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Chapter 11 Quiz 2
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1

The Oakleigh Company has the following information available for its production facility for the month of July. The budgeted activity level for fixed manufacturing overhead was estimated to be 48 000 machine hours for the production cycle. Actual machine hours for the period were 50 000, which resulted in the completion of 9900 units.

Material purchased (210 000 items)

$819 000

Material quantity variance

$39 600 U

Actual labour cost (15 000 hours)

$102 000

Machine hours used

50 000 machine hours

Variable overhead spending variance

$2 500 U

Actual fixed manufacturing overhead

$150 000

Oakleigh’s standard costs per unit are as follows:

Direct material

20 components @ $4 per item

Direct labour

1.5 hours @ $6 per hour

Variable overhead (applied on machine hour basis)

4.8 hours @ $2.50 per hour

Fixed overhead (applied on machine hour basis)

4.8 hours @ $3 per hour

The fixed overhead budget variance is:

A)$6000 unfavourable
B)$6000 favourable
C)$1440 unfavourable
D)$1440 favourable
2

The Oakleigh Company has the following information available for its production facility for the month of July. The budgeted activity level for fixed manufacturing overhead was estimated to be 48 000 machine hours for the production cycle. Actual machine hours for the period were 50 000, which resulted in the completion of 9900 units.

Material purchased (210 000 items)

$819 000

Material quantity variance

$39 600 U

Actual labour cost (15 000 hours)

$102 000

Machine hours used

50 000 machine hours

Variable overhead spending variance

$2 500 U

Actual fixed manufacturing overhead

$150 000

Oakleigh’s standard costs per unit are as follows:

Direct material

20 components @ $4 per item

Direct labour

1.5 hours @ $6 per hour

Variable overhead (applied on machine hour basis)

4.8 hours @ $2.50 per hour

Fixed overhead (applied on machine hour basis)

4.8 hours @ $3 per hour

The fixed overhead volume variance is:

A)$6000 unfavourable
B)$6000 favourable
C)$1440 unfavourable
D)$1440 favourable
3

The Oakleigh Company has the following information available for its production facility for the month of July. The budgeted activity level for fixed manufacturing overhead was estimated to be 48 000 machine hours for the production cycle. Actual machine hours for the period were 50 000, which resulted in the completion of 9900 units.

Material purchased (210 000 items)

$819 000

Material quantity variance

$39 600 U

Actual labour cost (15 000 hours)

$102 000

Machine hours used

50 000 machine hours

Variable overhead spending variance

$2 500 U

Actual fixed manufacturing overhead

$150 000

Oakleigh’s standard costs per unit are as follows:

Direct material

20 components @ $4 per item

Direct labour

1.5 hours @ $6 per hour

Variable overhead (applied on machine hour basis)

4.8 hours @ $2.50 per hour

Fixed overhead (applied on machine hour basis)

4.8 hours @ $3 per hour

How much overhead was underapplied or overapplied during July?

A)$8700 underapplied.
B)$16 140 underapplied.
C)$16 140 overapplied.
D)$8700 overapplied.
4
Variable overhead efficiency variance occurs as the result of:
A)the efficient or inefficient usage of electricity, indirect material or other variable overhead items
B)producing completed units for finished goods inventory instead of producing completed units for sale
C)a difference between the budgeted amount of units sold and the actual amount of units sold
D)the efficient or inefficient use of the cost drivers, such as direct labour hours or machine hours, that are used to apply variable overhead
5
The variance that is the real control variance for variable overhead is the:
A)variable overhead efficiency variance
B)overapplied or underapplied variable overhead
C)variable overhead budget variance
D)variable overhead spending variance
6
The uncontrollable variable for fixed overhead is:
A)fixed overhead volume variance
B)fixed overhead budget variance
C)fixed overhead efficiency variance
D)fixed overhead production variance
7
If the variable overhead is applied on the basis of direct labour hours and there is an unfavourable direct labour efficiency variance:
A)direct labour rate variance will be unfavourable
B)variable overhead efficiency variance will be favourable
C)variable overhead efficiency variance will be unfavourable
D)variable overhead spending variance will be unfavourable
8
If the annual fixed overhead budget variance is favourable, the cost of goods sold:
A)is increased by debiting the cost of goods sold account
B)is increased by crediting the cost of goods sold account
C)is decreased by debiting the cost of goods sold account
D)is decreased by crediting the cost of goods sold account
9
Which of the following is not a criticism of standard costing systems?
A)Variances are too aggregated and concentrate on the consequences rather than the causes of the problems.
B)Variance reports are produced too late to be useful.
C)Standard costing systems place too much emphasis on the cost and efficiency of direct labour.
D)Variance analysis explicitly encourages continuous improvement.
10
Which of the following is a disadvantage of standard costing?
A)Standard costs provide a good basis for cost comparisons
B)Calculation of standard costs and cost variances enables managers to use management by exception.
C)Standard costs can be used for external reporting.
D)Standard costing systems take a departmental perspective.





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