117. Megan, Inc. uses the following standard costs per unit for one of its products: Direct labor
(2 hrs. @ $5/hr.) = $10; overhead (2 hrs. @ $2.50/hr.) = $5. The flexible budget for overhead is
$120,000 plus $1 per direct labor hour (DLH). Actual data for the past month show total overhead
costs of $225,000, total fixed overhead of $123,000, 85,000 hours worked, and 40,000 units
produced.
The
overhead production volume variance
for Megan, Inc. for the past month was:
118. Megan, Inc. uses the following standard costs per unit for one of its products: Direct labor
(2 hrs. @ $5/hr.) = $10; overhead (2 hrs. @ $2.50/hr.) = $5. The flexible budget for overhead is
$120,000 plus $1 per direct labor hour (DLH). Actual data for the past month show total overhead
costs of $225,000, total fixed overhead of $123,000, 85,000 hours worked, and 40,000 units
produced.
The
variable overhead spending variance
for the past month for Megan, Inc. was:
119. Megan, Inc. uses the following standard costs per unit for one of its products: Direct labor
(2 hrs. @ $5/hr.) = $10; overhead (2 hrs. @ $2.50/hr.) = $5. The flexible budget for overhead is
$120,000 plus $1 per direct labor hour (DLH). Actual data for the past month show total overhead
costs of $225,000, total fixed overhead of $123,000, 85,000 hours worked, and 40,000 units
produced.
The
fixed overhead spending variance
for Megan, Inc. for the past month was:
120. Megan, Inc. uses the following standard costs per unit for one of its products: Direct labor
(2 hrs. @ $5/hr.) = $10; overhead (2 hrs. @ $2.50/hr.) = $5. The flexible budget for overhead is
$120,000 plus $1 per direct labor hour (DLH). Actual data for the past month show total overhead
costs of $225,000, total fixed overhead of $123,000, 85,000 hours worked, and 40,000 units
produced.
The
variable factory overhead efficiency variance
for Megan, Inc. for the past month was:
121. The following information is available from the Terry Company:
Actual total factory overhead cost incurred $25,000
Actual fixed overhead cost incurred $10,400
Budgeted fixed overhead expenses $11,000
Actual direct labor hours (DLH) worked 4,400
Standard DLHs for this period’s production 4,000
Standard variable overhead rate per DLH $3.00
Standard fixed overhead rate per DLH $2.50
What is the
total overhead spending variance
for Terry Company for the period?
122. The following information is available from the Terry Company:
Actual total factory overhead cost incurred $25,000
Actual fixed overhead cost incurred $10,400
Budgeted fixed overhead expenses $11,000
Actual direct labor hours (DLH) worked 4,400
Standard DLHs for this period’s production 4,000
Standard variable overhead rate per DLH $3.00
Standard fixed overhead rate per DLH $2.50
What was the
variable overhead efficiency variance
for the period?
123. The following information is available from the Terry Company:
Actual total factory overhead cost incurred $25,000
Actual fixed overhead cost incurred $10,400
Budgeted fixed overhead expenses $11,000
Actual direct labor hours (DLH) worked 4,400
Standard DLHs for this period’s production 4,000
Standard variable overhead rate per DLH $3.00
Standard fixed overhead rate per DLH $2.50
What is the
overhead production volume variance
for Terry Company for the period?
124. The following information is available from the Terry Company:
Actual total factory overhead cost incurred $25,000
Actual fixed overhead cost incurred $10,400
Budgeted fixed overhead expenses $11,000
Actual direct labor hours (DLH) worked 4,400
Standard DLHs for this period’s production 4,000
Standard variable overhead rate per DLH $3.00
Standard fixed overhead rate per DLH $2.50
What is the
variable overhead (VOH) spending variance
for Terry Company for the period?
125. The following information is available from the Terry Company:
Actual total factory overhead cost incurred $25,000
Actual fixed overhead cost incurred $10,400
Budgeted fixed overhead expenses $11,000
Actual direct labor hours (DLH) worked 4,400
Standard DLHs for this period’s production 4,000
Standard variable overhead rate per DLH $3.00
Standard fixed overhead rate per DLH $2.50
The
fixed overhead spending variance
for Terry Company for the period is:
126. The following information is available from the Terry Company:
Actual total factory overhead cost incurred $25,000
Actual fixed overhead cost incurred $10,400
Budgeted fixed overhead expenses $11,000
Actual direct labor hours (DLH) worked 4,400
Standard DLHs for this period’s production 4,000
Standard variable overhead rate per DLH $3.00
Standard fixed overhead rate per DLH $2.50
The
total under or overapplied overhead
for Terry Company for the period is:
127. The following information is available from the Terry Company:
Actual total factory overhead cost incurred $25,000
Actual fixed overhead cost incurred $10,400
Budgeted fixed overhead expenses $11,000
Actual direct labor hours (DLH) worked 4,400
Standard DLHs for this period’s production 4,000
Standard variable overhead rate per DLH $3.00
Standard fixed overhead rate per DLH $2.50
The
total overhead flexible-budget (FB) variance
for the period is:
128. For which one of the following reasons is the calculation of overhead variances in
conjunction with an activity-based cost (ABC) system desirable from the standpoint of
management?
129. Which of the following is a characteristic of calculating standard cost variances for
manufacturing overhead costs under an activity-based cost (ABC) system?
130. Which one of the following characteristics is associated with standard cost variance
analysis for manufacturing overhead under a traditional versus an activity-based cost (ABC)
system?
131. When there is a standard batch size for production activity:
132. Which one of the following standard cost variances is not available when analyzing
batch-related manufacturing overhead costs using an activity-based cost (ABC) system?
133. Which of the following is not a cost system proposed as an extension to ABC systems,
with the overall goal of more accurately allocating manufacturing overhead costs to outputs?
134. A comprehensive management accounting and control system regarding manufacturing
overhead costs:
135. Which of the following items would be useful to management in deciding whether to
investigate the cause of a reported standard cost variance?
136. In framing the decision whether to investigate the cause of a reported standard cost (or
revenue) variance, which of the following tools would management find most useful?
137. Based on experience, you observe the following probabilities regarding the underlying
cause of an observed cost or revenue variance: the probability,
p
, of a nonrandom variance
equals 0.10, and the probability, 1 –
p
of a nonrandom variance equals 0.90. If management
chooses to investigate, the total cost is $1,000 if it is concluded that the reported variance is a
random fluctuation, while the total cost is $6,000 if it is concluded that the variance is the result
of a nonrandom (i.e., a systematic) cause (i.e., the incremental cost to correct the variance is
$5,000). On the other hand, if an observed variance is not investigated, management expects the
following costs: if it is concluded that the variance is due to random causes, the cost would be
$0; if it is concluded that the observed variance is due to a nonrandom (i.e., a systematic) cause,
the cost would be $30,000.
Given this information, what is the expected cost of the decision to investigate the observed
variance?
138. Based on experience, you observe the following probabilities regarding the underlying
cause of an observed cost or revenue variance: the probability,
p
, of a nonrandom variance
equals 0.10, and the probability, 1 –
p
of a nonrandom variance equals 0.90. If management
chooses to investigate, the total cost is $1,000 if it is concluded that the reported variance is a
random fluctuation, while the total cost is $6,000 if it is concluded that the variance is the result
of a nonrandom (i.e., a systematic) cause (i.e., the incremental cost to correct the variance is
$5,000). On the other hand, if an observed variance is not investigated, management expects the
following costs: if it is concluded that the variance is due to random causes, the cost would be
$0; if it is concluded that the observed variance is due to a nonrandom (i.e., a systematic) cause,
the cost would be $30,000.
Given this information, what is the indifference probability,
p
(i.e., the probability of a nonrandom
variance that would make management indifferent between investigating and not investigating
the variance)? (Round your answer to one decimal place.)
139. Which of the following would not likely be useful for addressing the variance-
investigation decision under uncertainty?
140. The most appropriate end–of-period disposition of underapplied or overapplied factory
overhead
141. Which of the following statements regarding the “expected value of perfect information”
(EVPI) is not true?
142. In terms of the variance-investigation decision, an “indifference probability,”
p
, of 10%