Question :
11) One possible reason for unfavorable variable overhead efficiency variance : 1212161
11) One possible reason for unfavorable variable overhead efficiency variance for materials handling is ________.
A) inefficient layout of product distribution channels
B) loosely budgeted standard hours
C) very low wait time at work centers
D) experienced but unmotivated employees
12) The fixed setup overhead flexible-budget variance is calculated as actual costs – flexible-budget variance.
13) An unfavorable price variance for materials-handling labor indicates that the actual cost per materials-handling labor-hour is less than the budgeted cost per materials-handling labor-hour.
14) Possible reasons for the larger actual materials-handling labor-hours per batch include the possibility of unmotivated, inexperienced, and underskilled employees
15) Casey Corporation produces a special line of basketball hoops. Casey Corporation produces the hoops in batches. To manufacture a batch of the basketball hoops, Casey Corporation must set up the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of basketball hoops.
Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to January 2005.
Static-budgetActual
AmountsAmounts
Basketball hoops produced and sold30,00028,000
Batch size (number of units per batch)200250
Setup-hours per batch54
Variable overhead cost per setup hour$10$9
Total fixed setup overhead costs$22,500$21,000
Required:
a.Calculate the efficiency variance for variable overhead setup costs.
b.Calculate the spending variance for variable overhead setup costs.
c.Calculate the flexible-budget variance for variable overhead setup costs.
d.Calculate the spending variance for fixed overhead setup costs.
e.Calculate the production-volume variance for fixed overhead setup costs.
16) Teecorp Company uses a flexible budget for its indirect manufacturing costs. For 2015, the company anticipated that it would produce 27,000 units with 4,800 machine-hours and 8,000 employee days. The costs and cost drivers were to be as follows:
FixedVariableCost driver
Product handling$45,000$0.75per unit
Inspection12,00012.00per 100 unit batch
Utilities6006.00per 100 unit batch
Maintenance1,2500.25per machine-hour
Supplies5.00per employee day
During the year, the company processed 26,500 units, worked 8,200 employee days, and had 4,850 machine-hours. The actual costs for 2015 were:
Actual costs
Product handling$65,000
Inspection16,200
Utilities2,220
Maintenance2,850
Supplies39,900
Required:
a.Prepare the static budget using the overhead items above and then compute the static-budget variances.
b.Prepare the flexible budget using the overhead items above and then compute the flexible-budget variances.
