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| 1 | |
Athena Restaurant compares monthly operating results with a static budget prepared at the beginning of the year. When actual sales are less than budget, would the restaurant usually report favorable variances on fixed supervisory salaries and variable food costs? |
| | A) | Supervisory Salaries: Yes; Food Costs: Yes |
| | B) | Supervisory Salaries: Yes; Food Costs: No |
| | C) | Supervisory Salaries: No; Food Costs: Yes |
| | D) | Supervisory Salaries: No; Food Costs: No |
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| 2 | |
A major weakness of static budgets is that: |
| | A) | they are geared only to a single level of activity. |
| | B) | they cannot be used to assess whether variable costs are under control. |
| | C) | they force the manager to compare actual costs at one level of activity to budgeted costs at a different level of activity. |
| | D) | all of the above. |
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| 3 | |
A company's static budget estimate of total overhead costs was $200,000 based on the assumption that 20,000 units would be produced and sold. The company estimates that 30% of its overhead is variable and the remainder is fixed. What would be the total overhead cost according to the flexible budget if 24,000 units were produced and sold? |
| | A) | $192,000 |
| | B) | $200,000 |
| | C) | $212,000 |
| | D) | $232,000 |
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| 4 | |
The higher the estimated total units in the base for the predetermined overhead rate (i.e., the denominator activity): |
| | A) | the more profitable operations likely will be. |
| | B) | the less likely is the occurrence of a volume variance. |
| | C) | the lower the unit product cost. |
| | D) | the higher the unit product cost. |
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| 5 | |
The two variances that can be computed for fixed overhead are the: |
| | A) | budget variance and the efficiency variance. |
| | B) | budget variance and the volume variance. |
| | C) | efficiency variance and the spending variance. |
| | D) | efficiency variance and the volume variance. |
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| 6 | |
Which of the following variances is caused by a difference between the denominator activity in the predetermined overhead rate and the standard hours allowed for the actual production of the period? |
| | A) | fixed overhead budget variance. |
| | B) | fixed overhead volume variance. |
| | C) | variable overhead efficiency variance. |
| | D) | variable overhead spending variance. |
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| 7 | |
The Syngrou Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 12 direct labor-hours are required per unit of product. For August, the company budgeted to work 360,000 direct labor-hours and to incur the following total manufacturing overhead costs:
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The denominator activity in the predetermined overhead rate is 360,000 direct labor-hours. The variable overhead spending variance for August is: |
| | A) | $17,200 F. |
| | B) | $17,200 U. |
| | C) | $26,000 F. |
| | D) | $26,000 U. |
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| 8 | |
The Syngrou Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 12 direct labor-hours are required per unit of product. For August, the company budgeted to work 360,000 direct labor-hours and to incur the following total manufacturing overhead costs:
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The denominator activity in the predetermined overhead rate is 360,000 direct labor-hours. The variable overhead efficiency variance for August is: |
| | A) | $0. |
| | B) | $7,200 F. |
| | C) | $8,800 F. |
| | D) | $8,800 U. |
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| 9 | |
The Syngrou Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 12 direct labor-hours are required per unit of product. For August, the company budgeted to work 360,000 direct labor-hours and to incur the following total manufacturing overhead costs:
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The denominator activity in the predetermined overhead rate is 360,000 direct labor-hours. The fixed overhead budget variance for August is: |
| | A) | $12,800 F. |
| | B) | $12,800 U. |
| | C) | $14,000 F. |
| | D) | $14,000 U. |
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| 10 | |
The Syngrou Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 12 direct labor-hours are required per unit of product. For August, the company budgeted to work 360,000 direct labor-hours and to incur the following total manufacturing overhead costs:
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The denominator activity in the predetermined overhead rate is 360,000 direct labor-hours. The fixed overhead volume variance for August is: |
| | A) | $17,200 U. |
| | B) | $19,920 F. |
| | C) | $19,920 U. |
| | D) | $31,680 U. |
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