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Exam 4: Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

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Question 51

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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?

A) variable overhead rate variance
B) variable overhead efficiency variance
C) fixed manufacturing overhead budget variance
D) fixed manufacturing overhead volume variance

E) All of the above
F) None of the above

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Question 52

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Pierce Corporation uses a standard cost system in which it applies manufacturing overhead to its product on the basis of standard direct labor-hours (DLHs). Below is the standard cost card for the product: Last year, the company produced 6,000 units of product using 17,000 direct labor-hours. The actual total fixed manufacturing overhead cost for the year was $140,000 and the volume variance was $12,000, favorable. Required: a. Determine the budgeted amount of total fixed manufacturing overhead cost. b. Determine the denominator activity figure that the company used in computing predetermined overhead rates.

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a. Fixed overhead cost applied to work i...

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Question 53

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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

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 fixed manufacturing overhead budget variance for May was:

The fixed manufacturing overhead volume variance is more meaningful than the budget variance for cost control purposes.

Hairr Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $9.50 per machine-hour and fixed manufacturing overhead cost of $947,672 per period. If the denominator level of activity is 8,900 machine-hours, 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.

A manufacturer of playground equipment 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 fixed manufacturing overhead applied to products during the period is closest to:

The Forbes Corporation uses a standard cost system in which overhead costs are applied to products on the basis of standard direct labor-hours (DLHs) . The following data applied to the company's activities for June: -The volume variance for June is:

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. A fixed manufacturing overhead volume variance will NOT necessarily occur in a month in which production volume differs from sales volume.

An outdoor barbecue grill manufacturer has a standard costing system based on standard direct labor-hours (DLHs) as 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 fixed manufacturing overhead volume variance for the period is closest to:

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 was Vette's fixed manufacturing overhead budget variance?

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

Semaan Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the month appear below: The company based its original budget on 2,700 machine-hours. The company actually worked 2,960 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 3,030 machine-hours. What was the overall fixed manufacturing overhead budget variance for the month?

A manufacturer of playground equipment 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 fixed manufacturing overhead rate is closest to:

Alex Corporation has a large underapplied overhead balance in the manufacturing overhead account. This could be explained by:

Odonell Corporation estimates that its variable manufacturing overhead is $11.20 per machine-hour and its fixed manufacturing overhead is $563,640 per period. -If the denominator level of activity is 1,000 machine-hours, the fixed component in the predetermined overhead rate would be:

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?

Odonell Corporation estimates that its variable manufacturing overhead is $11.20 per machine-hour and its fixed manufacturing overhead is $563,640 per period. -If the denominator level of activity is 6,100 machine-hours, the predetermined overhead rate would be:

You have just been hired as the new executive assistant to the manager of the Eastern Division of Global Manufacturing. You have been given the following incomplete records concerning manufacturing overhead for last year: The company uses a standard cost system in which manufacturing overhead costs are applied to products on the basis of standard direct labor-hours (DLHs). Required: a. Compute the variable overhead rate variance and indicate whether it was favorable or unfavorable. b. Compute the fixed overhead volume variance and indicate whether it was favorable or unfavorable.