Managerial Accounting

Really Great Corporation manufactures industrial−sized landscaping trailers and uses budgeted machine−hours to allocate variable manufacturing overhead. The following information pertains to the​ company's manufacturing overhead​ data: Budgeted output units 26,250 units Budgeted machine−hours 10,500 hours Budgeted variable manufacturing overhead costs for 26,250 units ---- $378,000 Actual output units produced 17,750 units Actual machine−hours used 14,200 hours Actual variable manufacturing overhead costs $355,000 What is the budgeted variable overhead cost rate per output​ unit? A. $20.00 B. $14.40 (Your answer is correct.) C. $28.80 D. $36.00

$378,000/26250 = $14.40

Absolute Manipulation​Manufacturing's (AMM) standards anticipate that there will be 6 pounds of raw material used for every unit of finished goods produced. AMM began the month of May with 6,500 pounds of raw​material, purchased 36,200 pounds for $68,780 and ended the month with 5,300 pounds on hand. The company produced 5,900 units of finished goods. The company estimates standard costs at $2.00 per pound. The materials price and efficiency variances for the month of May were:

1. Price Variance-Efficiency Variance $3,620 F --- $4,000 U (Your answer is correct.) 2. Price Variance Efficiency Variance $3,740 F $4,000 U 3. Price Variance Efficiency Variance $3,620 U $4,000 F 4. Price Variance Efficiency Variance $3,620 F $0

Lariat Co. budgets production of 130,000 units in the next year. Lariat​'s CFO expects that each unit will take 14 hours to produce at an hourly wage rate of $13 per hour. If factory overhead is applied to direct labor hours at $9 per​hour, the budget for factory overhead will​total: A. $15,210,000 B. $16,380,000 (Your answer is correct.) C. $23,660,000 D. $40,040,000

130,000 x 14 hours x 9 per hour = $16,380,000

Lancelot Corporation manufactures tennis gear and uses budgeted machine−hours to allocate variable manufacturing overhead. The following information relates to the​ company's manufacturing overhead​ data: Budgeted output units--11,250 units Budgeted machine−hours--22,500 hours Budgeted variable manufacturing overhead costs for 11,250 units--$54,000 Actual output units produced--11,500 units Actual machine−hours used--22,250 hours Actual variable manufacturing overhead costs --$230,000 What is the amount of the budgeted variable manufacturing overhead cost per​ unit? A. $4.80 per unit (Your answer is correct.) B. $2.40 per unit C. $20.00 per unit D. $4.70 per unit

54000/11250 = $4.80 (A)

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

A - the actual variable overhead cost per unit and the budgeted variable overhead cost per unit (Your answer is correct.)

Which of the following items will be same for a flexible budget and a master​ budget? A. total expected fixed costs Your answer is correct. B. total variable cost C. total contribution margin D. total expected revenues

A. total expected fixed costs (Your answer is correct.)

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. focusing on the highest possible quality B. choosing the appropriate level of capacity that will benefit the company in the​ long-run (Your answer is correct.) C. identifying essential​ value-adding activities D. increasing the linearity between total costs and volume of production

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

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. (Your answer is correct.) 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. (Your answer is correct.)

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. total budgeted costs B. fixed costs (Your answer is correct.) C. variable costs D. total overhead costs

B - fixed costs (Your answer is correct.)

A favorable variance indicates that​ ________. A. budgeted contribution margin is more than the actual amount B. actual revenues exceed budgeted revenues Your answer is correct. C. actual operating income is less than the budgeted amount D. budgeted costs are less than actual costs

B. actual revenues exceed budgeted revenues (Your answer is correct.)

The flexible budget contains​ ________. A. actual costs for planned output B. budgeted amounts for actual output Your answer is correct. C. static budget amounts for planned output D. actual costs for actual output

B. budgeted amounts for actual output (Your answer is correct.)

Lazy Guy Corporation manufactured 3,000 chairs during June. The following variable overhead data relates to​ June: Budgeted variable overhead cost per unit $20.00 Actual variable manufacturing overhead cost $52,300 Flexible−budget amount for variable manufacturing overhead---$47,100 Variable manufacturing overhead efficiency variance---$710 unfavorable What is the variable overhead flexible−budget ​variance? A. $5,200 favorable B. $5,200 unfavorable (Your answer is correct.) C. $4,490 unfavorable D. $4,490 favorable

B. $5,200 unfavorable (Your answer is correct.) (52,300 - 47,100 = $5200)

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 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. (Your answer is correct.) C. It is the same as actual costing but done in real-time. 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.

B. 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. (Your answer is correct.)

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. actual cost incurred and the budgeted quantity of the​ cost-allocation base that should have been used to produce the actual output B. 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 Your answer is correct. C. 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 D. budgeted cost and the actual cost used to produce the actual output

B. 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 (Your answer is correct.)

As part of her annual review of her​ company's budgets versus​ actuals, Mary Gerard isolates unfavorable variances with the hope of getting a better understanding of what caused them and how to avoid them next year. The variable overhead efficiency variance was the most unfavorable over the previous​ year, which Gerard will specifically be able to trace​ to: A. Actual production units below budgeted production units. B. The standard variable overhead rate below the actual variable overhead rate. C. Standard direct labor hours below actual direct labor hours. (Your answer is correct.) D. Actual overhead costs below applied overhead costs.

C - Standard direct labor hours below actual direct labor hours. (Your answer is correct.)

An unfavorable​ static-budget variance indicates that​ ________. A. the actual revenues exceed the budgeted revenues B. the actual costs are less than the budgeted costs C. the actual units sold are less than the budgeted units Your answer is correct. D. the budgeted contribution margin is less than the actual amount

C. the actual units sold are less than the budgeted units (Your answer is correct.)

Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the​ company's manufacturing overhead​ data: Budgeted output units 31,000 units Budgeted machine−hours 16,585 hours Budgeted variable manufacturing overhead costs for 31,000 units---$414,625 Actual output units produced 34,000 units Actual machine−hours used 14,800 hours Actual variable manufacturing overhead costs $446,389 What is the flexible−budget amount for variable manufacturing​ overhead? A. $414,625 B. $446,389 C. $454,750 (Your answer is correct.) D. $407,002

C. $454,750 (Your answer is correct.) ($414,625/31,000 = 13.375) 13.375 x 34,000 = $454,750

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

C. Uses standard costs to determine the cost of products (Your answer is correct.)

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

C. a decline in the cost of energy (Your answer is correct.)

Inc. calculates direct manufacturing labor variances and has the following​ information: Actual hours​ worked: 200 Standard​ hours: 250 Actual rate per​ hour: $12 Standard rate per​ hour: $10 Given the information​ above, which of the following is correct regarding direct manufacturing labor​ variances? A. The price and efficiency variances are favorable. B. The price variance is​ favorable, while the efficiency variance is unfavorable. C. The price and efficiency variances are unfavorable. D. The price variance is​ unfavorable, while the efficiency variance is favorable.

D. The price variance is​ unfavorable, while the efficiency variance is favorable. (Your answer is correct.)

Metal Shelf Company's standard cost for raw materials is $4.00 per pound and it is expected that each metal shelf uses two pounds of material. During October Year​2, 25,000 pounds of materials are purchased from a new supplier for $97,000 and 13,000 shelves are produced using 27,000 pounds of materials. Which statement is a possible explanation concerning the direct materials​variances? A. The overall materials variance is​ positive; no further analysis is necessary. B. The purchasing manager paid more than expected for materials. C. Production workers were more efficient than anticipated. D. The production department had to use more materials since the quality of the materials was inferior.

D. The production department had to use more materials since the quality of the materials was inferior. (Your answer is correct.)

Johnson Company had planned for operating income of​ $10 million in the master budget with a contribution margin of​ $3 million, but actually achieved operating income of only​ $7 million and a contribution margin of​ $2.5 million. A. The static−budget variance for operating income is​ $3 million favorable. B. The flexible−budget variance for operating income is​ $3 million unfavorable. C. The flexible−budget variance for operating income is​ $3 million favorable. D. The static−budget variance for operating income is​ $3 million unfavorable.

D. The static−budget variance for operating income is​ $3 million unfavorable. (Your answer is correct.)

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​ = Actual 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 ÷ Actual total quantity of cost allocation base D. 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 (Your answer is correct.)

D. 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 (Your answer is correct.)

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

D. actual quantity of the​ cost-allocation base used is lower than the budgeted quantity (Your answer is correct.)

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

D. the actual variable manufacturing overhead exceeded the​ flexible-budget amount by​ $5,000 (Your answer is correct.)

Castleton Corporation manufactured 33,000 units during March. The following fixed overhead data relates to​ March: Actual---Static Budget Production 33,000 units---32,000 units Machine−hours 8,150 hours----8,000 hours Fixed overhead costs for March $168,400----$160,000 What is the fixed overhead spending​ variance?

Fixed overhead spending variance = Actual fixed overhead - Budgeted fixed overhead = $168,400 - $160,000 = $8,400 unfavourable (unf because you under budgeted)

Lancelot Corporation manufactures tennis gear and uses budgeted machine−hours to allocate variable manufacturing overhead. The following information relates to the​ company's manufacturing overhead​ data: Budgeted output units 3,000 units Budgeted machine−hours 15,000 hours Budgeted variable manufacturing overhead costs for 3,000 units $165,000 Actual output units produced 3,400 units Actual machine−hours used 14,750 hours Actual variable manufacturing overhead costs $250,000 What is the flexible−budget variance for variable manufacturing​ overhead? A. $85,000 favorable B. $85,000 unfavorable C. $63,000 unfavorable (Your answer is correct.) D.$63,000 favorable

Flexible budget variance Actual - Flexible (the greater determines favorability.) 250,000 - (165000/3000)*3400 = $63,000 C. $63,000 unfavorable

Radon Corporation manufactured 40,500 units during March. The following fixed overhead data pertain to​ March: Actual---Static Budget Production 40,500 units---37,000 units Machine−hours 14,900 hours---14,800 hours Fixed overhead costs for March $379,100---$370,000 What is the fixed overhead production−volume ​variance? A. $9,100 favorable B. $9,100 unfavorable C. $35,000 favorable (Your answer is correct.) D. $35,000 unfavorable

Standard hour per unit = 14800/ 37000 = 0.4 hour per unit Standard rate per hour = $370000/ 14800 = $25 per hour Applied fixed overhead = 40500 x 0.4 x $25 = $405000 Applied overhead - Budgeted overhead (the greater determines favorability.) $405000 - $370,000 = $35000. $35,000 Favorable

Castleton Corporation manufactured 34,000 units during March. The following fixed overhead data relates to​ March: Actual---Static Budget Production 34,000 units---32,000 units Machine−hours 8,150 hours---8,000 hours Fixed overhead costs for March $176,260---$168,000 What is the amount of fixed overhead allocated to​ production? A. $168,000.00 B. $183,829.45 C. $176,260.00 D. $178,500.00 (Your answer is correct.)

Static budget fixed overhead / Static budget Machine- hours Predetermined overhead rate = 168000 / 8000 = $21 Budgeted Machin Hours for Actual output = (34000/32000) x 8000 = $8500 Fixed overheads allocated = 8,500 x 21 = $178,500 (Answer)

Murdy Corporation had the following inventories at the beginning and end of the month of January​: ​(January 1 ---January 31 Finished goods $123,000---$120,000 Work-in-process 236,000---246,000 Direct materials 132,000---126,000) The following additional manufacturing data was available for the month of January. ​(Direct materials purchased - $185,000 Transportation in - 2,600 Direct labor - 300,000 Actual factory overhead - 85,000) Murdy Corporation applies factory overhead at a rate of 25​% of direct labor​ cost, and any overallocated or underallocated factory overhead is deferred until the end of the year. Murdy​'s balance in its factory overhead control account at the end of January ​was: 1. $10,000 underallocated. (Your answer is correct.) 2. $4,000 overallocated. 3. $4,000 underallocated. 4. $10,000 overallocated.

Step 1 - Factory overhead rate 25% x Direct labor $300,000 (300,000 x .25 = $75,000) - Actual factory overhead of $85000. ($85000 - $75,000 = $10000 (u) )