Chapter 10
166. 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 volume variance.
a. $32,000 U
b. $20,000 F
c. $22,000 F
d. $4,000 U
e. None of these.
167. The total fixed overhead variance is calculated by the following formula:
a. Total actual overhead − Total applied overhead
b. Actual Fixed Overhead – (Standard Overhead Rate × Standard Hours Allowed)
c. Actual Fixed Overhead − (Standard Fixed Overhead Rate × Standard Hours Allowed)
d. Actual Fixed Overhead − (Standard Fixed Overhead Rate × Actual Direct Labor Hours)
e. (Total actual overhead − Standard Fixed Overhead Rate) × Standard Hours Allowed
Chapter 10
168. Responsibility for the fixed overhead volume variance is
a. not assigned because fixed overhead costs do not change with activity changes.
b. usually assigned to the production department.
c. usually assigned to top management.
d. usually assigned to the planning department.
e. None of these.
169. The fixed overhead spending variance
a. is usually not significant.
b. is made up of many individual items.
c. is the difference between actual costs and budgeted costs.
d. merits investigation only if the variance is material.
e. All of these.
Chapter 10
170. The two variances for fixed overhead are
a. budget and volume.
b. spending and budget.
c. volume and spending.
d. efficiency and volume.
e. volume and efficiency.
171. The fixed overhead volume variance is a measure of
a. the cost of overspending on fixed overhead items.
b. the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate.
c. the cost of unused activity capacity acquired.
d. both the cost of overspending on fixed overhead items and the effect of the actual output differing from the output
used to calculate predetermined fixed overhead rate.
Chapter 10
e. both the effect of the actual output differing from the output used to calculate the predetermined fixed overhead
rate and the cost of unused activity capacity.
172. Which of the following is used to calculate the fixed overhead spending variance?
a. (Budgeted Fixed Overhead – Standard Fixed Overhead Rate) × Actual Hours
b. (Actual Fixed Overhead – Standard Fixed Overhead) × Actual Hours
c. Budgeted Fixed Overhead – Variable Overhead
d. Actual Fixed Overhead – Budgeted Fixed Overhead
e. None of these
Chapter 10
173. Which of the following is used to calculate the fixed overhead volume variance?
a. Mixed Overhead – Variable Overhead
b. Fixed Overhead – Variable Overhead
c. Budgeted Fixed Overhead – Applied Fixed Overhead
d. Actual Fixed Overhead – Applied Fixed Overhead
e. None of these
174. _______________ often means the difference between success and failure or between above-average profits and
lesser profits.
Chapter 10
175. The amount of input that should be used per unit of output is known as the _______________.
176. The amount that should be paid for the quantity of the input to be used is known as the ______________.
177. ___________________ can provide an initial guideline for setting standards, but should be used with caution
because they can perpetuate existing inefficiencies.
Chapter 10
178. Standards are set by using historical experiences, ___________________, and input from operating personnel,
marketing, and accounting.
179. ________________ demands maximum efficiency and can be achieved only if everything operates perfectly.
Chapter 10
180. In a ____________________, costs are assigned to products using quantity and price standards for all three
manufacturing costs: direct materials, direct labor, and overhead.
181. The __________________ provides the products data needed to calculate the standard unit cost.
182. The ______________________ can be used to compute the total amount of inputs allowed for the actual output.
Chapter 10
183. ___________________ is calculated by multiplying the unit labor standard by the actual output.
184. The ____________________ is the difference between the actual cost of the input and its planned cost.
Chapter 10
185. ____________________ is the difference between the actual and standard unit price of an input multiplied by the
number of inputs used.
186. _________________ occur whenever actual prices or actual usage of inputs are greater than standard prices or
standard usage.
Chapter 10
187. The ____________________ measures the difference between the actual costs of materials and their budgeted costs
for actual level of activity.
188. The ____________________ measures the difference between what should have been paid for raw materials and
what was actually paid.
Chapter 10
189. The _____________________ measures the difference between the direct materials actually used and the direct
materials that should have been used for the actual output.
190. The _______________ computes the difference between the rate paid to direct laborers and the rate that should have
been paid.
191. The ___________________ measures the difference between the labor hours that were actually used and the labor
hours that should have been used.
Chapter 10
192. ______________ focuses on the continuous reduction of the manufacturing costs of existing products and processes.
193. A ______________ is the difference between the sales price needed to capture a predetermined market share and the
desired per-unit profit.
Chapter 10
194. The _____________________ is the difference between actual fixed overhead and applied fixed overhead.
195. _________________ are capacity costs acquired in advance of usage.
Chapter 10
196. The ____________________ is the difference between budgeted fixed overhead and applied fixed overhead.
197. The ______________________ is the difference between the actual fixed overhead and the budgeted fixed overhead.
Chapter 10
198. The ________________________ measures the change in the actual variable overhead cost that occurs because of
efficient (or inefficient) use of direct labor
199. _______________________ is the difference between the actual variable overhead and applied variable overhead.
200. ______________________ is a prerequisite for assigning responsibility.
Chapter 10
201. The variable overhead efficiency variance is directly related to the __________________ or usage variance.
202. The _____________________ measures the aggregate effect of differences between the actual variable overhead rate
and the standard variable overhead rate.
Chapter 10
203. Standards of perfection that require absolute efficiency.
204. Standards that are rigorous but achievable and reflect reasonable efficiency.
Chapter 10
205. These reflect the amount that should be paid for the quantity of input to be used.
206. These reflect the amount of input that should be used per unit of output.
207. A tool used to provide the production data needed to calculate the standard unit cost.
208. This is the standard plus the allowable deviation when determining whether variances are significant.
209. This reflects the planned improvement that is set, which will help reduce nonvalue-added costs.
Chapter 10
210. Actual Costs
211. Budgeted Costs
212. Total Materials Variance
213. Materials Price Variance
214. Materials Usage Variance