Chapter 10a

Multiple Choice Questions

15.

Sulema, Inc. repairs and refinishes antique furniture. Manufacturing overhead at Sulema is applied to production on the basis of standard direct labor-hours. Which overhead variance(s) at Sulema would be unfavorably affected if the cost of solvents used to strip the old paint from the furniture unexpectedly doubles in price?

A. variable overhead rate variance B. variable overhead efficiency variance C. fixed manufacturing overhead budget variance D. fixed manufacturing overhead volume variance AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance. Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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16.

When computing standard cost variances, the difference between actual and standard price multiplied by actual quantity yields a(n):

A. combined price and quantity variance. B. efficiency variance. C. price or rate variance. D. quantity variance. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 10-01 Compute the direct materials price and quantity variances and explain their significance. Learning Objective: 10-02 Compute the direct labor rate and efficiency variances and explain their significance. Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance. Source: CMA, adapted

17.

The fixed manufacturing overhead budget variance is:

A. the difference between budgeted fixed manufacturing overhead cost and actual fixed manufacturing overhead cost. B. the difference between actual fixed manufacturing overhead cost and applied fixed manufacturing overhead cost. C. the difference between budgeted fixed manufacturing overhead cost and applied fixed manufacturing overhead cost. D. the difference between fixed overhead at the planned level of activity and the flexible budget for actual activity. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement App10A -2 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Blooms: Understand Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

18.

A volume variance is computed for:

A. both variable and fixed manufacturing overhead. B. variable manufacturing overhead only. C. fixed manufacturing overhead only. D. direct labor costs as well as overhead costs. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

19.

Which of the following variances is generally the least significant from the standpoint of cost control?

A. Materials price variance. B. Labor efficiency variance. C. Fixed manufacturing overhead volume variance. D. Variable overhead rate variance. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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20.

Traveller Corporation sells one product and uses a standard cost system. Last year the overhead volume variance was zero. Which of the following is correct?

A. Actual variable manufacturing overhead cost was equal to standard variable manufacturing overhead cost. B. Total applied overhead was equal to total actual overhead. C. The denominator activity was equal to actual activity. D. The budgeted fixed costs were equal to the applied fixed costs. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

21.

The Santos Corporation made an error when selecting a denominator level of activity and chose a much lower level than was realistic. This error would most likely result in a large:

A. favorable variable overhead efficiency variance. B. favorable fixed manufacturing overhead budget variance. C. favorable fixed manufacturing overhead volume variance. D. unfavorable fixed manufacturing overhead budget variance. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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22.

In a standard cost system, overhead is applied to production on the basis of:

A. the denominator hours chosen for the period. B. the actual hours required to complete the actual output of the period. C. the standard hours allowed to complete the actual output of the period. D. the actual cost of fixed overhead during the period. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

23.

Dori Castings is a job order shop that uses a standard cost system. Manufacturing overhead costs are applied on the basis of standard direct labor-hours. A volume variance will exist for Dori in a month where:

A. production volume differs from sales volume. B. actual direct labor-hours differ from standard hours allowed. C. there is a budget variance in fixed manufacturing overhead costs. D. the fixed manufacturing overhead applied to units of product on the basis of standard hours allowed differs from the budgeted fixed manufacturing overhead. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Analyze Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances. Source: CMA, adapted

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24.

Alex Corporation has a large underapplied overhead balance in the manufacturing overhead account. This could be explained by:

A. an unfavorable volume variance, assuming all other variances are zero. B. a favorable volume variance, assuming all other variances are zero. C. standard hours allowed for the period's output being greater than denominator hours for the period. D. favorable total variance for overhead. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Analyze Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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25.

Coblentz Fabrication Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) at $6.20 per MH. The company had budgeted its fixed manufacturing overhead cost at $40,000 for the month. During the month, the actual total variable manufacturing overhead was $48,970 and the actual total fixed manufacturing overhead was $43,000. The actual level of activity for the period was 8,300 MHs. What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?

A. $2,490 Favorable B. $510 Favorable C. $510 Unfavorable D. $2,490 Unfavorable Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $43,000 - $40,000 = $3,000 U Variable overhead rate variance = (AH × AR) - (AH × SR) = $48,970 - (8,300 MHs × $6.20 per MH) = $48,970 - $51,460 = $2,490 F Total variance = $3,000 U + $2,490 F = $510 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance. Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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26.

Omary Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month:

What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?

A. $1,520 Unfavorable B. $3,180 Favorable C. $4,820 Unfavorable D. $6,340 Unfavorable Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $54,000 - $50,000 = $4,000 U Variable overhead rate variance = (AH × AR) - (AH × SR) = $31,980 - (4,100 MHs × $7.60 per MH) = $31,980 - $31,160 = $820 U Total variance = $4,000 U + $820 U = $4,820 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium

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Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance. Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

27.

Dexter Corporation uses a standard cost system and applies manufacturing overhead cost to units of product on the basis of standard direct labor-hours (DLHs). Information on Dexter Corporation's manufacturing overhead costs for last period is given below:

Given these data, the underapplied or overapplied overhead cost for the period would be:

A. $10,000 overapplied B. $2,000 overapplied C. $10,000 underapplied D. $8,000 underapplied Overhead applied = Predetermined overhead rate × Standard hours allowed for the actual output = $4 per DLH × 38,000 DLHs = $152,000 Overhead is overapplied by $2,000 because the actual overhead cost incurred was $150,000.

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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28.

Steinhagen Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below:

The company based its original budget on 2,600 machine-hours. The company actually worked 2,790 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 2,960 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

A. $5,148 Favorable B. $5,148 Unfavorable C. $2,717 Favorable D. $2,717 Unfavorable

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $37,180 ÷ 2,600 machine-hours = $14.30 per machine-hour Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process = $37,180 - (2,960 machine-hours × $14.30 per machine-hour) = $37,180 - $42,328 = $5,148 F

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AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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29.

Semaan Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the month appear below:

The company based its original budget on 2,700 machine-hours. The company actually worked 2,960 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 3,030 machine-hours. What was the overall fixed manufacturing overhead budget variance for the month?

A. $3,130 Unfavorable B. $340 Unfavorable C. $340 Favorable D. $3,130 Favorable

Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $30,060 - $30,400 = $340 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium

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Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

30.

Hairr Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $9.50 per machine-hour and fixed manufacturing overhead cost of $947,672 per period. If the denominator level of activity is 8,900 machine-hours, the predetermined overhead rate would be:

A. $9.50 B. $115.98 C. $106.48 D. $950.00 Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $947,672 ÷ 8,900 machine-hours = $106.48 per machine-hour Predetermined overhead rate = $9.50 per machine-hour + $106.48 per machine-hour = $115.98 per machine-hour

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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31.

The Adlake Corporation makes and sells a single product and uses a standard cost system. During October, the company budgeted $300,000 in manufacturing overhead cost at a denominator activity of 20,000 machine-hours. At standard, each unit of finished product requires 5 machine-hours. The following cost and activity were recorded during October:

The amount of overhead cost that the company applied to work in process for October was:

A. $279,300 B. $291,330 C. $294,000 D. $285,000 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $300,000 ÷ 20,000 machine-hours = $15 per machine-hour Overhead applied = Predetermined overhead rate × Standard hours allowed for the actual output = $15 per machine-hour × (3,800 units × 5 machine-hours per unit) = $15 per machine-hour × (19,000 machine-hours) = $285,000

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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32.

Reidenbach Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The budgeted fixed manufacturing overhead cost for the most recent month was $17,100 and the actual fixed manufacturing overhead cost for the month was $17,450. The company based its original budget on 4,500 machine-hours. The standard hours allowed for the actual output of the month totaled 4,810 machine-hours. What was the overall fixed manufacturing overhead budget variance for the month?

A. $1,178 Unfavorable B. $350 Unfavorable C. $350 Favorable D. $1,178 Favorable Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $17,450 - $17,100 = $350 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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33.

Diseth Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company bases its predetermined overhead rate on 5,300 machinehours. The company's total budgeted fixed manufacturing overhead is $12,720. In the most recent month, the total actual fixed manufacturing overhead was $12,370. The company actually worked 5,350 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 5,540 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

A. $350 Favorable B. $120 Favorable C. $120 Unfavorable D. $576 Favorable Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $12,720 ÷ 5,300 machinehours = $2.40 per machine-hour Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process = $12,720 - (5,540 machine-hours × $2.40 per machine-hour) = $12,720 - $13,296 = $576 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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34.

Masek Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month:

What was the fixed manufacturing overhead budget variance for the month?

A. $2,360 Unfavorable B. $1,000 Unfavorable C. $2,360 Favorable D. $1,000 Favorable Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $49,000 - $50,000 = $1,000 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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35.

Pizzi, Inc. had the following fixed manufacturing overhead variances last year:

Pizzi uses machine-hours as an activity base for overhead and used 48,000 machine-hours as the denominator activity level for the year. Total actual fixed manufacturing overhead was $150,000. The actual number of machine-hours incurred were 50,000. What were Pizzi's standard hours allowed for actual output?

A. 40,000 B. 42,000 C. 50,400 D. 52,500 Budget variance = Actual fixed overhead - Budgeted fixed overhead $30,000 U = $150,000 - Budgeted fixed overhead $30,000 = $150,000 - Budgeted fixed overhead Budgeted fixed overhead = $150,000 - $30,000 Budgeted fixed overhead = $120,000 Fixed component of the predetermined overhead rate = $120,000 ÷ 48,000 MHs = $2.50 per MH Volume variance = Fixed component of the predetermined overhead rate × (Denominator hours - Standard hours allowed for the actual output) $6,000 F = $2.50 per MH × (48,000 MHs - Standard hours allowed for the actual output) -$6,000 = $2.50 per MH × (48,000 MHs - Standard hours allowed for the actual output) 48,000 MHs - Standard hours allowed for the actual output = -$6,000 ÷ $2.50 per MH 48,000 MHs - Standard hours allowed for the actual output = -2,400 MHs Standard hours allowed for the actual output = 48,000 MHs + 2,400 MHs Standard hours allowed for the actual output = 50,400 MHs

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AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

36.

Tropiano Electronics Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company had budgeted its fixed manufacturing overhead cost at $62,100 for the month and its level of activity at 3,200 MHs. The actual total fixed manufacturing overhead was $61,600 for the month and the actual level of activity was 3,000 MHs. What was the fixed manufacturing overhead budget variance for the month to the nearest dollar?

A. $3,381 Unfavorable B. $500 Favorable C. $500 Unfavorable D. $3,381 Favorable Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $61,600 - $62,100 = $500 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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37.

At the beginning of last year, Tari Corporation budgeted $300,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours. At the end of the year, Tari's fixed manufacturing overhead budget variance was $9,000 favorable. Its fixed manufacturing overhead volume variance was $15,000 favorable. Actual direct labor-hours for the year were 625,000. What was Tari's total standard machine-hours allowed for last year's output?

A. 570,000 B. 630,000 C. 648,000 D. 656,250 Fixed component of the predetermined overhead rate = $300,000 ÷ 600,000 machine-hours = $0.50 per machine-hour Volume variance = Fixed component of the predetermined overhead rate × (Denominator hours - Standard hours allowed for the actual output) $15,000 F = $0.50 per machine-hour × (600,000 machine-hours - Standard hours allowed for the actual output) -$15,000 = $0.50 per machine-hour × (600,000 machine-hours - Standard hours allowed for the actual output) -$15,000 = $300,000 - ($0.50 per machine-hour × Standard hours allowed for the actual output) $0.50 per machine-hour × Standard hours allowed for the actual output = $300,000 + $15,000 $0.50 per machine-hour × Standard hours allowed for the actual output = $315,000 Standard hours allowed for the actual output = $315,000 ÷ $0.50 per machine-hour Standard hours allowed for the actual output = 630,000 machine-hours

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply App10A -20 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

38.

Denby Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual fixed manufacturing overhead costs for the most recent month appear below:

The company based its original budget on 6,400 machine-hours. The company actually worked 6,710 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 6,540 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

A. $3,286 Favorable B. $1,484 Unfavorable C. $3,286 Unfavorable D. $1,484 Favorable Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $67,840 ÷ 6,400 machinehours = $10.60 per machine-hour = $67,840 - (6,540 machine-hours × $10.60 per machine-hour) = $67,840 - $69,324 = $1,484 F

AACSB: Analytic AICPA BB: Critical Thinking

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AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

39.

Bakos Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $8.80 per machine-hour and fixed manufacturing overhead cost of $100,688 per period. If the denominator level of activity is 2,800 machine-hours, the variable component in the predetermined overhead rate would be:

A. $44.76 B. $35.96 C. $43.52 D. $8.80 As given $8.80.

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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40.

Acuff Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below:

The company based its original budget on 6,200 machine-hours. The company actually worked 6,560 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 6,420 machine-hours. What was the overall fixed manufacturing overhead budget variance for the month?

A. $320 Favorable B. $320 Unfavorable C. $972 Favorable D. $972 Unfavorable Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $27,720 - $27,400 = $320 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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41.

Oldham Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $4.00 per machine-hour and fixed manufacturing overhead cost of $87,822 per period. If the denominator level of activity is 4,100 machine-hours, the fixed component in the predetermined overhead rate would be:

A. $25.42 B. $4.00 C. $21.42 D. $400.00 Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $87,822 ÷ 4,100 machinehours = $21.42 per machine-hour

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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42.

Bruley Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company's predetermined overhead rate for fixed manufacturing overhead is $3.30 per machine-hour and the denominator level of activity is 3,500 machinehours. In the most recent month, the total actual fixed manufacturing overhead was $11,570 and the company actually worked 3,430 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 3,450 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

A. $66 Favorable B. $231 Favorable C. $231 Unfavorable D. $165 Unfavorable Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process = (3,500 machine-hours × $3.30 per machine-hour) - (3,450 machine-hours × $3.30 per machine-hour) = $11,550 - $11,385 = $165 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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Nitrol Corporation manufactures brass vases using a standard cost system with standard machine-hours as the activity base for overhead. The following information relates to vase production at Nitrol for last year:

The standard machine-hours per vase is 1.25. Last year Nitrol produced 84,000 vases.

43.

What was Nitrol's variable overhead rate variance for last year?

A. $1,000 Favorable B. $1,060 Unfavorable C. $2,060 Unfavorable D. $9,500 Unfavorable SR = $50,000 ÷ 100,000 hours = $0.50 per hour AH × AR = $53,560 Variable overhead rate variance = (AH × AR) - (AH × SR) = ($53,560) - (103,000 hours × $0.50 per hour) = $53,560 - $51,500 = $2,060 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance.

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44.

What was Nitrol's fixed manufacturing overhead volume variance for last year?

A. $2,500 Favorable B. $7,500 Favorable C. $12,500 Favorable D. $40,000 Unfavorable Fixed component of the predetermined overhead rate = $250,000 ÷ 100,000 hours = $2.50 per hour Standard hours allowed for the actual output = 1.25 hours per unit × 84,000 units = 105,000 hours Volume variance = Fixed component of the predetermined overhead rate × (Denominator hours - Standard hours allowed for the actual output) = $2.50 per hour × (100,000 hours - 105,000 hours) = $2.50 per hour × (-5,000 hours) = $12,500 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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45.

What was Nitrol's total underapplied or overapplied overhead cost for last year?

A. $1,060 overapplied B. $1,060 underapplied C. $7,940 overapplied D. $13,940 overapplied Standard overhead cost per hour = ($50,000 + $250,000) ÷ 100,000 hours = $3 per hour Standard overhead cost applied = $3 per hour × (1.25 hours per vase × 84,000 vases) = $3 per hour × 105,000 hours = $315,000 Total overhead cost incurred = $53,560 + $247,500 = $301,060 Overhead overapplied = $315,000 - $301,060 = $13,940

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance. Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

The Dillon Corporation makes and sells a single product. Overhead costs are applied on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit. The Dillon Corporation had the following budgeted and actual data for March:

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46.

The variable overhead rate variance for March is:

A. $4,900 U B. $11,060 U C. $14,700 U D. $17,300 U AH × AR = $140,500 SR = $123,200 ÷ 154,000 hours = $0.80 per hour Variable overhead rate variance = (AH × AR) - (AH × SR) = ($140,500) - (161,800 hours × $0.80 per hour) = $140,500 - $129,440 = $11,060 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance.

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47.

The variable overhead efficiency variance for March is:

A. $12,400 F B. $6,160 U C. $12,400 U D. $6,160 F Standard hours per unit = 154,000 hours ÷ 30,800 units = 5 hours per unit SH = 33,900 units × 5 hours per unit = 169,500 hours SR = $123,200 ÷ 154,000 hours = $0.80 per hour Variable overhead efficiency variance = (AH - SH) × SR = (161,800 hours - 169,500 hours) × $0.80 per hour = (-7,700 hours) × $0.80 per hour = $6,160 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance.

App10A -30 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

48.

The fixed manufacturing overhead budget variance for March is:

A. $900 F B. $3,900 F C. $3,000 U D. $7,750 F Budget variance = Actual fixed overhead - Budgeted fixed overhead = $80,000 - $77,000 = $3,000 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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49.

The fixed manufacturing overhead volume variance for March is:

A. $7,750 F B. $7,750 U C. $1,550 F D. $3,900 U Fixed component of the predetermined overhead rate = $77,000 ÷ 154,000 hours = $0.50 per hour Standard hours allowed for the actual output = 5.00 hours per unit × 33,900 units = 169,500 hours Fixed overhead applied to work in process = $0.50 per hour × 169,500 hours = $84,750 Volume variance = Budgeted fixed overhead - Fixed overhead applied to work in process = $77,000 - $84,750 = $7,750 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

Derf Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours. Two direct labor-hours are required for each unit produced. The denominator activity was set at 9,000 units. Manufacturing overhead was budgeted at $135,000 for the period; 20 percent of this cost was fixed. The 17,200 hours worked during the period resulted in production of 8,500 units. Variable manufacturing overhead cost incurred was $108,500 and fixed manufacturing overhead cost was $28,000.

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50.

The variable overhead rate variance for the period was:

A. $5,300 Unfavorable B. $1,200 Unfavorable C. $6,300 Unfavorable D. $6,500 Unfavorable SR = (0.8 × $135,000) ÷ (9,000 units × 2 hours per unit) = $108,000 ÷ 18,000 hours = $6 per hour AH × AR = $108,500 Variable overhead rate variance = (AH × AR) - (AH × SR) = ($108,500) - (17,200 hours × $6 per hour) = $108,500 - $103,200 = $5,300 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance. Source: CMA, adapted

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51.

The variable overhead efficiency variance for the period was:

A. $5,300 Unfavorable B. $1,200 Unfavorable C. $1,500 Unfavorable D. $6,500 Unfavorable SR = (0.8 × $135,000) ÷ (9,000 units × 2 hours per unit) = $108,000 ÷ 18,000 hours = $6 per hour SH = 8,500 units × 2.00 hours per unit = 17,000 hours Variable overhead efficiency variance = (AH - SH) × SR = (17,200 hours - 17,000 hours) × $6 per hour = (200 hours) × $6 per hour = $1,200 Us

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance. Source: CMA, adapted

App10A -34 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

52.

The fixed manufacturing overhead budget variance for the period was:

A. $6,300 Unfavorable B. $2,500 Unfavorable C. $1,500 Unfavorable D. $1,000 Unfavorable Budget variance = Actual fixed overhead - Budgeted fixed overhead = $28,000 - $27,000 = $1,000 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances. Source: CMA, adapted

App10A -35 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

53.

The fixed manufacturing overhead volume variance for the period was:

A. $750 Unfavorable B. $2,500 Unfavorable C. $1,500 Unfavorable D. $1,000 Unfavorable Fixed component of the predetermined overhead rate = (0.2 × $135,000) ÷ (9,000 units × 2 hours per unit) = $27,000 ÷ 18,000 hours = $1.50 per hour Standard hours allowed for the actual output = 2.00 hours per unit × 8,500 units = 17,000 hours Volume variance = Fixed component of the predetermined overhead rate × (Denominator hours - Standard hours allowed for the actual output) = $1.50 per hour × (18,000 hours - 17,000 hours) = $1.50 per hour × (1,000 hours) = $1,500 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances. Source: CMA, adapted

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Vette Tie Corporation has developed the following manufacturing overhead standards to use in applying overhead to the production of its hand-painted silk ties. Manufacturing overhead at Vette is applied to production on the basis of standard direct labor-hours (DLHs).

The above standards were based on an expected annual volume of 60,000 ties. The actual results for last year were as follows:

54.

What was Vette's variable overhead rate variance?

A. $2,800 Unfavorable B. $13,200 Favorable C. $16,000 Favorable D. $68,000 Unfavorable AH × AR = $880,000 Variable overhead rate variance = (AH × AR) - (AH × SR) = ($880,000) - (64,000 hours × $14.00 per hour) = $880,000 - $896,000 = $16,000 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their App10A -37 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

significance.

55.

What was Vette's fixed manufacturing overhead budget variance?

A. $1,600 Unfavorable B. $3,000 Favorable C. $13,000 Unfavorable D. $17,600 Unfavorable Budget variance = Actual fixed overhead - Budgeted fixed overhead = $525,000 - $528,000 = $3,000 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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56.

What total amount of manufacturing overhead cost (variable and fixed) did Vette apply to the 58,000 ties produced during the year?

A. $1,276,000 B. $1,403,600 C. $1,421,200 D. $1,452,000 Standard overhead cost per unit = $15.40 per unit + $8.80 per unit = $24.20 per unit Standard overhead cost applied = $24.20 per unit × 58,000 units = $1,403,600

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance. Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours. For June, the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20,000 machine-hours:

During June, 17,000 machine-hours were used to complete 13,000 units of product, and the following actual total overhead costs were incurred:

At standard, each unit of finished product requires 1.4 hours of machine time.

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57.

The total predetermined overhead rate per machine-hour for June was:

A. $2.57 per machine-hour B. $1.30 per machine-hour C. $2.80 per machine-hour D. $3.15 per machine-hour Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = ($16,000 + $10,000 + $20,500 + $9,500) ÷ 20,000 machinehours = $56,000 ÷ 20,000 machine-hours = $2.80 per machine-hour

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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58.

The variable overhead rate variance for maintenance cost for June was

A. $1,020 F B. $1,020 U C. $3,230 F D. $3,230 U SR = $16,000 ÷ 20,000 machine-hours = $0.80 per machine-hour Variable overhead rate variance = (AH × AR) - (AH × SR) = $14,620 - (17,000 machine-hours × $0.80 per machine-hour) = $14,620 - $13,600 = $1,020 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance.

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59.

The variable overhead efficiency variance for utilities cost for June was

A. $400 F B. $400 U C. $600 F D. $600 U SH = 13,000 units × 1.4 machine-hours per unit = 18,200 machine-hours SR = ($10,000) ÷ 20,000 machine-hours = $0.50 per machine-hour Variable overhead efficiency variance = (AH - SH) × SR = (17,000 machine-hours - 18,200 machine-hours) × $0.50 per machine-hour = (-1,200 machine-hours) × $0.50 per machine-hour = $600 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance.

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60.

The fixed manufacturing overhead budget variance (in total) for June was:

A. $3,230 F B. $3,230 U C. $1,180 F D. $1,180 U Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = ($19,320 + $9,500) - ($20,500 + $9,500) = $28,820 - $30,000 = $1,180 Fs

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

A manufacturing company uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:

The following data pertain to operations for the most recent period:

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61.

The predetermined overhead rate per MH is closest to:

A. $17.91 per MH B. $18.59 per MH C. $18.00 per MH D. $18.50 per MH Variable overhead + Fixed overhead = $35,075 + $77,775 Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $112,850 ÷ 6,100 MHs = $18.50 per MH

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance.

App10A -45 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

62.

The overhead applied to products during the period was closest to:

A. $112,850 B. $113,415 C. $116,550 D. $110,889 Variable overhead + Fixed overhead = $35,075 + $77,775 Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $112,850 ÷ 6,100 MHs = $18.50 per MH Overhead applied = Predetermined overheard rate × Standard hours allowed for the actual output = $18.50 per MH × 5,994 MHs = $110,889

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance.

App10A -46 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

63.

The variable overhead rate variance for the period was closest to:

A. $315 U B. $1,465 F C. $1,465 U D. $315 F SR = $35,075 ÷ 6,100 MHs = $5.75 per MH AH × AR = $36,540 Labor rate variance = (AH × AR) - (AH × SR) = $36,540 - (6,300 MHs × $5.75 per MH) = $36,540 - $36,225 = $315 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance.

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64.

The variable overhead efficiency variance for the period is closest to:

A. $300 F B. $1,465 U C. $1,760 U D. $1,775 U Variable overhead efficiency variance = (AH - SH) × SR = (6,300 MHs - 5,994 MHs) × $5.75 per MH = (306 MHs) × $5.75 per MH = $1,759.50 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance.

65.

The fixed manufacturing overhead budget variance for the period is closest to:

A. $900 F B. $452 F C. $3,734 F D. $3,450 U Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $76,875 - $77,775 = $900 F

AACSB: Analytic

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AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

66.

The fixed manufacturing overhead volume variance for the period is closest to:

A. $1,359 U B. $2,550 F C. $3,902 U D. $1,352 U Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $77,775 ÷ 6,100 MHs = $12.75 per MH Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process = $77,775 - (5,994 MH × $12.75 per MH) = $77,775 - $76,423.50 = $1,351.50 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

App10A -49 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Cuda Manufacturing Corporation uses a standard cost system with machine-hours (MHs) as the activity base for overhead. The following information relates to Cuda's operations last year:

67.

What was Cuda's variable overhead rate variance?

A. $6,000 Unfavorable B. $15,000 Favorable C. $20,000 Unfavorable D. $21,000 Favorable AH × AR = $370,000 Variable overhead rate variance = (AH × AR) - (AH × SR) = ($370,000) - (52,000 MHs × $7 per MH) = $370,000 - $364,000 = $6,000 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance.

App10A -50 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

68.

What was Cuda's fixed manufacturing overhead budget variance?

A. $9,000 Favorable B. $15,000 Unfavorable C. $45,000 Favorable D. $45,000 Unfavorable Budget variance = Actual fixed overhead - Budgeted fixed overhead = $615,000 - (50,000 MHs × $12 per MH) = $615,000 - $600,000 = $15,000 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

69.

What total amount of manufacturing overhead cost (variable and fixed) did Cuda apply to production?

A. $950,000 B. $985,000 C. $988,000 D. $1,045,000 Manufacturing overhead cost applied = 55,000 MHs × ($7 per MH + $12 per MH) = 55,000 MHs × ($19 per MH) = $1,045,000

AACSB: Analytic

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AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10-03 Compute the variable manufacturing overhead rate and efficiency variances and explain their significance. Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

The Claus Corporation makes and sells a single product and uses standard costing. During January, the company actually used 8,700 direct labor-hours (DLHs) and produced 3,000 units of product. The standard cost card for one unit of product includes the following: Variable factory overhead: 3.0 DLHs @ $4.00 per DLH. Fixed factory overhead: 3.0 DLHs @ $3.50 per DLH. For January, the company incurred $22,000 of actual fixed manufacturing overhead costs and recorded a $875 favorable volume variance.

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70.

The denominator level of activity in direct labor-hours (DLHs) used by Claus in setting the predetermined overhead rate for January is:

A. 9,500 DLHs B. 9,250 DLHs C. 8,750 DLHs D. 10,500 DLHs Volume variance = Fixed component of the predetermined overhead rate × (Denominator hours - Standard hours allowed for the actual output) $875 F = $3.50 per DLH × [Denominator hours - (3.0 DLHs per unit × 3,000 units)] -$875 = $3.50 per DLH × [Denominator hours - (3.0 DLHs per unit × 3,000 units)] -$875 = $3.50 per DLH × [Denominator hours - (9,000 DLHs)] -$875 = ($3.50 per DLH × Denominator hours) - $31,500 $3.50 per DLH × Denominator hours = $31,500 - $875 $3.50 per DLH × Denominator hours = $30,625 Denominator hours = $30,625 ÷ $3.50 per DLH = 8,750 DLHs

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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71.

The fixed manufacturing overhead cost used to compute the predetermined overhead rate was:

A. $31,500 B. $30,625 C. $32,375 D. $33,250 Fixed overhead applied to work in process = $3.50 per DLH × 3.0 DLHs per unit × 3,000 units = $31,500 Volume variance = Budgeted fixed overhead - Fixed overhead applied to work in process $875 F = Budgeted fixed overhead - $31,500 -$875 = Budgeted fixed overhead - $31,500 Budgeted fixed overhead = $31,500 - $875 = $30,625

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

App10A -54 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

A manufacturer of playground equipment uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:

The following data pertain to operations for the most recent period:

72.

The predetermined fixed manufacturing overhead rate is closest to:

A. $12.24 per MH B. $13.55 per MH C. $13.87 per MH D. $11.96 per MH Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity = $40,650 ÷ 3,000 MHs = $13.55 per MH

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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73.

The fixed manufacturing overhead applied to products during the period is closest to:

A. $40,650 B. $42,981 C. $41,600 D. $46,070 Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity = $40,650 ÷ 3,000 MHs = $13.55 per MH Fixed manufacturing overhead applied = Predetermined overheard rate × Standard hours allowed for the actual output = $13.55 per MH × 3,172 MHs = $42,980.60

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

74.

The fixed manufacturing overhead budget variance for the period is closest to:

A. $4,470 U B. $950 U C. $2,790 F D. $1,381 U Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $41,600 - $40,650 = $950 U

AACSB: Analytic

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AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

75.

The fixed manufacturing overhead volume variance for the period is closest to:

A. $2,256 F B. $2,331 F C. $3,089 U D. $5,420 F Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity = $40,650 ÷ 3,000 MHs = $13.55 per MH Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process = $40,650 - (3,172 MHs × $13.55 per MH) = $40,650 - $42,980.60 = $2,330.60 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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The Murray Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours (DLHs). The company recorded the following activity and cost data for May:

76.

The amount of fixed manufacturing overhead cost that was used to compute the fixed component of the predetermined overhead rate was:

A. $54,135 B. $60,150 C. $59,465 D. $57,600 Fixed component of the predetermined overhead rate = Budgeted fixed overhead ÷ Denominator level of activity $0.90 per DLH = Budgeted fixed overhead cost ÷ 64,000 DLHs Budgeted fixed overhead cost = $0.90 per DLH × 64,000 DLHs = $57,600

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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77.

The amount of fixed manufacturing overhead cost applied during May was:

A. $52,535 B. $54,135 C. $36,090 D. $50,400 Fixed manufacturing overhead cost applied to work in process = 40,100 units × 1.5 DLHs per unit × $0.90 per DLH = $54,135

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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78.

The fixed manufacturing overhead budget variance for May was:

A. $8,000 F B. $8,000 U C. $1,600 F D. $1,600 U Fixed component of the predetermined overhead rate = Budgeted fixed overhead ÷ Denominator level of activity $0.90 per DLH = Budgeted fixed overhead cost ÷ 64,000 DLHs Budgeted fixed overhead cost = $0.90 per DLH × 64,000 DLHs = $57,600 Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $56,000 - $57,600 = $1,600 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

An outdoor barbecue grill manufacturer has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:

The following data pertain to operations for the most recent period:

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79.

The fixed manufacturing overhead budget variance for the period is closest to:

A. $166 U B. $422 F C. $585 F D. $1,400 U Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $28,295 - $26,895 = $1,400 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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80.

The fixed manufacturing overhead volume variance for the period is closest to:

A. $978 F B. $993 F C. $163 F D. $815 F Fixed component of the predetermined overhead rate = $26,895 ÷ 3,300 hours = $8.15 per DLH Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process = $26,895 - (3,420 DLHs × $8.15 per DLH) = $26,895 - $27,873 = $978 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

The Forbes Corporation uses a standard cost system in which overhead costs are applied to products on the basis of standard direct labor-hours (DLHs). The following data applied to the company's activities for June:

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81.

The fixed component of the predetermined overhead rate for June is:

A. $3.00 per DLH B. $3.23 per DLH C. $3.78 per DLH D. $3.46 per DLH Budget variance = Actual fixed overhead - Budgeted fixed overhead $11,450 U = $161,450 - Budgeted fixed overhead $11,450 = $161,450 - Budgeted fixed overhead Budgeted fixed overhead = $161,450 - $11,450 Budgeted fixed overhead = $150,000 Fixed component of the predetermined overhead rate = Estimated fixed overhead cost ÷ Estimated total amount of the allocation base = $150,000 ÷ 50,000 DLHs = $3 per DLH

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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82.

The volume variance for June is:

A. $44,954 Unfavorable B. $39,000 Favorable C. $39,000 Unfavorable D. $44,954 Favorable Budget variance = Actual fixed overhead - Budgeted fixed overhead $11,450 U = $161,450 - Budgeted fixed overhead $11,450 = $161,450 - Budgeted fixed overhead Budgeted fixed overhead = $161,450 - $11,450 Budgeted fixed overhead = $150,000 Fixed component of the predetermined overhead rate = Estimated fixed overhead cost ÷ Estimated total amount of the allocation base = $150,000 ÷ 50,000 DLHs = $3 per DLH Volume variance = Fixed component of the predetermined overhead rate × (Denominator hours - Standard hours allowed for the actual output) = $3 per DLH × [50,000 DLHs - (21,000 units × 3 DLHs per unit)] = $3 per DLH × [50,000 DLHs - (63,000 DLHs)] = $3 per DLH × [-13,000 DLHs] = $39,000 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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The Murray Corporation makes and sells a single product. The company recorded the following activity and cost data for May:

The fixed component of the predetermined overhead rate is $0.95 per direct labor-hour.

83.

The fixed manufacturing overhead used to calculate the predetermined overhead rate was:

A. $64,125 B. $67,500 C. $68,400 D. $70,275 $0.95 per DLH = Fixed manufacturing overhead ÷ 72,000 DLHs Fixed manufacturing overhead = $0.95 per DLH × 72,000 DLHs Fixed manufacturing overhead = $68,400

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

App10A -65 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

84.

The amount of fixed manufacturing overhead cost applied to work in process during May was:

A. $61,725 B. $62,700 C. $42,750 D. $64,125 Fixed manufacturing overhead cost applied to work in process = $0.95 per DLH × 1.5 DLHs per unit × 45,000 units = $64,125

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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85.

The fixed manufacturing overhead budget variance for May was:

A. $2,400 U B. $2,400 F C. $6,000 U D. $6,000 F $0.95 per DLH = Fixed manufacturing overhead ÷ 72,000 DLHs Fixed manufacturing overhead = $0.95 per DLH × 72,000 DLHs Fixed manufacturing overhead = $68,400 Budget variance = Actual fixed overhead - Budgeted fixed overhead = $66,000 - $68,400 = $2,400 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

The following data for February has been provided by Gillard Corporation.

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86.

The budget variance for February is:

A. $7,440 F B. $7,440 U C. $1,140 F D. $1,140 U Budget variance = Actual fixed overhead - Budgeted fixed overhead = $69,960 - $68,820 = $1,140 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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87.

The volume variance for February is:

A. $5,580 F B. $5,580 U C. $7,440 U D. $7,440 F Fixed component of the predetermined overhead rate = $68,820 ÷ 3,700 hours = $18.60 per hour Volume variance = Fixed component of the predetermined overhead rate × (Denominator hours - Standard hours allowed for the actual output) = $18.60 per hour × (3,700 hours - 4,000 hours) = $18.60 per hour × (-300 hours) = $5,580 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

Odonell Corporation estimates that its variable manufacturing overhead is $11.20 per machine-hour and its fixed manufacturing overhead is $563,640 per period.

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88.

If the denominator level of activity is 6,000 machine-hours, the variable component in the predetermined overhead rate would be:

A. $93.94 per machine-hour B. $11.20 per machine-hour C. $105.14 per machine-hour D. $103.60 per machine-hour $11.20 per machine-hour (given)

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

89.

If the denominator level of activity is 6,000 machine-hours, the fixed component in the predetermined overhead rate would be:

A. $1,120.00 per machine-hour B. $11.20 per machine-hour C. $93.94 per machine-hour D. $105.14 per machine-hour Fixed component of the predetermined overhead rate = Estimated total fixed manufacturing overhead ÷ Denominator level of activity = $563,640 ÷ 6,000 machine-hours = $93.94 per machine-hour

AACSB: Analytic AICPA BB: Critical Thinking

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AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

90.

If the denominator level of activity is 6,100 machine-hours, the predetermined overhead rate would be:

A. $11.20 per machine-hour B. $1,120.00 per machine-hour C. $92.40 per machine-hour D. $103.60 per machine-hour Predetermined overhead rate = Estimated total manufacturing overhead ÷ Denominator level of activity = [$563,640 + ($11.20 per machine-hour × 6,100 machine-hours)] ÷ 6,100 machine-hours = [$563,640 + $68,320] ÷ 6,100 machine-hours = $631,960 ÷ 6,100 machine-hours = $103.60 per machine-hour

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

Tillinghast Corporation estimates that its variable manufacturing overhead is $9.60 per machine-hour and its fixed manufacturing overhead is $14,630 per period.

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91.

If the denominator level of activity is 1,000 machine-hours, the variable component in the predetermined overhead rate would be:

A. $22.90 per machine-hour B. $14.63 per machine-hour C. $24.23 per machine-hour D. $9.60 per machine-hour $9.60 per machine-hour (given)

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

92.

If the denominator level of activity is 1,000 machine-hours, the fixed component in the predetermined overhead rate would be:

A. $24.23 per machine-hour B. $14.63 per machine-hour C. $960.00 per machine-hour D. $9.60 per machine-hour Fixed component of the predetermined overhead rate = Estimated fixed overhead ÷ Denominator level of activity = $14,630 ÷ 1,000 machine-hours = $14.63 per machine-hour

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply App10A -72 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

93.

If the denominator level of activity is 1,100 machine-hours, the predetermined overhead rate would be:

A. $960.00 per machine-hour B. $9.60 per machine-hour C. $13.30 per machine-hour D. $22.90 per machine-hour Predetermined overhead rate = Estimated total manufacturing overhead ÷ Denominator level of activity = [$14,630 + ($9.60 per machine-hour × 1,100 machine-hours] ÷ 1,100 machine-hours = [$14,630 + $10,560] ÷ 1,100 machine-hours = $25,190 ÷ 1,100 machine-hours = $22.90 per machine-hour

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

Saffold Corporation has provided the following data for December.

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94.

The budget variance for December is:

A. $10,050 U B. $6,540 U C. $6,540 F D. $10,050 F Budget variance = Actual fixed overhead - Budgeted fixed overhead = $284,730 - $274,680 = $10,050 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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95.

The volume variance for December is:

A. $6,540 F B. $6,540 U C. $16,350 F D. $16,350 U Volume variance = Fixed component of the predetermined overhead rate × (Denominator hours - Standard hours allowed for the actual output) = $32.70 per hour × (8,400 hours - 8,900 hours) = $32.70 per hour × (-500 hours) = $16,350 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:

The following data pertain to operations for the most recent period:

96.

The predetermined overhead rate is closest to:

A. $21.90 per hour B. $21.80 per hour C. $21.16 per hour D. $21.26 per hour Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity = ($31,845 + $40,425) ÷ 3,300 hours = $72,270 ÷ 3,300 hours = $21.90 per hour

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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97.

The overhead applied to products during the period was closest to:

A. $74,460 B. $72,270 C. $67,408 D. $71,955 Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity = ($31,845 + $40,425) ÷ 3,300 hours = $72,270 ÷ 3,300 hours = $21.90 per hour Overhead applied = Predetermined overhead rate × Standards hours allowed for the actual output = $21.90 per hour × 3,078 hours = $67,408.20

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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98.

The fixed manufacturing overhead budget variance for the period is closest to:

A. $2,675 U B. $1,450 F C. $3,691 F D. $1,270 F Budget variance = Actual fixed overhead - Budgeted fixed overhead cost = $38,975 - $40,425 = $1,450 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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99.

The fixed manufacturing overhead volume variance for the period is closest to:

A. $2,720 U B. $1,225 F C. $2,811 U D. $3,945 U Fixed component of the predetermined overhead rate = $40,425 ÷ 3,300 hours = $12.25 per hour Volume variance = Budgeted fixed overhead cost - Fixed overhead applied to work in process = $40,425 - (3,078 hours × $12.25 per hour) = $40,425 - $37,705.50 = $2,719.50 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

Homer Corporation has a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours. The company has provided the following data concerning its manufacturing overhead costs for last year:

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100.

The fixed manufacturing overhead budget variance was:

A. $200 F B. $400 U C. $300 F D. $240 U Budget variance = Actual fixed overhead - Budgeted fixed overhead = $3,800 - $4,000 = $200 F

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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101.

The volume variance was:

A. $200 F B. $400 U C. $300 F D. $240 U Fixed component of the predetermined overhead rate = Estimated total fixed manufacturing overhead cost ÷ Estimated total amount of the allocation base = $4,000 ÷ 1,000 hours = $4 per hour Volume variance = Fixed component of the predetermined overhead rate × (Denominator hours - Standard hours allowed for the actual output) = $4 per hour × (1,000 hours - 900 hours) = $4 per hour × (100 hours) = $400 U

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 10A-04 Compute and interpret the fixed overhead budget and volume variances.

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