ACC 350 Week 9 Quiz – Strayer New
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Quiz 7 Chapter 8
Flexible Budgets, Overhead Cost
Variances, and Management Control
1)
Overhead
costs are a major part of costs for most companiesmore than 50% of all costs for
some companies.
2)
At the
start of the budget period, management will have made most decisions regarding
the level of variable costs to be incurred.
3)
One way
to manage both variable and fixed overhead costs is to eliminate
nonvalue-adding activities.
4)
The
planning of fixed overhead costs does not differ from the planning of variable
overhead costs.
5)
In a
standard costing system, the variable-overhead rate per unit is generally
expressed as a standard cost per output unit.
6)
For
calculating the cost of products and services, a standard costing system does
not have to track actual costs.
7)
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.
8)
The
budget period for variable-overhead costs is typically less than 3 months.
9)
A
favorable variable overhead spending variance can be the result of paying lower
prices than budgeted for variable overhead items such as energy.
10)
The
variable overhead efficiency variance is computed in a different way than the
efficiency variance for direct-cost items.
11)
The
variable overhead flexible-budget variance measures the difference between
standard variable overhead costs and flexible-budget variable overhead
costs.
12)
The
variable overhead efficiency variance measures the efficiency with which the
cost-allocation base is used.
13)
The
variable overhead efficiency variance can be interpreted the same way as the
efficiency variance for direct-cost items.
14)
An
unfavorable variable overhead efficiency variance indicates that variable
overhead costs were wasted and inefficiently used.
15)
Causes
of a favorable variable overhead efficiency variance might include using
lower-skilled workers than expected.
16)
If the
production planners set the budgeted machine hours standards too tight, one
could anticipate there would be an unfavorable variable overhead efficiency
variance.
17)
If the
production planners set the budgeted machine hours standards too tight, one
could anticipate there would be an unfavorable fixed overhead efficiency
variance.
18)
For
fixed overhead costs, the flexible-budget amount is always the same as the
static-budget amount.
19)
The
fixed overhead flexible-budget variance is the difference between actual fixed
overhead costs and the fixed overhead costs in the flexible budget.
20)
There is
never an efficiency variance for fixed costs.
21)
All
unfavorable overhead variances decrease operating income compared to the
budget.
22)
A
favorable fixed overhead flexible-budget variance indicates that actual fixed
costs exceeded the lump-sum amount budgeted.
23)
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.
24)
Caution
is appropriate before interpreting the production-volume variance as a measure
of the economic cost of unused capacity.
25)
The
production-volume variance arises whenever the actual level of the denominator
differs from the level used to calculate the budgeted fixed overhead rate.
26)
The lump
sum budgeted for fixed overhead will always be the same amount for the static
budget and the flexible budget.
27)
A
favorable production-volume variance arises when manufacturing capacity planned
for is not used.
28)
The
fixed overhead flexible budget variance is the difference between actual fixed
overhead costs and fixed overhead costs in the flexible budget.
29)
An
unfavorable production-volume variance always infers that management made a bad
planning decision regarding the plant capacity.
30)
Favorable
overhead variances are always recorded with credits in a standard cost
system.
31)
Under
activity-based costing, the flexible-budget amount equals the static-budget
amount for fixed overhead costs.
32)
Managers
should use unitized fixed manufacturing overhead costs for planning and
control.
33)
For
purposes of allocating fixed overhead costs to products, managers may view the
fixed overhead costs as if they had a variable-cost behavior pattern.
34)
Both
financial and nonfinancial performance measures are key inputs when evaluating
the performance of managers.
35)
In the
journal entry that records overhead variances, the manufacturing overhead
allocated accounts are closed.
36)
Variance
analysis of fixed nonmanufacturing costs, such as distribution costs, can also
be useful when planning for capacity.
37)
At the
end of the fiscal year, the fixed overhead spending variance is always written
off to cost of goods sold.
38)
Variance
analysis of fixed overhead costs is also useful when a company uses
activity-based costing.
39)
An
unfavorable fixed setup overhead spending variance could be due to higher lease
costs of new setup equipment.
40)
A
favorable variable setup overhead efficiency variance could be due to actual
setup-hours exceeding the setup-hours planned for the units produced.
41)
Overhead
costs have been increasing due to all of the following EXCEPT:
A)
increased
automation
B)
more
complexity in distribution processes
C)
tracing
more costs as direct costs with the help of technology
D)
product
proliferation
42)
Effective
planning of variable overhead costs means that a company performs those
variable overhead costs that primarily add value for:
A)
the
current shareholders
B)
the
customer using the products or services
C)
plant
employees
D)
major
suppliers of component parts
43)
Variable
overhead costs include:
A)
plant-leasing
costs
B)
the
plant manager's salary
C)
depreciation
on plant equipment
D)
machine
maintenance
44)
Fixed
overhead costs include:
A)
the cost
of sales commissions
B)
property
taxes paid on plant facilities
C)
energy
costs
D)
indirect
materials
45)
Effective
planning of fixed overhead costs includes all of the following EXCEPT:
A)
planning
day-to-day operational decisions
B)
eliminating
nonvalue-added costs
C)
planning
to be efficient
D)
choosing
the appropriate level of capacity
46)
Effective
planning of variable overhead includes all of the following EXCEPT:
A)
choosing
the appropriate level of capacity
B)
eliminating
nonvalue-adding costs
C)
redesigning
products to use fewer resources
D)
redesigning
the plant layout for more efficient processing
47)
Choosing
the appropriate level of capacity:
A)
is a key
strategic decision
B)
may lead
to loss of sales if overestimated
C)
may lead
to idle capacity if underestimated
D)
All of
these answers are correct.
48)
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
49)
In a
standard costing system, a cost-allocation base would MOST likely be:
A)
actual
machine-hours
B)
normal
machine-hours
C)
standard
machine-hours
D)
Any of
these answers is correct.
50)
For
calculating the costs of products and services, a standard costing system:
A)
only
requires a simple recording system
B)
uses
standard costs to determine the cost of products
C)
does not
have to keep track of actual costs
D)
All of
these answers are correct.
51)
The
variable overhead flexible-budget variance measures the difference
between:
A)
actual
variable overhead costs and the static budget for variable overhead costs
B)
actual
variable overhead costs and the flexible budget for variable overhead
costs
C)
the
static budget for variable overhead costs and the flexible budget for variable
overhead costs
D)
None of
these answers is correct.
52)
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
53)
Which of
the following is NOT a step in developing budgeted variable overhead
rates?
A)
identifying
the variable overhead costs associated with each cost-allocation base
B)
estimating
the budgeted denominator level based on expected utilization of available
capacity
C)
selecting
the cost-allocation bases to use
D)
choosing
the period to be used for the budget
54)
In
flexible budgets, costs that remain the same regardless of the output levels
within the relevant range are:
A)
allocated
costs
B)
budgeted
costs
C)
fixed
costs
D)
variable
costs
Answer
the following questions using the information below:
Shimon
Corporation manufactures industrial-sized water coolers and uses budgeted
machine-hours to allocate variable manufacturing overhead. The following
information pertains to the company's manufacturing overhead data:
Budgeted
output units 15,000 units
Budgeted
machine-hours 5,000 hours
Budgeted
variable manufacturing overhead costs for 15,000 units $161,250
Actual
output units produced 22,000 units
Actual
machine-hours used 7,200 hours
Actual
variable manufacturing overhead costs $242,000
55)
What is
the budgeted variable overhead cost rate per output unit?
A)
$10.75
B)
$11.00
C)
$32.25
D)
$48.40
56)
What is
the flexible-budget amount for variable manufacturing overhead?
A)
$165,000
B)
$236,500
C)
$242,000
D)
None of
these answers is correct.
57)
What is
the flexible-budget variance for variable manufacturing overhead?
A)
$5,500
favorable
B)
$5,500
unfavorable
C)
$4,300
favorable
D)
None of
these answers is correct.
58)
Variable
manufacturing overhead costs were ________ for actual output.
A)
higher
than expected
B)
the same
as expected
C)
lower
than expected
D)
indeterminable
Answer
the following questions using the information below:
White
Corporation manufactures football jerseys and uses budgeted machine-hours to
allocate variable manufacturing overhead. The following information pertains to
the company's manufacturing overhead data:
Budgeted
output units 20,000 units
Budgeted
machine-hours 30,000 hours
Budgeted
variable manufacturing overhead costs for 20,000 units $360,000
Actual
output units produced 18,000 units
Actual
machine-hours used 28,000 hours
Actual
variable manufacturing overhead costs $342,000
59)
What is
the budgeted variable overhead cost rate per output unit?
A)
$12.00
B)
$12.21
C)
$18.00
D)
$19.00
60)
What is
the flexible-budget amount for variable manufacturing overhead?
A)
$324,000
B)
$342,000
C)
$380,000
D)
None of
these answers is correct.
61)
What is
the flexible-budget variance for variable manufacturing overhead?
A)
$18,000
favorable
B)
$18,000
unfavorable
C)
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