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2. The flexible budget is a dynamic tool, in that a budget can be constructed to compare
to any level of actual costs within the relevant range.
3. Fixed costs should never be considered when evaluating how well a manager has
controlled costs.
4. The overhead spending variance contains price but not quantity elements.
5. Waste or excessive usage of overhead items will show up as part of the variable
overhead efficiency variance.
10. The Apmon Company uses a standard cost system in which manufacturing overhead
is applied to units on the basis of machine-hours. During July, the company budgeted
$350,000 in manufacturing overhead cost at a denominator activity of 25,000 machine-
hours. At standard, each unit requires 5 machine-hours. The following cost and activity
were recorded during July:
Total actual manufacturing overhead cost incurred…….. $325,000
Units of product completed ……………………………. 4,500
Actual machine-hours worked………………………….. 23,000
The amount of overhead cost that the company applied to work in process for July was:
A) $292,500.
B) $315,000.
C) $322,000.
D) $325,000.
The following data pertain to operations for the most recent period:
12. How much overhead was applied to products during the period to the nearest dollar?
A) $79,118
B) $76,035
C) $77,440
D) $80,145
13. What was the variable overhead spending variance for the period to the nearest
dollar?
A) $585 U
B) $585 F
C) $955 U
D) $955 F
14. What was the variable overhead efficiency variance for the period to the nearest
dollar?
A) $578 U
B) $385 U
C) $378 U
D) $955 U
15. What was the fixed overhead budget variance for the period to the nearest dollar?
A) $615 F
B) $2,120 U
C) $1,478 U
D) $450 U
16. What was the fixed overhead volume variance for the period to the nearest dollar?
A) $1,870 F
B) $1,928 F
C) $643 U
D) $2,570 F
The Royale Company has a standard cost system in which manufacturing overhead is
applied to units of product on the basis of direct labor-hours (DLHs). The company
recorded the following activity and cost data relating to manufacturing overhead for
October:
Activity:
Number of units completed …………………………… 31,200 units
Standard direct labor-hours per unit ………………….. 1.6 DLHs
Denominator activity …………………………………. 54,000 DLHs
Cost:
Actual fixed overhead costs incurred ………………… $51,300
Volume variance …………………………………… $3,468 Unfavorable
Fixed portion of the predetermined overhead rate … $0.85 per DLH
17. The amount of fixed overhead cost contained in the company’s overhead budget for
September was:
A) $45,900.
B) $54,768.
C) $49,920.
D) $47,703.
18. The amount of fixed manufacturing overhead cost applied to work in process during
September was:
A) $47,832.
B) $26,520.
C) $42,432.
D) $43,605.
Answers:
1. T 2. T 3. F 4. F 5. F 6. C 7. C 8. B 9. C 10. B 11. D