92. 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
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?
93. Figure 11-4.
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/hour
Variable overhead:
3,302,000
Fixed overhead:
998,000
Refer to Figure 11-4. The predetermined variable overhead rate is:
94. Figure 11-4.
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/hour
Variable overhead:
3,302,000
Fixed overhead:
998,000
Refer to Figure 11-4. Calculate the variable overhead spending variance.
95. Figure 11-4.
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/hour
Variable overhead:
3,302,000
Fixed overhead:
998,000
Refer to Figure 11-4. Calculate the variable overhead efficiency variance.
96. Figure 11-4.
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/hour
Variable overhead:
3,302,000
Fixed overhead:
998,000
Refer to Figure 11-4. The predetermined fixed overhead rate is
97. Figure 11-4.
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/hour
Variable overhead:
3,302,000
Fixed overhead:
998,000
Refer to Figure 11-4. Calculate the applied fixed overhead.
98. Figure 11-4.
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/hour
Variable overhead:
3,302,000
Fixed overhead:
998,000
Refer to Figure 11-4. Calculate the fixed overhead spending variance.
99. Figure 11-4.
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/hour
Variable overhead:
3,302,000
Fixed overhead:
998,000
Refer to Figure 11-4. Calculate the fixed overhead volume variance.
100. The standard fixed overhead rate is often calculated as
101. The total fixed overhead variance is calculated by the following formula:
102. The two variances for fixed overhead are
103. The formula for the fixed overhead volume variance is
104. The formula for the fixed overhead spending variance is
105. The fixed overhead volume variance is a measure of
106. The fixed overhead spending variance
107. Responsibility for the fixed overhead volume variance is
108. Because fixed overhead is made up of many items
109. Which of the following relationships is valid concerning fixed overhead budgeted at the beginning of the
year?
110. The total fixed overhead variance is
111. 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
112. 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
113. 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. 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 Crawford’s fixed overhead spending variance for 2011?
114. 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
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?
115. Crawford Company’s standard fixed overhead cost is $6 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?
116. 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
117. 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
118. Gina Production Company uses a standard costing system. The following information pertains to 2011:
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 units. 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?
119. An activity-budgetary system has the following benefit(s):
120. Which of the following is not one of the steps in building an activity-based budget?
121. The major differences between activity-based budgeting and traditional budgeting are found in
122. In budgeting at the activity level, the cost behavior of each activity is defined with respect to
123. In an activity framework controlling costs translates into
124. Activity flexible budgeting
125. Activity flexible budgeting provides a more accurate prediction of costs than a traditional flexible
budgeting approach because
126. A performance report using activity flexible budgeting compares
127. For activity flexible budgeting, a cost formula is developed for each
128. In an activity flexible budget, the variable cost component typically corresponds to
129. In an activity flexible budget, the fixed cost component typically corresponds to
130. Building an activity-based budget requires
131. If an organization has implemented an ABC or ABM system, they will already have accomplished which
of the following?
132. The major differences between functional and activity-based budgeting are found within which of the
following categories?
133. Activity-based budgeting
134. Figure 11-5.
Merric Company uses an activity-based costing system. Four activities have been identified. The setup activity
uses the number of setups as its cost driver. The following budget information is available for this activity:
Fixed costs per month
$240,000
Variable cost per setup
$ 5,400
The company expects to perform 25 setups in May.
Refer to Figure 11-5. If the company expects 25 setups in the month of May, what would be the total budgeted costs of the setup activity?
135. Figure 11-5.
Merric Company uses an activity-based costing system. Four activities have been identified. The setup activity
uses the number of setups as its cost driver. The following budget information is available for this activity:
Fixed costs per month
$240,000
Variable cost per setup
$ 5,400
The company expects to perform 25 setups in May.
Refer to Figure 11-5. Actual costs incurred were $246,000 fixed and $144,000 variable. If the actual number of setups in May was 30, what is the
activity-based flexible budget variance?
136. Figure 11-6.
Kyle Company uses forklifts to move materials from the storage area to the production floor. There are five
forklifts. They are fully used 20 hours per day (making 8 moves per hour). The company works 320 days per
year, running two seven-hour shifts per day. Fork-lift operators work 1,800 hours per year and are paid an
annual salary of $56,000.
Based on a recent study each forklift uses 0.45 gallons of fuel per move. The cost of fuel is $3.80 per gallon.
Refer to Figure 11-6. Prepare a salary budget for the activity, moving materials. Assume that the labor market
does not permit the hiring of part-time forklift operators.
137. Figure 11-6.
Kyle Company uses forklifts to move materials from the storage area to the production floor. There are five
forklifts. They are fully used 20 hours per day (making 8 moves per hour). The company works 320 days per
year, running two seven-hour shifts per day. Fork-lift operators work 1,800 hours per year and are paid an
annual salary of $56,000.
Based on a recent study each forklift uses 0.45 gallons of fuel per move. The cost of fuel is $3.80 per gallon.
Refer to Figure 11-6. Calculate the fuel budget for the year for moving materials.
138. Figure 11-6.
Kyle Company uses forklifts to move materials from the storage area to the production floor. There are five
forklifts. They are fully used 20 hours per day (making 8 moves per hour). The company works 320 days per
year, running two seven-hour shifts per day. Fork-lift operators work 1,800 hours per year and are paid an
annual salary of $56,000.
Based on a recent study each forklift uses 0.45 gallons of fuel per move. The cost of fuel is $3.80 per gallon.
Refer to Figure 11-6. Prepare a flexible budget formula for the moving materials activity.
139. Figure 11-6.
Kyle Company uses forklifts to move materials from the storage area to the production floor. There are five
forklifts. They are fully used 20 hours per day (making 8 moves per hour). The company works 320 days per
year, running two seven-hour shifts per day. Fork-lift operators work 1,800 hours per year and are paid an
annual salary of $56,000.
Based on a recent study each forklift uses 0.45 gallons of fuel per move. The cost of fuel is $3.80 per gallon.
Refer to Figure 11-6. Suppose that the actual moves made are 80% of the forklifts’ capacity. What is the after-
the-fact budgeted fuel cost?
140. Figure 11-7.
Larry Miller, controller for Kipling Company, has been instructed to develop a flexible budget for overhead
costs. The company produces two types of frozen desserts: Icey and Tasty. The two desserts use common raw
materials in different proportions. The company expects to produce 200,000 gallons of each product during the
coming year. Icey requires 0.25 direct labor hour per gallon and Tasty requires 0.30. Larry has developed the
following fixed and variable costs for each of the four overhead items:
Overhead Item
Fixed Cost
Variable Rate per DLH
Maintenance
$52,000
$1.20
Power
1.50
Indirect labor
79,500
4.80
Rent
54,000
Refer to Figure 11-7.
Required:
A.
Prepare an overhead budget for the expected activity level for the coming year.
B.
Prepare an overhead budget that reflects production that is 10 percent higher than expected (for both products).
C.
Prepare an overhead budget that reflects production that is 10 percent lower than expected (for both products).
