Question : 8.4   Integrate the fixed and variable overhead cost variance analyses : 1186342

 

8.4   Integrate the fixed and variable overhead cost variance analyses to reconcile the actual overhead incurred with overhead allocated.

 

1) Identifying the reasons for variances is important because it helps managers plan for corrective action.

2) Effective planning of variable overhead costs means that a company performs those variable overhead costs that primarily add value

A) for the current shareholders.

B) for the customer using the products or services.

C) for plant employees.

D) for major suppliers of component parts.

E) for management.

 

3) Two of the primary ways to manage variable-overhead costs include

A) eliminating non-value-added costs and reducing the consumption of cost drivers.

B) eliminating non-value-added costs and increasing fixed overhead expenses.

C) reducing the consumption of cost drivers and increasing variable costs.

D) using more energy-efficient equipment and planning for appropriate capacity levels.

E) increasing variable costs and eliminating non-value added costs.

 

4) The difference between the actual amount of variable overhead incurred and the budget amount allowed for actual output achieved is

A) the flexible budget variance.

B) the variable overhead rate variance.

C) the price variance.

D) the sales-volume variance.

E) the efficiency variance.

 

5) A favourable variable manufacturing overhead efficiency variance may be interpreted as meaning which of the following?

A) Employees used too much electricity during production.

B) Less maintenance was required than expected.

C) Excess supplies were used.

D) Too much of the cost driver was used.

E) The cost driver is inappropriate.

6) Fixed overhead costs must be unitized for

A) financial reporting purposes.

B) planning purposes.

C) for utilization in activity-based-costing.

D) to calculate the static-budget variance.

E) to analyze the efficiency variance.

 

7) The rate and efficiency variances are subcomponents of

A) a flexible-budget variance.

B) the fixed overhead static-budget variance.

C) a production-volume variance.

D) a variable overhead volume variance.

E) the fixed overhead rate variance.

Use the information below to answer the following question(s).

 

Michelle Inc. uses a level 4-variance analysis of its manufacturing overhead costs, and has the following results for April.

 

A.Budgeted direct labour-hours per unit is used to allocate variable manufacturing overhead.

Fixed overhead is allocated on a per unit basis.

 

B.Budgeted amounts for April 2012 are:

 

Direct labour-hours

0.30/unit

Variable labour-hour overhead rate

$20.00 /DLH

Fixed manufacturing overhead

$600,000

Budgeted output (denominator level output)

30,000 units

 

C.Actual amounts for April 2012 are:

 

Variable manufacturing overhead

$340,000

Fixed manufacturing overhead

$590,000

Direct labour-hours

16,000 hours

Actual output

40,000 units

 

8) What is the variable production-volume variance?

A) $13,500 unfavourable

B) $6,000 unfavourable

C) $6,000 favourable

D) $0

E) There is never a variable production-volume variance.

 

9) What is the fixed manufacturing overhead rate variance?

A) $10,000 favourable

B) $10,000 unfavourable

C) $13,500 unfavourable

D) $13,500 favourable

E) $14,625 favourable

10) What are the fixed manufacturing overhead efficiency and production-volume variances, respectively?

A) 0; $200,000 favourable

B) 0; $200,000 unfavourable

C) $50,500 favourable; $199,998 unfavourable

D) $50,500 unfavourable; $199,998 favourable

E) There is no efficiency variance; $200,000 favourable.