Question 1

In a standard cost system,when production is greater than the estimated unit or denominator level of activity,there will be a(n)

Accepted Answer

When production is greater than the estimated unit or denominator level of activity, it indicates that the actual volume of production exceeds the volume that was anticipated when calculating the standard cost. This results in a favorable volume variance because fixed overhead costs are typically spread over a larger volume, resulting in a lower per-unit cost. It does not affect material and labor usage, as these variances are based on actual usage versus the standard for the actual volume produced. The capacity variance is typically based on the difference between actual and budgeted capacity levels.

Question 2

In analyzing manufacturing overhead variances,the volume variance is the difference between the

Accepted Answer

The volume variance is calculated as the difference between the budget allowance based on standard hours allowed for actual production and the amount budgeted to be applied during the period.

Question 3

Which of the following are considered controllable variances? $\underline{\text{VOH spenching}}~~~~~~~~~~\underline{\text{Total overhead budget}}~~~~~~~~\underline{\text{Volume}}$

Accepted Answer

Controllable variances are those variances that can be controlled by the management through effective planning and decision-making. Examples of such variances include direct material cost variance, direct labor cost variance, and variable overhead cost variance. Therefore, option D correctly identifies the variances that are considered controllable.

Question 4

A company has a favorable variable overhead spending variance,an unfavorable variable overhead efficiency variance,and underapplied variable overhead at the end of a period.The journal entry to record these variances and close the variable overhead control account will show which of the following? $\begin{array}{lll}
\mathrm{VOH} \text { spending } & \text { VOH efficiency } &\
\underline{\text{variance }} &\underline{\text{variance }} & \underline{\text{VMOH }}
\end{array}$

Accepted Answer

The answer of A company has a favorable variable overhead...

Question 5

Total actual overhead minus total budgeted overhead at the actual input production level equals the

Accepted Answer

Total actual overhead minus total budgeted overhead at the actual input production level represents the difference between the actual amount spent on overhead and the expected (budgeted) amount of overhead for that level of production, giving us the total overhead spending variance.

Question 6

A favorable fixed overhead spending variance indicates that

Accepted Answer

A favorable fixed overhead spending variance occurs when actual fixed overhead is less than budgeted fixed overhead. This means that the company spent less on fixed overhead costs than they had anticipated, which is a positive outcome.

Question 7

The efficiency variance computed on a three-variance approach is

Accepted Answer

In both the three-variance and four-variance approaches, the efficiency variance measures the difference between the actual input used and the standard input allowed for the actual output, valued at the standard rate.

Question 8

The use of separate variable and fixed overhead rates is better than a combined rate because such a system

Accepted Answer

Separate variable and fixed overhead rates are more effective in assigning overhead costs to products because they recognize that variable and fixed overhead costs behave differently. By using separate rates for each type of overhead, overhead costs can be allocated more accurately to each product, and the cost of the product can be calculated more precisely. This leads to better decision-making regarding pricing, product mix, and profitability.

Question 9

Actual fixed overhead minus budgeted fixed overhead equals the

Accepted Answer

The difference between actual fixed overhead and budgeted fixed overhead represents the fixed overhead spending variance, which measures the difference between the actual amount spent on fixed overhead and the budgeted amount. The fixed overhead volume variance measures the difference in fixed overhead costs that can be attributed to the difference between actual output and budgeted output. Noncontrollable and controllable variances are not specific variance types related to fixed overhead.

Question 10

Fixed overhead costs are

Accepted Answer

Fixed overhead costs are mostly incurred to provide the capacity to produce and are best controlled on a total basis at the time they are originally negotiated. This means that the best way to control these costs is by negotiating favorable terms on a total basis rather than trying to control them on a unit-by-unit basis.

Question 11

A favorable fixed overhead volume variance occurs if

Accepted Answer

The fixed overhead volume variance measures the difference between the actual overhead incurred and the budgeted overhead based on the level of production planned. If production is greater than planned, it means that more units were produced than anticipated, resulting in a lower fixed overhead per unit and therefore a favorable variance. Therefore, choice D is correct. The other choices are unrelated to the fixed overhead volume variance.

Question 12

An unfavorable fixed overhead volume variance is most often caused by

Accepted Answer

An unfavorable fixed overhead volume variance occurs when actual production levels are less than normal capacity. This means that fixed overhead costs were incurred, but not fully absorbed by actual production.

Question 13

A variable overhead spending variance is caused by

Accepted Answer

A variable overhead spending variance can be caused by paying a higher/lower average actual overhead price per unit of the activity base than the standard price allowed per unit of the activity base (option B) as well as larger/smaller waste and shrinkage associated with the resources involved than expected (option C). Option A describes the variable overhead efficiency variance.

Question 14

Which of the following capacity levels has traditionally been used to compute the fixed overhead application rate?

Accepted Answer

The answer of Which of the following capacity levels has...

Question 15

Bailey Corporation.incurred 2,300 direct labor hours to produce 600 units of product.Each unit should take 4 direct labor hours.Bailey Corporation applies variable overhead to production on a direct labor hour basis.The variable overhead efficiency variance

Accepted Answer

Since each unit should take 4 direct labor hours, the company should have used 2,400 direct labor hours (600 units x 4 hours per unit) to produce the 600 units. However, they only used 2,300 direct labor hours, which means they were more efficient than expected. Therefore, the variable overhead efficiency variance will be favorable.

Question 16

Variance analysis for overhead normally focuses on

Accepted Answer

Variance analysis for overhead typically focuses on efficiency variances for machinery and indirect production costs, rather than volume variances for fixed overhead costs, the controllable variance as a lump-sum amount, or the difference between budgeted and applied variable overhead.

Question 17

A company may set predetermined overhead rates based on normal,expected annual,or theoretical capacity.At the end of a period,the fixed overhead spending variance would

Accepted Answer

The fixed overhead spending variance is the difference between actual fixed overhead costs and budgeted fixed overhead costs. It is not affected by the capacity level selected, as it is based on actual spending versus budgeted spending, not on the level of capacity used.

Question 18

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

Accepted Answer

If the standard hours allowed for good output equal the predetermined activity level, then the actual overhead cost should be equal to the budgeted overhead cost, which means there should be no difference between budgeted and actual overhead costs, and therefore no volume variance.

Question 19

The variance least significant for purposes of controlling costs is the

Accepted Answer

The answer of The variance least significant for purposes of...

Question 20

The variancemost useful in evaluating plant utilization is the

Accepted Answer

The fixed overhead volume variance is the most useful in evaluating plant utilization as it shows the difference between the actual fixed overhead cost incurred and the budgeted fixed overhead cost, based on the actual production volume. This variance is directly related to plant utilization because it measures the difference in fixed overhead costs that arise due to changes in production volume. Therefore, it can help management identify how efficiently the plant is utilizing its capacity and resources. The other variances listed (variable overhead spending variance, fixed overhead spending variance, and variable overhead efficiency variance) do not directly relate to plant utilization.

Quiz 7: Standard Costing and Variance Analysis

In a standard cost system,when production is greater than the estimated unit or denominator level of activity,there will be a(n)

In analyzing manufacturing overhead variances,the volume variance is the difference between the

Which of the following are considered controllable variances? $\underline{\text{VOH spenching}}~~\underline{\text{Total overhead budget}}\underline{\text{Volume}}$

Total actual overhead minus total budgeted overhead at the actual input production level equals the

A favorable fixed overhead spending variance indicates that

The efficiency variance computed on a three-variance approach is

The use of separate variable and fixed overhead rates is better than a combined rate because such a system

Actual fixed overhead minus budgeted fixed overhead equals the

Fixed overhead costs are

A favorable fixed overhead volume variance occurs if

An unfavorable fixed overhead volume variance is most often caused by

A variable overhead spending variance is caused by

Which of the following capacity levels has traditionally been used to compute the fixed overhead application rate?

Bailey Corporation.incurred 2,300 direct labor hours to produce 600 units of product.Each unit should take 4 direct labor hours.Bailey Corporation applies variable overhead to production on a direct labor hour basis.The variable overhead efficiency variance

Variance analysis for overhead normally focuses on

A company may set predetermined overhead rates based on normal,expected annual,or theoretical capacity.At the end of a period,the fixed overhead spending variance would

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

The variance least significant for purposes of controlling costs is the

The variancemost useful in evaluating plant utilization is the

Quiz 7: Standard Costing and Variance Analysis

In a standard cost system,when production is greater than the estimated unit or denominator level of activity,there will be a(n)

In analyzing manufacturing overhead variances,the volume variance is the difference between the

Which of the following are considered controllable variances? VOH spenching‾ Total overhead budget‾ Volume‾\underline{\text{VOH spenching}}~~~~~~~~~~\underline{\text{Total overhead budget}}~~~~~~~~\underline{\text{Volume}}VOH spenching​ Total overhead budget​ Volume​

Total actual overhead minus total budgeted overhead at the actual input production level equals the

A favorable fixed overhead spending variance indicates that

The efficiency variance computed on a three-variance approach is

The use of separate variable and fixed overhead rates is better than a combined rate because such a system

Actual fixed overhead minus budgeted fixed overhead equals the

Fixed overhead costs are

A favorable fixed overhead volume variance occurs if

An unfavorable fixed overhead volume variance is most often caused by

A variable overhead spending variance is caused by

Which of the following capacity levels has traditionally been used to compute the fixed overhead application rate?

Bailey Corporation.incurred 2,300 direct labor hours to produce 600 units of product.Each unit should take 4 direct labor hours.Bailey Corporation applies variable overhead to production on a direct labor hour basis.The variable overhead efficiency variance

Variance analysis for overhead normally focuses on

A company may set predetermined overhead rates based on normal,expected annual,or theoretical capacity.At the end of a period,the fixed overhead spending variance would

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

The variance least significant for purposes of controlling costs is the

The variancemost useful in evaluating plant utilization is the

Which of the following are considered controllable variances? $\underline{\text{VOH spenching}}~~\underline{\text{Total overhead budget}}\underline{\text{Volume}}$