CHAPTER 8 QUIZ
1. Which of the following pertains primarily to the planning of fixed overhead costs?
a. A standard rate per output unit is developed.
b. Only essential activities are to be undertaken.
c. Activities are to be undertaken in the most efficient method.
d. Key decisions are made at the start of the budget period determining the level of costs.
2. In selecting a cost-allocation base for variable overhead, what criteria for the base is
preferred?
a. Ease of acquiring reliable information for accurate allocations
b. A cause-and-effect relationship between the cost and the activity level
c. A single base that will simplify the allocation process
d. One that has been used in the past
The following data apply to questions 3 through 9.
Sebastian Company, which manufactures electrical switches, uses a standard cost system
and carries all inventories at standard. The standard manufacturing overhead costs per
switch are based on direct labor hours and are shown below:
Variable overhead (5 hours @ $12 per direct manufacturing labor hour) $ 60
Fixed overhead (5 hours @ $15* per direct manufacturing labor hour) 75
Total overhead per switch $135
*Based on capacity of 200,000 direct manufacturing labor hours per month.
The following information is available for the month of December:
46,000 switches were produced although 40,000 switches were scheduled to be produced.
225,000 direct manufacturing labor hours were worked at a total cost of $5,625,000.
Variable manufacturing overhead costs were $2,750,000.
Fixed manufacturing overhead costs were $3,050,000.
3. [CMA Adapted] The variable overhead spending variance for December was
a. $50,000 U.
b. $350,000 U.
c. $10,000 F.
d. $60,000 F.
4. [CMA Adapted] The variable manufacturing overhead efficiency variance for December
was
a. $50,000 U.
b. $350,000 U.
c. $10,000 F.
d. $60,000 F.
5. The total variable manufacturing overhead variance was
a. $10.000 F.
b. $10,000 U.
c. $110,000 U.
d. $110,000 F.
6. [CMA Adapted] The fixed manufacturing overhead spending variance for December
was
a. $450,000 F.
b. $400,000 F.
c. $50,000 U.
d. $775,000 F.
7. The fixed overhead production-volume variance for December was
a. $450,000 F.
b. $400,000 F.
c. $50,000 U.
d. $775,000 F.
8. What amount should be credited to the Allocated Manufacturing Overhead Control
account for the month of December?
a. $6,210,000
b. $5,800,000
c. $5,760,000
d. $5,700,000
9. Under the 2-variance method, the flexible-budget variance for December was
a. $10,000 F.
b. $40,000 U.
c. $50,000 U.
d. $100,000 U.
10. Under the 3-variance method, the spending variance for December was
a. $10,000 F.
b. $40,000 U.
c. $50,000 U.
d. $100,000 U.
11. Which of the following statements is true about overhead cost variance analysis using
activity-based costing?
a. Overhead cost variances are calculated only for output-unit level costs.
b. Overhead cost variances are calculated only for variable manufacturing overhead costs.
c. A 4-variance analysis can be conducted.
d. Activity-based costing uses input measures for all activities, resulting in the inability to
do flexible budgets needed for variance analysis.
12. Which of the following is an example of a nonmanufacturing cost that may be
analyzed using variances?
a. Factory rent
b. Product distribution costs
c. Indirect labor
d. Factory supplies
CHAPTER 8 QUIZ SOLUTIONS
