Moncrief Corporation bases its
budgets on machine-hours. The company's static budget for July appears below:
|
|
Budgeted
number of machine-hours.........
|
1,000
|
|
|
Budgeted
variable overhead costs:
|
|
|
|
Supplies
(@ $8.60 per machine-hour)...
|
$ 8,600
|
|
|
Power
(@ $8.80 per machine-hour).......
|
8,800
|
|
|
Total
variable overhead cost.....................
|
17,400
|
|
|
Budgeted
fixed overhead costs:
|
|
|
|
Salaries...................................................
|
11,300
|
|
|
Equipment
depreciation.........................
|
9,900
|
|
|
Total
fixed overhead cost..........................
|
21,200
|
|
|
Total
budgeted overhead cost....................
|
$38,600
|
|
|
|
|
|
|
Actual
results for the month were:
|
|
|
|
Actual
number of machine-hours...........
|
1,200
|
|
|
Supplies..................................................
|
$10,290
|
|
|
Power.....................................................
|
$10,860
|
|
|
Salaries...................................................
|
$11,690
|
|
|
Equipment
depreciation.........................
|
$9,990
|
74. The
variance for supplies costs in the flexible budget performance report for the
month should be:
A) $30
F
B) $1,690
F
C) $1,690
U
D) $30
U
Ans: A
Solution:
Budgeted number of machine-hours:
1,000
Actual
number of machine-hours: 1,200
|
|
|
Cost Formula (per machine-hour)
|
Actual Costs Incurred for 1,200
machine-hours
|
Budget Based on 1,200
machine-hours
|
Variance
|
|
|
Variable
overhead costs (Supplies)......
|
$8.60
|
$10,290
|
$10,320
|
$30 F
|
75. The
variance for power costs in the flexible budget performance report for the
month should be:
A) $2,060
F
B) $2,060
U
C) $300
F
D) $300
U
Ans: D
Solution:
Budgeted number of machine-hours:
1,000
Actual
number of machine-hours: 1,200
|
|
|
Cost Formula (per machine-hour)
|
Actual Costs Incurred for 1,200
machine-hours
|
Budget Based on 1,200
machine-hours
|
Variance
|
|
|
Variable
overhead costs (Power)
|
$8.80
|
$10,860
|
$10,560
|
$300 U
|
76. The
variance for equipment depreciation in the flexible budget performance report
for the month should be:
A) $1,890
U
B) $90
F
C) $90
U
D) $1,890
F
Ans: C
Solution:
Budgeted number of machine-hours:
1,000
Actual
number of machine-hours: 1,200
|
|
|
Actual Costs Incurred for 1,200
machine-hours
|
Budget Based on 1,200 machine-hours
|
Variance
|
|
|
Fixed
overhead costs (Equipment
depreciation).
|
$9,990
|
$9,900
|
$90 U
|
Use the following to answer
questions 77-79:
Medlar Corporation's static
budget for June appears below. The company bases its budgets on machine-hours.
|
|
Budgeted
number of machine-hours.........
|
8,900
|
|
|
Budgeted
variable overhead costs:
|
|
|
|
Supplies
(@ $2.20 per machine-hour)...
|
$ 19,580
|
|
|
Power
(@ $3.80 per machine-hour).......
|
33,820
|
|
|
Total
variable overhead cost.....................
|
53,400
|
|
|
Budgeted
fixed overhead costs:
|
|
|
|
Salaries...................................................
|
26,700
|
|
|
Equipment
depreciation.........................
|
39,160
|
|
|
Total
fixed overhead cost..........................
|
65,860
|
|
|
Total
budgeted overhead cost....................
|
$119,260
|
In June, the actual number of
machine-hours was 9,300, the actual supplies cost was $19,760, the actual power
cost was $35,720, the actual salaries cost was $27,130, and the actual
equipment depreciation was $39,430.
77. The
variance for supplies cost in the flexible budget performance report for the
month should be:
A) $180
U
B) $700
U
C) $700
F
D) $180
F
Ans: C
Solution:
Budgeted number of machine-hours:
8,900
Actual
number of machine-hours: 9,300
|
|
|
Cost Formula (per machine-hour)
|
Actual Costs Incurred for 9,300
machine-hours
|
Budget Based on 9,300
machine-hours
|
Variance
|
|
|
Variable
overhead costs (Supplies)....
|
$2.20
|
$19,760
|
$20,460
|
$700 F
|
78. The
variance for power cost in the flexible budget performance report for the month
should be:
A) $1,900
F
B) $1,900
U
C) $380
U
D) $380
F
Ans: C
Solution:
Budgeted number of machine-hours:
8,900
Actual
number of machine-hours: 9,300
|
|
|
Cost Formula (per machine-hour)
|
Actual Costs Incurred for 9,300
machine-hours
|
Budget Based on 9,300
machine-hours
|
Variance
|
|
|
Variable
overhead costs (Power)...............................
|
$3.80
|
$35,720
|
$35,340
|
$380 U
|
79. The
variance for equipment depreciation in the flexible budget performance report
for the month should be:
A) $1,490
F
B) $1,490
U
C) $270
U
D) $270
F
Ans: C
Solution:
Budgeted number of machine-hours:
8,900
Actual
number of machine-hours: 9,300
|
|
|
Actual Costs Incurred for 9,300
machine-hours
|
Budget Based on 9,300
machine-hours
|
Variance
|
|
|
Fixed
overhead costs (Equipment
depreciation)...........................
|
$39,430
|
$39,160
|
$270 U
|
Use the following to answer
questions 80-85:
A manufacturing company 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:
|
|
Denominator
level of activity...............................
|
1,000
|
DLHs
|
|
|
Overhead
costs at the denominator activity level:
|
|
|
|
|
Variable
overhead cost.......................................
|
$3,800
|
|
|
|
Fixed
overhead cost...........................................
|
$14,250
|
|
The
following data pertain to operations for the most recent period:
|
|
Actual
hours..........................................................
|
1,200
|
DLHs
|
|
|
Standard
hours allowed for the actual output........
|
885
|
DLHs
|
|
|
Actual
total variable overhead cost.......................
|
$4,380
|
|
|
|
Actual
total fixed overhead cost............................
|
$12,450
|
|
80. What
is the predetermined overhead rate to the nearest cent?
A) $14.03
B) $16.83
C) $15.04
D) $18.05
Ans: D LO: 5
Solution:
Predetermined overhead rate = Total
overhead ÷ Denominator level of activity
= ($3,800 + $14,250) ÷ 1,000 DLHs
= $18,050 ÷ 1,000 DLHs = $18.05 per
DLH
81. How
much overhead was applied to products during the period to the nearest dollar?
A) $18,050
B) $16,830
C) $15,974
D) $21,660
Ans: C LO: 5
Solution:
Predetermined overhead rate = Total
overhead ÷ Denominator level of activity
=
($3,800 + $14,250) ÷ 1,000 DLHs
=
$18,050 ÷ 1,000 DLHs = $18.05 per DLH
Applied
overhead = 885 DLHs × $18.05 per DLH = $15,974
82. What
was the variable overhead spending variance for the period to the nearest
dollar?
A) $180
U
B) $180
F
C) $580
U
D) $580
F
Ans: B
Solution:
Budgeted direct-labor hours: 1,100
Actual
direct-labor hours: 1,200
Standard
direct-labor hours allowed: 800
|
|
|
Cost Formula (per DLH)
|
|
Actual Costs Incurred 1,200 DLHs
|
Budget Based on 1,200 DLHs
|
Spending Variance
|
|
|
Variable
overhead costs.................
|
$3.80
|
*
|
$4,380
|
$4,560
|
$180 F
|
*
$3,800 ÷ 1,000 DLHs = $3.80 per DLH
83. What
was the variable overhead efficiency variance for the period to the nearest
dollar?
A) $133
U
B) $580
U
C) $1,150
U
D) $1,197
U
Ans: D
Solution:
Budgeted direct-labor hours: 1,000
Actual
direct-labor hours: 1,200
Standard
direct-labor hours allowed: 885
|
|
|
Cost Formula (per DLH)
|
|
Budget Based on 1,200 DLHs
|
Budget Based on 885 DLHs
|
Efficiency Variance
|
|
|
Variable
overhead costs.................
|
$3.80
|
*
|
$4,560
|
$3,363
|
$1,197 U
|
*$3,800
÷ 1,000 = $3.80
84. What
was the fixed overhead budget variance for the period to the nearest dollar?
A) $1,800
F
B) $3,268
F
C) $161
U
D) $4,650
U
Ans: A LO: 6
Solution:
Fixed overhead budget variance
= Actual fixed overhead cost −
Budgeted fixed overhead cost
= $12,450 − $14,250 = $1,800 F
85. What
was the fixed overhead volume variance for the period to the nearest dollar?
A) $4,489
U
B) $1,618
U
C) $2,850
F
D) $1,639
U
Ans: D LO: 6
Solution:
Fixed portion of predetermined
overhead rate
=
$14,250 ÷ 1,000 DLHs = $14.25 per DLH
Volume
variance = Fixed portion of predetermined overhead rate × (Denominator hours −
Standard hours allowed)
=
$14.25 per DLH × (1,000 DLHs − 885 DLHs)
=
$14.25 per DLH × 115 DLHs = $1,639 U
