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136. Responsibility for the variable overhead spending variance is usually assigned to
a. the purchasing department.
b. the production department.
c. the engineering department.
d. the personnel department.
e. None of these.
137. A performance report for variable overhead reveals
a. the aggregate variable overhead spending and efficiency variances.
b. the volume and spending variances.
c. the spending and efficiency variances for each variable overhead item.
d. both the aggregate variable overhead spending and efficiency variances and the spending and efficiency variances
for each variable overhead item.
e. both the volume and spending variances and the spending and efficiency variances for each variable overhead
item.
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138. Hexene, Inc. produces a specialized machine part used in forklifts. For last year’s operations, the following data were
gathered:
Units produced 40,000
Direct labor 32,000 hours @ $10.00
Actual variable overhead $140,000
Hexene employs a standard costing system. During the year, a variable overhead rate of $6.00 was used. The labor
standard requires 0.75 hours per unit produced. The variable overhead spending and efficiency variances are:
a. $45,000 U and $6,500 U.
b. $52,000 F and $12,000 U.
c. $9,600 U and $45,000 F.
d. $16,000 F and $8,400 F.
e. None of these
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139. Ketone Inc. produces small engines. For last year’s operations, the following data were gathered:
Units produced 110,000
Direct labor 120,000 hours @ $10.00
Actual variable overhead
$1,000,000
Ketone Inc. employs a standard costing system. During the year, a variable overhead rate of $5.00 was used. The labor
standard requires 1 hour per unit produced. The variable overhead spending and efficiency variances are:
a. $176,000 U and $19,000 U.
b. $150,000 U and $24,000 F.
c. $400,000 U and $50,000 U.
d. $200,000 U and $40,000 F.
e. None of these
140. During the year, Octagon produced 8,000 units, used 24,000 direct labor hours, and incurred variable overhead of
$120,000. Budgeted variable overhead for the year was $90,000. The hours allowed per unit are 2. The standard variable
overhead rate is $3.00 per direct labor hour. The variable overhead spending variance is:
a. $54,000 F.
b. $61,000 U.
c. $48,000 U.
d. $27,000 U.
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e. None of these
141. Budgeted variable overhead for the year is $150,000. Expected activity is 30,000 standard direct labor hours. The
actual hours worked were 15,000 and the standard hours allowed for actual production were 18,000. The variable
overhead efficiency variance is:
a. $14,600 F.
b. $18,000 F.
c. $30,000 F.
d. $15,000 F.
e. None of these
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142. Opal Production Company uses a standard costing system. The following information pertains to the current year:
Actual factory overhead costs ($15,000 is fixed) $50,000
Actual direct labor costs (10,000 hours) $130,000
Standard direct labor for 6,000 units:
Standard hours allowed 9,500 hours
Labor rate $10.00
The factory overhead rate is based on an activity level of 12,000 hours. Standard cost data for 6,000 units is as follows:
Variable factory overhead $18,000
Fixed factory overhead 12,000
Total factory overhead $30,000
What is the variable overhead efficiency variance for Opal Production Company?
a. $540 F
b. $980 U
c. $750 U
d. $820 F
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143. Rhodium Company is planning to produce 5,000,000 speakers for the coming year. Actual production was 3,000,000
speakers. Each speaker requires 0.50 direct labor hours per unit. Predetermined overhead rates are calculated using
expected production, measured in direct labor hours. The budgeted variable overhead for the coming year is $500,000.
The actual variable overhead incurred was $650,000. The applied variable overhead for the year is:
a. $450,000.
b. $725,000.
c. $300,000.
d. $740,000.
e. None of these
144. Fixed overhead was budgeted at $200,000, and 25,000 direct labor hours were budgeted. If the fixed overhead
volume variance was $8,000 favorable and the fixed overhead spending variance was $6,000 unfavorable, fixed overhead
applied must be
a. $208,000.
b. $206,000.
c. $202,000.
d. $194,000.
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145. If actual fixed overhead was $54,000 and there was a $1,300 unfavorable spending variance and a $1,000
unfavorable volume variance, budgeted fixed overhead must have been
a. $56,300.
b. $50,300.
c. $53,000.
d. $52,700.
146. Fluorspar Company’s standard variable overhead rate is $4.00 per direct labor hour, and each unit requires 3 standard
direct labor hours. During March, Fluorspar recorded 3,000 actual direct labor hours, $40,000 actual variable overhead
costs, and 2,500 units of product manufactured.
What is the total variable overhead variance for March for Fluorspar?
a. $14,000 U
b. $6,000 U
c. $8,000 U
d. $10,000 U
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147. An unfavorable variable overhead spending variance may be caused by
a. the use of excessive quantities of variable overhead items.
b. the payment of lower prices for variable overhead items used.
c. the use of excessive quantities of the variable overhead allocation base.
d. both the use of excessive quantities of variable overhead items and the payment of lower prices for variable
overhead items used.
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148. Crawford Company’s standard fixed overhead cost is $6.00 per direct labor hour based on budgeted fixed costs of
$600,000. The standard allows 1 direct labor hours per unit. During 2011, Crawford produced 110,000 units of product,
incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor.
What is the activity level on which Crawford based its fixed overhead rate?
a. 110,000 direct labor hours
b. 105,000 direct labor hours
c. 100,000 direct labor hours
d. 50,000 direct labor hours
149. Griffen Corporation uses a standard costing system. Information for the month of May is as follows:
Actual manufacturing overhead costs ($26,000 is fixed) $80,000
Direct labor:
Actual hours worked 12,000 hrs.
Standard hours allowed for actual production 10,000 hrs.
Average actual labor cost per hour $18.00
The overhead rate is based on a normal volume of 12,000 direct labor hours. Standard cost data at 12,000 direct labor
hours were as follows:
Variable overhead $48,000
Fixed overhead 24,000
Total overhead $72,000
What is the fixed overhead spending variance for Griffen?
a. $2,000 U
b. $8,000 U
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c. $4,000 U
d. $20,000 U
150. Gina Production Company uses a standard costing system. The following information pertains to the current year:
Actual overhead costs ($16,500 is fixed) $40,125
Actual direct labor costs (11,250 hours) $131,625
Standard direct labor for 5,500 units:
Standard hours allowed 11,000 hours
Labor rate $12.00
The overhead rate is based on an activity level of 10,000 hours. Standard cost data for 5,000 units is as follows:
Variable overhead $22,500
Fixed overhead 13,500
Total overhead $36,000
What is the fixed overhead volume variance for Gina Production Company?
a. $1,350 F
b. $3,600 F
c. $4,125 U
d. $1,350 U
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151. If variable manufacturing overhead is applied based on direct labor hours and there is an unfavorable direct labor
efficiency variance
a. the direct materials usage variance will be unfavorable.
b. the direct labor rate variance will be favorable.
c. the variable manufacturing overhead efficiency variance will be unfavorable.
d. the variable manufacturing overhead spending variance will be unfavorable.
152. Crawford Company’s standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of
$600,000. The standard allows one direct labor hour per unit. Last year, Crawford produced 110,000 units of product,
incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor.
What is Crawford’s fixed overhead spending variance for last year?
a. $60,000 F
b. $24,000 F
c. $36,000 U
d. $30,000 U
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153. Griffen Corporation uses a standard costing system. Information for the month of May is as follows:
Actual manufacturing overhead costs ($26,000 is fixed) $80,000
Direct labor:
Actual hours worked 12,000 hrs.
Standard hours allowed for actual production 10,000 hrs.
Average actual labor cost per hour $18.00
The factory overhead rate is based on a normal volume of 12,000 direct labor hours. Standard cost data at 12,000 direct
labor hours were as follows:
Variable factory overhead $48,000
Fixed factory overhead 24,000
Total factory overhead $72,000
What is the variable overhead efficiency variance for Griffen?
a. $2,000 U
b. $8,000 U
c. $4,000 U
d. $20,000 U
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154. Fixed overhead was budgeted at $84,000 and 10,000 direct labor hours were budgeted. If the fixed overhead volume
variance was $3,200 unfavorable and the fixed overhead spending variance was $1,200 favorable, fixed overhead applied
must be
a. $85,200.
b. $80,800.
c. $82,800.
d. $82,000.
e. $87,200.
155. Kris Company calculates its predetermined rates using practical volume, which is 325,000 units. The standard cost
system allows 3 direct labor hours per unit produced. Overhead is applied using direct labor hours. The total budgeted
overhead is $4,260,000, of which $994,000 is fixed overhead. The actual results for the year are as follows:
Units produced: 318,000
Direct labor: 965,000 hours @ $12.00/hour
Variable overhead: $3,302,000
Fixed overhead: $998,000
The predetermined variable overhead rate is
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a. $3.00 per direct labor hour.
b. $2.50 per direct labor hour.
c. $5.50 per direct labor hour.
d. $3.35 per direct labor hour.
e. None of these are correct.
156. If actual fixed overhead was $98,400 and there was a $2,880 favorable spending variance and a $600 unfavorable
volume variance, budgeted fixed overhead must have been
a. $101,280.
b. $100,680.
c. $99,000.
d. $97,800.
e. $95,520.
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157. Kris Company calculates its predetermined rates using practical volume, which is 325,000 units. The standard cost
system allows 3 direct labor hours per unit produced. Overhead is applied using direct labor hours. The total budgeted
overhead is $4,260,000, of which $994,000 is fixed overhead. The actual results for the year are as follows:
Units produced: 318,000
Direct labor: 965,000 hours @ $12.00/hour
Variable overhead: $3,302,000
Fixed overhead: $998,000
Calculate the variable overhead spending variance.
a. $69,250 U
b. $69,250 F
c. $24,000 U
d. $40,000 F
e. None of these.
158. Kris Company calculates its predetermined rates using practical volume, which is 325,000 units. The standard cost
system allows 3 direct labor hours per unit produced. Overhead is applied using direct labor hours. The total budgeted
overhead is $4,260,000, of which $994,000 is fixed overhead. The actual results for the year are as follows:
Units produced: 318,000
Direct labor: 965,000 hours @ $12.00/hour
Variable overhead: $3,302,000
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Fixed overhead: $998,000
Calculate the variable overhead efficiency variance.
a. $36,850 U
b. $80,000 U
c. $36,850 F
d. $4,000 U
e. None of these.
159. Kris Company calculates its predetermined rates using practical volume, which is 325,000 units. The standard cost
system allows 3 direct labor hours per unit produced. Overhead is applied using direct labor hours. The total budgeted
overhead is $4,260,000, of which $994,000 is fixed overhead. The actual results for the year are as follows:
Units produced: 318,000
Direct labor: 965,000 hours @ $12.00/hour
Variable overhead: $3,302,000
Fixed overhead: $998,000
The predetermined fixed overhead rate is
a. $3.35 per direct labor hour.
b. $1.02 per direct labor hour.
c. $5.50 per direct labor hour.
d. $4.00 per direct labor hour.
e. None of these.
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160. Kris Company calculates its predetermined rates using practical volume, which is 325,000 units. The standard cost
system allows 3 direct labor hours per unit produced. Overhead is applied using direct labor hours. The total budgeted
overhead is $4,260,000, of which $994,000 is fixed overhead. The actual results for the year are as follows:
Units produced: 318,000
Direct labor: 965,000 hours @ $12.00/hour
Variable overhead: $3,302,000
Fixed overhead: $998,000
Calculate the applied fixed overhead.
a. $973,080
b. $855,030
c. $964,000
d. $910,000
e. None of these.
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161. Kris Company calculates its predetermined rates using practical volume, which is 325,000 units. The standard cost
system allows 3 direct labor hours per unit produced. Overhead is applied using direct labor hours. The total budgeted
overhead is $4,260,000, of which $994,000 is fixed overhead. The actual results for the year are as follows:
Units produced: 318,000
Direct labor: 965,000 hours @ $12.00/hour
Variable overhead: $3,302,000
Fixed overhead: $998,000
Calculate the fixed overhead spending variance.
a. $32,000 F
b. $0
c. $4,000 U
d. $12,000 U
e. $4,000 F
162. Which of the following formulas calculates the total fixed overhead (FOH) variance?
Standard Fixed Overhead – Variable Fixed Overhead
a.
b. Actual Fixed Overhead – (Standard Variable Overhead Rate × Standard Hours Allowed)
c. Actual Fixed Overhead – Applied Fixed Overhead
d. Actual Fixed Overhead – (Standard Fixed Overhead × Actual Direct Labor Hours Used)
e. (Total actual overhead – Standard Fixed Overhead) × Standard Hours Allowed
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163. Which of the following relationships is valid concerning fixed overhead budgeted at the beginning of the year?
a. BFOH = SFOR × AH
b. BFOH = SFOR × SH for actual production
c. BFOH = SFOR × SH for planned production
d. BFOH = SFOR / SH for actual production
e. None of these.
164. The standard fixed overhead rate is often calculated as
a. budgeted fixed overhead divided by practical capacity measured in standard hours.
b. actual fixed overhead divided by practical capacity measured in standard hours.
c. budgeted fixed overhead divided by actual hours.
d. budgeted fixed overhead divided by practical capacity measured in actual hours.
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e. None of these.
165. Because fixed overhead is made up of many items
a. the fixed overhead spending variance is not meaningful.
b. it is not possible to calculate a fixed overhead volume variance.
c. the fixed overhead volume variance will always be unfavorable.
d. a line by line comparison of budgeted costs with actual costs provides more information.
e. All of these.