School

Mansoura University **We aren't endorsed by this school

Course

ACCOUNTING MISC

Subject

Accounting

Date

Mar 3, 2023

Pages

5

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1.
When machine-hours are used as an overhead cost-allocation base and annual
leasing costs for equipment unexpectedly increase, the MOST likely result would
be to report
a.
an unfavorable variable overhead spending variance.
b.
a favorable variable overhead efficiency variance.
c.
an unfavorable fixed overhead flexible-budget variance.
d.
a favorable production-volume variance.
Answer: c
2.
The fixed overhead cost variance can be further subdivided into the
a.
price variance and the efficiency variance.
b.
spending variance and flexible-budget variance.
c.
production-volume variance and the efficiency variance.
d.
flexible-budget variance and the production-volume variance.
Answer: d
3.
The amount reported for fixed overhead on the static budget is also reported
a.
as actual fixed costs.
b.
as allocated fixed overhead.
c.
on the flexible budget.
d.
as both (b) and (c).
Answer: c
4.
For fixed manufacturing overhead, there is no
a.
spending variance.
b.
efficiency variance.
c.
flexible-budget variance.
d.
production-volume variance.
Answer
:
b

Jenny's Corporation manufactured 25,000 grooming kits for horses during March.
The fixed- overhead cost-allocation rate is $20.00 per machine-hour. The following
fixed overhead data pertain to March.
Actual
Static Budget
Production
25,000 units
24,000 units
Machine-hours
6,100 hours
6,000 hours
Fixed overhead costs for March
$123,000
$120,000
5.
What is the flexible-budget amount?
a.
$120,000
b.
$122,000
c.
$123,000
d.
$125,000
Answer
: a
$120,000, the same lump sum as the static budget
6.
What is the amount of fixed overhead allocated to production?
a.
$120,000
b.
$122,000
c.
$123,000
d.
$125,000
Answer
: d
[25,000 x (6,000/24,000)] x $
20
.00 = $125,000
7.
What is the fixed overhead spending variance?
a.
$1,000 unfavorable
b.
$2,000 favorable
c.
$3,000 unfavorable
d.
$5,000 favorable
Answer
: c
$123,000 actual costs - $120,000 budgeted cost = $3,000 unfavorable
8.
What is the fixed overhead production-volume variance?
a.
$1,000 unfavorable
b.
$2,000 favorable
c.
$3,000 unfavorable
d.
$5,000 favorable
Answer
: d
$120,000 - [25,000 x (6,000/24,000) x $20.00] = $5,000 favorable

Matthew's Corporation manufactured 10,000 golf bags during March. The fixed
overhead cost-allocation rate is $20.00 per machine-hour. The following fixed
overhead data pertain to March.
Actual
Static Budget
Production
10,000 units
12,000 units
Machine-hours
5,100 hours
6,000 hours
Fixed overhead cost for March
$122,000
$120,000
9.
What is the flexible-budget amount?
a.
$100,000
b.
$102,000
c.
$120,000
d.
$122,000
Answer
: c
$120,000, the same lump sum as the static budget
10.
What is the amount of fixed overhead allocated to production?
a.
$100,000
b.
$102,000
c.
$120,000
d.
$122,000
Answer
: a
[10,000 x (6,000/12,000)] x $20.00 = $100,000
11.
What is the fixed overhead production-volume variance?
a.
$2,000 unfavorable
b.
$18,000 favorable
c.
$20,000 unfavorable
d.
$22,000 unfavorable
Answer
: c
$120,000 - [10,000 x (6,000/12,000) x $20.00] = $20,000 unfavorable
12.
Fixed overhead is
a.
overallocated by $2,000.
b.
underallocated by $2,000.
c.
overallocated by $22,000.
d.
underallocated by $22,000.
Answer
: d
$122,000 - [10,000 x (6,000/12,000) x $20.00] = $22,000 underallocated

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