flexible-budget variance: 44 (F) - 1,222 (U) = 1,178 (U)
Diff: 3
Objective: 7
64
Budget Actual
Amounts Amounts
Calculate the spending variance for fixed overhead setup costs.

A) $100 unfavorable
B) $220 unfavorable
C) $100 favorable
D) $220 favorable
Answer: C
Diff: 3
Objective: 7
65
Budget Actual
Amounts Amounts
Calculate the production-volume variance for fixed overhead setup costs. (Round all intermediary
calculations to two decimal places and your final answer to the nearest whole number.)
A) $2,832 favorable
C) $363 unfavorable
D) $363 favorable
Answer: B
Explanation: Normal setup hours = (14,100 / 420) × 8 = 268.56 hours
OH rate = $36,300 / 268.56 = $135.17 per setup hour
[(13,000 / 420) × 8 × $135.17] - $36,300 = $2,832 unfavorable
Diff: 3
Objective: 7
11) One possible reason for unfavorable variable overhead efficiency variance for materials handling is
________.
A) inefficient layout of product distribution channels
B) loosely budgeted standard hours
C) very low wait time at work centers
D) very tight standards for materials-handling time
Answer: D
Diff: 2
Objective: 7
12) The fixed setup overhead flexible-budget variance is calculated as actual costs - flexible-budget
variance.
Answer: TRUE
Diff: 1
Objective: 7
66
13) An unfavorable price variance for materials-handling labor indicates that the actual cost per
materials-handling labor-hour is less than the budgeted cost per materials-handling labor-hour.
Answer: FALSE
Explanation: An unfavorable price variance for materials-handling labor indicates that the actual cost per
materials-handling labor-hour exceeds the budgeted cost per materials-handling labor-hour.
Diff: 2
Objective: 7
14) Possible reasons for the larger actual materials-handling labor-hours per batch include the possibility
of inefficient layout of production facilities.
Answer: TRUE
Diff: 1
Objective: 7
67
15) Casey Corporation produces a special line of basketball hoops. Casey Corporation produces the
hoops in batches. To manufacture a batch of the basketball hoops, Casey Corporation must set up the
machines and molds. Setup costs are batch-level costs because they are associated with batches rather
than individual units of products. A separate Setup Department is responsible for setting up machines
and molds for different styles of basketball hoops.
the number of setup-hours. The following information pertains to January 2005.
Static-budget Actual
Amounts Amounts
Basketball hoops produced and sold 30,000 28,000
Variable overhead cost per setup hour $10 $9
Required:
a. Calculate the efficiency variance for variable overhead setup costs.
b. Calculate the spending variance for variable overhead setup costs.
c. Calculate the flexible-budget variance for variable overhead setup costs.
d. Calculate the spending variance for fixed overhead setup costs.
e. Calculate the production-volume variance for fixed overhead setup costs.
Answer:
a. ((28,000 / 250) × 4 × $10) - (28,000 / 200) × 5 × $10) = $2,520 (F)
b. (28,000 / 250) × 4 × ($9 - $10) = $448 (F)
c. $2,520 (F) + $448 (F) = $2,968 (F)
d. $22,500 - $21,000 = $1,500 (F)
e. Normal setup-hours = (30,000 / 200) × 5 = 750 hours

OH rate = $22,500 / 750 = $30 per setup-hour
$22,500 - ((28,000 / 200) × 5 × $30) = $1,500 (U)
Diff: 3
Objective: 7
68
16) River Falls Company uses a flexible budget for its indirect manufacturing costs. For 2017, the
company anticipated that it would produce 27,000 units with 4,800 machine-hours and 8,000 employee
days. The costs and cost drivers were to be as follows:
Fixed Variable Cost driver

Product handling $45,000 $0.75 per unit
Inspection 12,000 12.00 per 100 unit batch
Utilities 600 6.00 per 100 unit batch
Maintenance 1,250 0.25 per machine-hour
Supplies 5.00 per employee day
During the year, the company processed 26,500 units, worked 8,200 employee days, and had 4,850
machine-hours. The actual costs for 2017 were:
Actual costs
Product handling $70,000
Inspection 16,000
Utilities 2,000
Maintenance 3,000
Supplies 40,000
Required:
a. Prepare the static budget using the overhead items above and then compute the static-budget
variances.
b. Prepare the flexible budget using the overhead items above and then compute the flexible-budget
variances.
Answer: River Falls Company

Overhead Static Budget with Variances
2017
Static
Product handling $70,000 $65,250 $4,750 U
Inspection 16,000 15,240 760 U
Utilities 2,000 2,220 220 F
Maintenance 3,000 2,450 550 U
Supplies 40,000 40,000 0
Total $131,000 $125,160 $5,840 U
69
b. River Falls Company
Overhead Flexible Budget with Variances
2017
Flexible
Product handling $70,000 $64,875 $15,125 U
Inspection 16,000 15,180 820 U
Utilities 2,000 2,190 190 F
Maintenance 3,000 2,463 537 U
Supplies 40,000 41,000 1,000 F
Total $131,000 $125,708 $5,292 U
Diff: 3
Objective: 7
8.8 Objective 8.8
1) When distribution costs are high, managers can use standard costing to analyze variances for spending
and efficiency variances.
Answer: TRUE
Diff: 2
Objective: 8
2) Managers can use variance analysis to make decisions about the mix of products to make.
Answer: TRUE
Diff: 1
Objective: 8
3) Service-sector companies have no use of variance analysis as only few costs can be traced to their
outputs in a cost effective way.
Answer: FALSE
Explanation: Even though service-sector companies have only few costs can be traced to their outputs in
a cost effective way, service-sector companies can use variance analysis to good effect as most of their
costs are fixed overhead costs.
Diff: 2
Objective: 8
70
Test Bank for Horngrenâ€™s Cost Accounting: A Managerial Emphasis 16th Edition
4) Explain how service-sector companies can benefit from variance analysis.

Answer: Service-sector companies such as airlines, hospitals, hotels, and railroads can benefit from
variance analyses. The output measures these companies commonly use are passenger-miles flown,
patient days provided, room-days occupied, etc. Few costs can be traced to these outputs in a cost-
effective way. Most of the costs are fixed overhead costs, such as the costs of equipment, buildings, and
staff. Using capacity effectively is the key to profitability, and fixed overhead variances can help
managers in this task.
Diff: 2
Objective: 8
71
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8.1 Objective 8.1

2) Effective planning of variable overhead costs means that managers must

3) Which of the following is a true statement of energy costs?

4) Fixed overhead costs include ________.

6) Effective planning of variable overhead costs includes ________.

8) The major challenge when planning fixed overhead is ________.

8.2 Objective 8.2

Budgeted output units 40,000 units

Actual output units produced 36,500 units

Budgeted output units 7,000 units

Actual output units produced 6,000 units

Budgeted output units 800 truckloads

Actual output units produced and delivered 760 truckloads

14) What is a standard costing system?

2) A $5,000 unfavorable flexible-budget variance indicates that ________.

Budgeted output units 28,475 units

Actual output units produced 32,475 units

What is the flexible-budget amount for variable manufacturing overhead?

Budgeted output units 43,500 units

Actual output units produced 45,500 units

What is the flexible-budget variance for variable manufacturing overhead?

Budgeted output units 43,500 units

Actual output units produced 47,500 units

Budgeted output units 8,000 units

Actual output units produced 8,500 units

What is the flexible-budget amount for variable manufacturing overhead?

Budgeted output units 3,000 units

Actual output units produced 3,350 units

What is the flexible-budget variance for variable manufacturing overhead?

Budgeted output units 9,500 units

Actual output units produced 9,800 units

Budgeted output units 690 truckloads

Actual output units produced and delivered 630 truckloads

Budgeted output units 680 truckloads

Actual output units produced and delivered 615 truckloads

What is the flexible-budget variance for variable manufacturing overhead?

Budgeted output units 710 truckloads

Actual output units produced and delivered 635 truckloads

What is the budgeted variable manufacturing overhead cost per unit?

Budgeted variable overhead cost per unit $10.00

What is the variable overhead flexible-budget variance?

Budgeted variable overhead cost per unit $10.00

What is the variable overhead spending variance?

Variable overhead spending variance $1,310 Unfavorable

Calculate the actual machine hours used by Stark during October.

Variable overhead spending variance $1,300 Unfavorable

Calculate the variable overhead flexible-budget variance.

What is the actual variable overhead cost?

What is the flexible-budget amount?

What is the variable overhead spending variance?

What is the variable overhead efficiency variance?

What is the actual variable overhead cost?

What is the flexible-budget amount?

What is the variable overhead spending variance?

What is the variable overhead efficiency variance?

What is the actual variable overhead cost?

What is the flexible-budget amount?

What is the variable overhead spending variance?

What is the variable overhead efficiency variance?