chp 8

Standard Costing is a costing system that:

- Traces direct costs to output produced by multiplying the standard prices or rate by the standard quantities of inputs allowed for actual outputs produced. - Allocates overhead costs based on the standard overhead cost rates times the standard quantities of the allocation bases allowed for the actual outputs produced.

When variable overhead efficiency variance is​ favorable, it can be safely assumed that the​ ________. A. actual quantity of the​ cost-allocation base used is lower than the budgeted quantity B. actual quantity of the​ cost-allocation base used is higher than the budgeted quantity C. actual rate per unit of the​ cost-allocation base is higher than the budgeted rate D. actual rate per unit of the​ cost-allocation base is lower than the budgeted rate

A. actual quantity of the​ cost-allocation base used is lower than the budgeted quantity

In flexible budgets the costs that are not​ "flexed" because they remain the same within a relevant range of activity​ (such as sales or​ output) are called​ ________. A. fixed costs B. total budgeted costs C. total overhead costs D. variable costs

A. fixed costs

A​ $5,000 unfavorable​ flexible-budget variance indicates that​ ________. A. the actual variable manufacturing overhead exceeded the​ flexible-budget amount by​ $5,000 B. the​ flexible-budget amount exceeded actual variable manufacturing overhead by​ $5,000 C. the​ flexible-budget amount exceeded standard variable manufacturing overhead by​ $5,000 D. the standard variable manufacturing overhead exceeded the​ flexible-budget amount by​ $5,000

A. the actual variable manufacturing overhead exceeded the​ flexible-budget amount by​ $5,000

An unfavorable fixed overhead spending variance indicates that​ ________. A. the price of fixed overhead items cost more than budgeted B. the fixed overhead​ cost-allocation base was not used efficiently C. there was more excess capacity than planned D. the denominator level was more than planned

A. the price of fixed overhead items cost more than budgeted

While calculating the costs of products and​ services, a standard costing system​ ________. A. uses standard costs to determine the cost of products B. does not keep track of overhead cost C. allocates overhead costs on the basis of the actual​ overhead-cost rates D. traces direct costs to output by multiplying the standard prices or rates by the actual quantities

A. uses standard costs to determine the cost of products

Fixed Overhead Flexible Budget Variance and Fixed Overhead Spending Variance =

Actual costs incurred - Flexible budget amount

VARIABLE OVERHEAD FLEXIBLE BUDGET VARIANCE =

Actual costs incurred - Flexible budget amount

Which of the following is the mathematical expression for the budgeted fixed overhead cost per unit of cost allocation​ base? A. Budgeted fixed overhead cost per unit of cost allocation base​ = Budgeted total costs in fixed overhead cost pool ÷ Actual total quantity of cost allocation base B. Budgeted fixed overhead cost per unit of cost allocation base​ = Budgeted total costs in fixed overhead cost pool ÷ Budgeted total quantity of cost allocation base C. Budgeted fixed overhead cost per unit of cost allocation base​ = Actual total costs in fixed overhead cost pool ÷ Budgeted total quantity of cost allocation base D. Budgeted fixed overhead cost per unit of cost allocation base​ = Actual total costs in fixed overhead cost pool ÷ Actual total quantity of cost allocation base

B. Budgeted fixed overhead cost per unit of cost allocation base​ = Budgeted total costs in fixed overhead cost pool ÷ Budgeted total quantity of cost allocation base

Each of the following statements is correct regarding overhead variances except A. Favorable spending and efficiency variances imply that the flexible budget variance must be favorable. B. The efficiency overhead variance ignores the standard variable overhead rate. C. Variable overhead rates are not a factor in the​ production-volume variance calculation. D. Actual overhead greater than applied overhead is unfavorable.

B. The efficiency overhead variance ignores the standard variable overhead rate.

Compared to variable overhead costs​ planning, fixed overhead cost planning has an additional strategic issue beyond undertaking only essential activities and efficient operations. That additional requirement is best described​ as: A. identifying essential​ value-adding activities B. choosing the appropriate level of capacity that will benefit the company in the​ long-run C. increasing the linearity between total costs and volume of production D. focusing on the highest possible quality

B. choosing the appropriate level of capacity that will benefit the company in the​ long-run

The variable overhead spending variance measures the difference between​ ________, multiplied by the actual quantity of variable overhead​ cost-allocation base used. A. the standard variable overhead cost rate and the budgeted variable overhead cost rate B. the actual variable overhead cost per unit and the budgeted variable overhead cost per unit C. the actual quantity per unit and the budgeted quantity per unit D. the actual variable overhead cost per unit and the budgeted fixed overhead cost per unit

B. the actual variable overhead cost per unit and the budgeted variable overhead cost per unit

Production Volume Variance =

Budgeted fixed overhead - fixed overhead allocated for actual output units produced

Which of the following best defines standard​ costing? A. It is a system that traces direct cost to output by multiplying actual process or rates by actual quantities of inputs​ + allocates overhead by on the basis of actual quantities of the allocation base used. B. It is the same as actual costing but done in real time. C. It is a system that traces direct costs to output produced by multiplying the standard prices or rates by the standard quantities of inputs allowed for the actual output produced. D. It is a system that allocates overhead costs on the basis of standard overhead cost rates times the actual quantities of the allocation based used.

C. It is a system that traces direct costs to output produced by multiplying the standard prices or rates by the standard quantities of inputs allowed for the actual output produced.

The variable overhead efficiency variance measures the difference between the​ ________, multiplied by the budgeted variable overhead cost per unit of the​ cost-allocation base. A. budgeted cost and the actual cost used to produce the actual output B. budgeted quantity of the​ cost-allocation base used and the budgeted quantity of the​ cost-allocation base that should have been used to produce the actual output C. actual quantity of the​ cost-allocation base used and the budgeted quantity of the​ cost-allocation base that should have been used to produce the actual output D. actual cost incurred and the budgeted quantity of the​ cost-allocation base that should have been used to produce the actual output

C. actual quantity of the​ cost-allocation base used and the budgeted quantity of the​ cost-allocation base that should have been used to produce the actual output

Which of the following is the correct mathematical expression to calculate the fixed overhead spending​ variance? A. ​Static-budget amount — ​Flexible-budget amount B. ​Flexible-budget amount — Fixed overhead allocated for actual output C. ​Static-budget amount — Fixed overhead allocated for actual output D. Actual costs incurred — ​Flexible-budget amount

D. Actual costs incurred — ​Flexible-budget amount

When​ machine-hours are used as an overhead​ cost-allocation base, the most likely cause of a favorable variable overhead spending variance is​ ________. A. excessive machine breakdowns B. strengthened demand for the product C. the production scheduler efficiently scheduled jobs D. a decline in the cost of energy

D. a decline in the cost of energy

Which of the following is the correct mathematical expression to calculate the fixed overhead​ production-volume variance? A. ​static-budget amount − ​flexible-budget amount B. ​flexible-budget amount − actual costs incurred C. actual costs incurred − fixed overhead allocated for actual output D. budgeted fixed overhead − fixed overhead allocated for actual output

D. budgeted fixed overhead − fixed overhead allocated for actual output

For fixed manufacturing​ overhead, there is no​ ________. A. spending variance B. ​production-volume variance C. ​flexible-budget variance D. efficiency variance

D. efficiency variance

VARIABLE OVERHEAD EFFICIENCY VARIANCE =

{Actual quantity of variable overhead cost-allocation base used for actual output - Budgeted quantity of variable overhead cost-allocation base allowed for actual output} X Budgeted variable overhead cost per unit of cost-allocation base

VARIABLE OVERHEAD SPENDING VARIANCE =

{Actual variable overhead cost per unit of cost-allocation base - Budgeted variable overhead cost per unit of cost-allocation base} X Actual quantity of variable overhead cost-allocation base used