Question :
81. Armstrong Products applies fixed overhead at a rate of $3 : 1295668
81. Armstrong Products applies fixed overhead at a rate of $3 per direct labor hour. Each unit produced is expected to take 2 direct labor hours. Armstrong expected production in the current year to be 10,000 units but 9,000 units were actually produced. Actual direct labor hours were 19,000 and actual fixed overhead costs were $62,000. Refer to the Armstrong Products information above. Armstrong’s fixed overhead spending variance is: A. $8,000 FB. $8,000 UC. $2,000 FD. $2,000 U
82. Armstrong Products applies fixed overhead at a rate of $3 per direct labor hour. Each unit produced is expected to take 2 direct labor hours. Armstrong expected production in the current year to be 10,000 units but 9,000 units were actually produced. Actual direct labor hours were 19,000 and actual fixed overhead costs were $62,000. Refer to the Armstrong Products information above. Armstrong’s fixed overhead volume variance is: A. $2,000B. $6,000C. $8,000D. $ 0
83. Hayward Inc. produces a unique item. Hayward’s management team wishes to perform a variance analysis on its fixed overhead. Fixed overhead is applied to units produced using direct labor hours as its cost driver. The company’s managerial accountant has compiled the following information:
Projected data:
Estimated direct labor hours
50,000 hours
Estimated fixed overhead
$75,000
Actual data:
Actual production
104,000 units
Actual direct labor hours used
52,000 hours
Actual fixed overhead
$80,000
Refer to the Hayward Inc. information above. Hayward’s fixed overhead spending variance is: A. $2,000 FB. $2,000 UC. $5,000 FD. $5,000 U
84. Hayward Inc. produces a unique item. Hayward’s management team wishes to perform a variance analysis on its fixed overhead. Fixed overhead is applied to units produced using direct labor hours as its cost driver. The company’s managerial accountant has compiled the following information:
Projected data:
Estimated direct labor hours
50,000 hours
Estimated fixed overhead
$75,000
Actual data:
Actual production
104,000 units
Actual direct labor hours used
52,000 hours
Actual fixed overhead
$80,000
Refer to the Hayward Inc. information above. Hayward’s fixed overhead volume variance is: A. $5,000B. $2,000C. $3,000D. $2,500
85. Which of the following types of companies would not have a need to calculate a fixed overhead volume variance? A. A company that uses variable costing.B. A company that uses absorption costing.C. A company that applies fixed overhead based on direct labor hours.D. A company that uses activity-based costing (ABC).
86. Washington Inc. has an unfavorable fixed overhead spending variance. Which of the following would be the most likely reason for this variance? A. More units were actually produced than predicted.B. Fewer units were actually produced than predicted.C. Actual fixed overhead was more than predicted.D. Actual fixed overhead was less than predicted.
87. New Hampshire Products has a favorable fixed overhead spending variance. Which of the following would be the most likely reason for this variance? A. More units were actually produced than predicted.B. Fewer units were actually produced than predicted.C. Actual fixed overhead was more than predicted.D. Actual fixed overhead was less than predicted.
88. Which of the following statements about performing variance analysis is false? A. It is more difficult to interpret variance analysis in an activity-based costing (ABC) environment than in a traditional manufacturing environment.B. Companies that use ABC will likely have multiple cost drivers for the calculation of their applied variable overhead.C. Selling and administrative expenses may be analyzed using variance analysis.D. There is often a correlation between different types of variances.
89. Prestige Furnishings uses flexible budgeting. The company’s budget for variable and fixed overhead is $20,000 and $10,000, respectively. The company uses activity-based costing (ABC) and has traced the budgeted overhead of $30,000 to three activities: material handling, assembly, and inspections. The costs associated with each activity and their respective cost drivers are as follows:
Activity
Flexible Budget
Cost Driver
Budgeted Volume
Material handling
$8,000
Number of moves
100
Assembly
16,000
Number of labor hours
4,000
Inspections
6,000
Number of inspections
1,000
The actual cost and total volume for each activity during the current year are as follows:
Activity
Cost
Volume
Material handling
$8,190
105 moves
Assembly
15,000
4,200 labor hours
Inspections
6,100
1,100 inspections
Refer to the Prestige Furnishings information above. What is the overhead application rate for the material handling activity? A. $78.00B. $.0125C. $80.00D. $4.375
90. Prestige Furnishings uses flexible budgeting. The company’s budget for variable and fixed overhead is $20,000 and $10,000, respectively. The company uses activity-based costing (ABC) and has traced the budgeted overhead of $30,000 to three activities: material handling, assembly, and inspections. The costs associated with each activity and their respective cost drivers are as follows:
Activity
Flexible Budget
Cost Driver
Budgeted Volume
Material handling
$8,000
Number of moves
100
Assembly
16,000
Number of labor hours
4,000
Inspections
6,000
Number of inspections
1,000
The actual cost and total volume for each activity during the current year are as follows:
Activity
Cost
Volume
Material handling
$8,190
105 moves
Assembly
15,000
4,200 labor hours
Inspections
6,100
1,100 inspections
Refer to the Prestige Furnishings information above. What is the overhead application rate for the assembly activity? A. $8.33B. $8.75C. $4.50D. $4.00
