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Exam 14: Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

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Question 1

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Homer Corporation has a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours. The company has provided the following data concerning its manufacturing overhead costs for last year: The fixed manufacturing overhead budget variance was:

A) $200 F
B) $400 U
C) $300 F
D) $240 U

E) None of the above
F) A) and B)

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Question 2

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The fixed manufacturing overhead budget variance is:

A) the difference between budgeted fixed manufacturing overhead cost and actual fixed manufacturing overhead cost.
B) the difference between actual fixed manufacturing overhead cost and applied fixed manufacturing overhead cost.
C) the difference between budgeted fixed manufacturing overhead cost and applied fixed manufacturing overhead cost.
D) the difference between fixed overhead at the planned level of activity and the flexible budget for actual activity.

E) B) and C)
F) B) and D)

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Question 3

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A manufacturing company uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period: The predetermined overhead rate per MH is closest to:

When computing standard cost variances, the difference between actual and standard price multiplied by actual quantity yields a(n) :

The Santos Corporation made an error when selecting a denominator level of activity and chose a much lower level than was realistic. This error would most likely result in a large:

Sulema, Inc. repairs and refinishes antique furniture. Manufacturing overhead at Sulema is applied to production on the basis of standard direct labor-hours. Which overhead variance(s) at Sulema would be unfavorably affected if the cost of solvents used to strip the old paint from the furniture unexpectedly doubles in price?

Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours. For June, the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20,000 machine-hours: During June, 17,000 machine-hours were used to complete 13,000 units of product, and the following actual total overhead costs were incurred: At standard, each unit of finished product requires 1.4 hours of machine time. The variable overhead rate variance for maintenance cost for June was:

Tillinghast Corporation estimates that its variable manufacturing overhead is $9.60 per machine-hour and its fixed manufacturing overhead is $14,630 per period. If the denominator level of activity is 1,000 machine-hours, the variable component in the predetermined overhead rate would be:

A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours. The company's choice of the denominator level of activity affects the fixed manufacturing overhead budget variance.

Vette Tie Corporation has developed the following manufacturing overhead standards to use in applying overhead to the production of its hand-painted silk ties. Manufacturing overhead at Vette is applied to production on the basis of standard direct labor-hours (DLHs) . The above standards were based on an expected annual volume of 60,000 ties. The actual results for last year were as follows: What total amount of manufacturing overhead cost (variable and fixed) did Vette apply to the 58,000 ties produced during the year?

Nitrol Corporation manufactures brass vases using a standard cost system with standard machine-hours as the activity base for overhead. The following information relates to vase production at Nitrol for last year: The standard machine-hours per vase is 1.25. Last year Nitrol produced 84,000 vases. What was Nitrol's variable overhead rate variance for last year?

A favorable volume variance means that the company operated at an activity level greater than that planned for the period.

The Dillon Corporation makes and sells a single product. Overhead costs are applied on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit. The Dillon Corporation had the following budgeted and actual data for March: The variable overhead rate variance for March is:

In a standard cost system, overhead is applied to production on the basis of:

Diseth Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company bases its predetermined overhead rate on 5,300 machine-hours. The company's total budgeted fixed manufacturing overhead is $12,720. In the most recent month, the total actual fixed manufacturing overhead was $12,370. The company actually worked 5,350 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 5,540 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

Bruley Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company's predetermined overhead rate for fixed manufacturing overhead is $3.30 per machine-hour and the denominator level of activity is 3,500 machine-hours. In the most recent month, the total actual fixed manufacturing overhead was $11,570 and the company actually worked 3,430 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 3,450 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

A volume variance is computed for:

Cuda Manufacturing Corporation uses a standard cost system with machine-hours (MHs) as the activity base for overhead. The following information relates to Cuda's operations last year: What was Cuda's variable overhead rate variance?

The Murray Corporation makes and sells a single product. The company recorded the following activity and cost data for May: The fixed component of the predetermined overhead rate is $0.95 per direct labor-hour. The amount of fixed manufacturing overhead cost applied to work in process during May was:

Derf Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours. Two direct labor-hours are required for each unit produced. The denominator activity was set at 9,000 units. Manufacturing overhead was budgeted at $135,000 for the period; 20 percent of this cost was fixed. The 17,200 hours worked during the period resulted in production of 8,500 units. Variable manufacturing overhead cost incurred was $108,500 and fixed manufacturing overhead cost was $28,000. The fixed manufacturing overhead budget variance for the period was: