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Question;51. In;regard to the investigation of variances under uncertainty, which of the;following is not a positive (i.e., desirable) combination of courses;of actionand states of nature?;A.;Investigate, a random fluctuation has;occurred.;B.;Do not investigate, a;random fluctuation has occurred.;C.;Do not investigate, a;noncontrollable fluctuation has occurred.;D.;Investigate, a nonrandom;fluctuation has occurred.;52. The;difference between the total factory overhead cost in the flexible budget for;the actual units produced and the amount of factory overhead cost applied to;products using the standard overhead rate is called the factory overhead;A.;Flexible-budget variance.;B.;Production-volume;variance.;C.;Total fixed cost;variance.;D.;Efficiency variance.;E.;Controllable variance.;53. The;difference between total factory overhead cost incurred during a period and the;total standard factory overhead cost assigned to production of the period is;the;A.;Flexible-budget variance.;B.;Production-volume;variance.;C.;Total factory overhead;variance.;D.;Overhead efficiency;variance.;E.;Total overhead spending;variance.;54.;For product-costing purposes, which of the following statements is true?;A.;It is necessary to "unitize;fixed overhead costs, under the absorption or full-costing approach.;B.;The amount of standard;fixed overhead costs for product-costing and control purposes is the same.;C.;Only standard variable;overhead costs are included since these costs change in response to cost;drivers.;D.;Standard costing is not;permissible under generally accepted accounting principles.;E.;Total fixed overhead;costs are applied as a "lump-sum" amount.;55.;All of the following;choices exist for defining the denominator volume (denominator activity level);for assigning fixed overhead costs in a standard cost system, except;A.;Budgeted capacity utilization.;B.;Actual capacity;utilization.;C.;Theoretical capacity.;D.;Practical capacity.;E.;Normal capacity.;56.;In terms of allocating fixed overhead cost to products, generally accepted;accounting principles;A.;Require that such allocations be based;on normal capacity.;B.;Allow for the use of;either practical capacity or theoretical capacity.;C.;Don't apply since the;resulting data are used only internally (for control purposes).;D.;Specify only that such;costs be "reasonably allocated" to outputs.;57.;For internal reporting purposes, it is recommended that fixed overhead;allocation rates in a standard costing system be based on;A.;Budgeted capacity usage.;B.;Theoretical capacity;since this is the level required under generally accepted accounting;principles.;C.;Actual capacity;utilization.;D.;Expected capacity usage.;E.;Practical capacity.;58.;The "death-spiral" effect refers to;A.;The allocation of fixed overhead costs;over time to an increasing volume of output.;B.;A possible consequence;when variable, not full, costing is used.;C.;A likely consequence;when fixed overhead allocation rates are based on practical capacity.;D.;The continual raising of;prices in an attempt to recover fixed costs.;E.;Increases in product;demand over time in response to increases in fixed promotional costs.;59.;Which one of the following journal entries in a standard cost system is needed;to record the completion of production for the period?;A.;A debit to Work-in-Process Inventory, at;standard cost.;B.;A debit to;Work-in-Process Inventory, at actual cost.;C.;A credit to Cost of;Goods Sold, at standard cost.;D.;A debit to Finished;Goods Inventory, at standard cost.;E.;A debit to Finished;Goods Inventory, at actual cost.;60.;Which one of the;following journal entries in a standard cost system is needed at the end of the;period to close out to Cost of Goods Sold an unfavorable production-volume;variance?;A.;A credit to Finished Goods Inventory, at;standard cost.;B.;A credit to Cost of;Goods sold, at standard cost.;C.;A credit to Cost of;Goods sold, at actual cost.;D.;A debit to the;Production-Volume Variance account.;E.;A debit to Cost of Goods;sold.;61.;Which one of the following journal entries in a standard cost system would be;used to apply factory overhead costs to production?;A.;A debit to the factory overhead account;at standard cost.;B.;A credit to the factory;overhead account, at standard cost.;C.;A debit to WIP;inventory, at actual cost.;D.;A credit to Finished;Goods Inventory, at standard cost.;62. Some;accountants would argue that any variances from standard costs, when such;standards are current, should be written off to cost of goods sold. The;principal rationale for this treatment is;A.;This is the treatment required currently;under generally accepted accounting principles.;B.;To allocate such;variances implies that asset values on the balance sheet (i.e., inventories);contain the cost of inefficiencies.;C.;The negligible effect;this treatment has on total cost of goods sold for the period.;D.;Consistency with current;income tax provisions.;63.;If standard cost;variances are allocated (i.e., prorated) to inventory and cost of goods sold;(CGS) accounts at the end of a period, which of the following is correct?;A. Conceptually;the amount allocated to each account is based on the relative amount of the;current period's standard cost in the end-of-period balance in each account.;B.;The resulting balances;represent relative actual cost in each of the affected accounts.;C.;There is a presumption;that the net variance for the period is immaterial in amount.;D.;The amount allocated to;inventories is generally larger than the amount allocated to CGS.;64.;Which of the following;statement is true regarding choice of the denominator volume level in;conjunction with the process of allocating fixed manufacturing costs to;production?;A.;The choice typically will affect;end-of-period asset values, but not the production-volume variance for the;period.;B.;The choice is important;only if the company in question uses variable costing.;C.;Under absorption (full);costing, this choice can affect reported profits for the period.;D.;This choice has no;effect on the standard overhead cost-allocation rate.;E.;The choice affects the;standard overhead cost-allocation rate but not product cost.;65.;When a company uses;absorption costing, there is the potential for income manipulation based on;choice of the denominator volume for setting the fixed overhead allocation;rate. In which case is this manipulation-potential manifested?;A.;When sales volume > production;volume, and the production-volume variance is prorated to inventories and cost;of goods sold at the end of the period.;B.;When sales volume;production volume, and the production-volume variance is prorated to;inventories and cost of goods sold at the end of the period.;C.;When the;production-volume variance is written off entirely as an adjustment to cost of;goods sold at the end of the period.;D.;When budgeted output is;used to develop the standard overhead cost-allocation rate.;66.;The following budget data pertain to the Machining Department of Yolkenverst;Co.;The;company prepared the budget at 85% of the maximum capacity level. The;department uses machine hours as the basis for applying standard factory;overhead costs to production. The standard fixed overhead application rate for;the Machining Department is;A.;$2.89 per machine hour.;B.;$3.40 per machine hour.;C.;$3.47 per machine hour.;D.;$4.08 per machine hour.;E.;$8.50 per machine hour.;67.The;following budget data pertain to the Machining Department of Yolkenverst Co.;The company prepared the budget at 85%;of the maximum capacity level. The department uses machine hours as the basis;for applying;standard;factory overhead costs to production. The budgeted total factory overhead for;the Machining Department is;A.;$617,100.;B.;$875,000.;C.;$883,500.;D.;$892,500.;E.;$1,050,000.;A.;The following budget data pertain to the;Machining Department of Yolkenverst Co.;The;company prepared the budget at 85% of the maximum capacity level. The;department uses machine hours as the basis for applying standard factory;overhead costs to production. During the year the Machining Department produced;50,000 units, consuming 127,500 machine hours and incurring $433,500 of fixed;overhead. For the current year the department has a production-volume variance;of;A.;$0.;B.;$3,400 unfavorable.;C.;$3,600 unfavorable.;D.;$7,000 unfavorable.;E.;$8,500 unfavorable.;69.;The following information is available from Thinnews Co., a company that uses;machine hours to apply factory overhead;The total actual;variable factory overhead cost incurred during the year was;A.;$13,000.;B.;$14,000.;C.;$14,100.;D.;$14,400.;E.;$15,000.;F.;A;70.;The following information is available from Thinnews Co., a company that uses;machine hours to apply factory overhead;The standard;fixed overhead application rate is;A.;$1.00 per machine hour.;B.;$2.00 per machine hour.;C.;$3.00 per machine hour.;D.;$4.00 per machine hour.;E.;$5.00 per machine hour.;71.;The following information is available from Thinnews Co., a company that uses;machine hours to apply factory overhead;The variable;overhead spending variance is;A.;$600 unfavorable.;B.;$1,000 favorable.;C.;$1,400 unfavorable.;D.;$1,500 favorable.;E.;$2,100 favorable.;72.;The;following information is available from Thinnews Co., a company that uses;machine hours to apply factory overhead;The variable;factory overhead efficiency variance is;A.;$600 unfavorable.;B.;$1,000 favorable.;C.;$1,400 unfavorable.;D.;$1,500 favorable.;E.;$2,100 favorable.;73.;The following information is available from Thinnews Co., a company that uses;machine hours to apply factory overhead;The factory;overhead production-volume variance is;A.;$600 unfavorable.;B.;$1,000 favorable.;C.;$1,400 unfavorable.;D.;$1,500 favorable.;E.;$2,100 favorable.;74.;The following information is available from Thinnews Co., a company that uses;machine hours to apply factory overhead;Under;a three-variance breakdown (decomposition) of the total factory overhead;variance, the total factory overhead spending variance is;A.;$0.;B.;$600 unfavorable.;C.;$1,400 favorable.;D.;$1,400 unfavorable.;E.;$2,000 favorable.;75.;The following information is available from Thinnews Co., a company that uses;machine hours to apply factory overhead;Under a three-variance;breakdown (decomposition) of the total factory overhead variance, the factory;overhead efficiency variance is;A.;$400 favorable.;B.;$600 unfavorable.;C.;$1,400 favorable.;D.;$1,400 unfavorable.;E.;$2,000 favorable.;76.;The following;information is available from Thinnews Co., a company that uses machine hours;to apply factory overhead;Under;a three-variance breakdown (decomposition) of the total factory overhead;variance, the factory overhead production-volume variance is;A.;$400 favorable.;B.;$600 unfavorable.;C.;$1,400 favorable.;D.;$1,400 unfavorable.;E.;$2,000 favorable.;77.;The following information is available from Thinnews Co., a company that uses;machine hours to apply factory overhead;Under;a two-variance breakdown (decomposition) of the total factory overhead;variance, the factory overhead controllable variance (i.e., total;flexible-budget variance) is;A.;$400 favorable.;B.;$600 unfavorable.;C.;$1,400 favorable.;D.;$1,400 unfavorable.;E.;$2,000 favorable.;78.;The following information is available from Thinnews Co., a company that uses;machine hours to apply factory overhead;Under a;two-variance breakdown (decomposition) of the total factory overhead variance;the factory overhead efficiency variance is;A.;$0.;B.;$400 favorable.;C.;$600 unfavorable.;D.;$1,400 favorable.;E.;$1,400 unfavorable.;79.;The following information is available from Thinnews Co., a company that uses;machine hours to apply factory overhead;Under;a two-variance breakdown (decomposition) of the total factory overhead;variance, the factory overhead production-volume variance is;A.;$400 favorable.;B.;$600 unfavorable.;C.;$1,400 favorable.;D.;$1,400 unfavorable.;E.;$2,000 favorable.;80.;Bonehead Co. has the following factory overhead costs;The;total overhead flexible-budget (FB) variance is;A.;$4,000 unfavorable.;B.;$7,000 favorable.;C.;$10,000 favorable.;D.;$11,000 unfavorable.;E.;$14,000 unfavorable.;81.;Bonehead Co. has the following factory overhead costs;The factory;overhead production-volume variance is;A.;$4,000 unfavorable.;B.;$7,000 favorable.;C.;$10,000 favorable.;D.;$11,000 unfavorable.;E.;$14,000 unfavorable.;82.;Bonehead Co. has the following factory overhead costs;The total;underapplied or overapplied factory overhead for the period is;A.;$4,000 underapplied.;B.;$7,000 overapplied.;C.;$10,000 overapplied.;D.;$11,000 underapplied.;E.;$14,000 underapplied.;83.;Bluecap Co. uses a standard cost system and flexible budgets for control;purposes. The following budgeted information pertains to 2010;During;2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units.;The actual factory overhead was $14,000 greater than the flexible budget amount;for the units produced, of which $6,000 was due to fixed factory overhead. In;preparing a budget for 2011 Bluecap decided to raise the level of operation to;90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000;direct labor hours. The standard variable overhead application rate per direct;labor hour in 2010 was;A.;$4.30.;B.;$4.50.;C.;$6.90.;D.;$9.30.;E.;$9.60.;84.;Bluecap Co. uses a standard cost system and flexible budgets for control;purposes. The following budgeted information pertains to 2010;During;2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units.;The actual factory overhead was $14,000 greater than the flexible budget amount;for the units produced, of which $6,000 was due to fixed factory overhead. In;preparing a budget for 2011 Bluecap decided to raise the level of operation to;90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000;direct labor hours. The total budget for fixed factory overhead in 2010 was;A.;$230,400.;B.;$259,200.;C.;$265,200.;D.;$276,480.;E.;$288,000.;85.;Bluecap Co. uses;a standard cost system and flexible budgets for control purposes. The following;budgeted information pertains to 2010;During;2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units.;The actual factory overhead was $14,000 greater than the flexible budget amount;for the units produced, of which $6,000 was due to fixed factory overhead. In;preparing a budget for 2011 Bluecap decided to raise the level of operation to;90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000;direct labor hours. Under the assumption that the total budgeted fixed overhead;for 2011 is the same as it was for 2010, what is the standard fixed overhead;application rate per direct labor hour for 2011?;A.;$4.30.;B.;$4.50.;C.;$6.90.;D.;$9.30.;E.;$9.60.;86.;Bluecap Co. uses a standard cost system and flexible budgets for control;purposes. The following budgeted information pertains to 2010;During;2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units.;The actual factory overhead was $14,000 greater than the flexible budget amount;for the units produced, of which $6,000 was due to fixed factory overhead. In;preparing a budget for 2011 Bluecap decided to raise the level of operation to;90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000;direct labor hours. The variable overhead efficiency variance in 2010 is;A.;$3,440 favorable.;B.;$8,000 unfavorable.;C.;$9,200 favorable.;D.;$11,440 unfavorable.;E.;$17,200 unfavorable.;87.;Bluecap Co. uses a standard cost system;and flexible budgets for control purposes. The following budgeted information;pertains to 2010;During;2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units.;The actual factory overhead was $14,000 greater than the flexible budget amount;for the units produced, of which $6,000 was due to fixed factory overhead. In;preparing a budget for 2011 Bluecap decided to raise the level of operation to;90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000;direct labor hours.;The factory overhead;spending variance in 2010, based on a three-variance breakdown (decomposition);of the total overhead variance is;A.;$3,200 favorable.;B.;$11,440 unfavorable.;C.;$15,040 favorable.;D.;$17,280 favorable.;E.;$17,440 unfavorable.;88.;Bluecap Co. uses a standard cost system;and flexible budgets for control purposes. The following budgeted information;pertains to 2010;During;2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units.;The actual factory overhead was $14,000 greater than the flexible budget amount;for the units produced, of which $6,000 was due to fixed factory overhead. In;preparing a budget for 2011 Bluecap decided to raise the level of operation to;90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000;direct labor hours. The variable overhead spending variance in 2010 is;A.;$6,000 unfavorable.;B.;$8,000 unfavorable.;C.;$9,200 favorable.;D.;$11,440 unfavorable.;E.;$17,440 unfavorable.;89.;Bluecap Co. uses;a standard cost system and flexible budgets for control purposes. The following;budgeted information pertains to 2010;During;2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units.;The actual factory overhead was $14,000 greater than the flexible budget amount;for the units produced, of which $6,000 was due to fixed factory overhead. In;preparing a budget for 2011 Bluecap decided to raise the level of operation to;90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000;direct labor hours. The fixed overhead production-volume variance in 2010 is;A.;$11,280 favorable.;B.;$17,280 favorable.;C.;$28,800 unfavorable.;D.;$34,800 unfavorable.;E.;$51,840 favorable.;90.;Bluecap Co. uses a standard cost system and flexible budgets for control;purposes. The following budgeted information pertains to 2010;During;2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units.;The actual factory overhead was $14,000 greater than the flexible budget amount;for the units produced, of which $6,000 was due to fixed factory overhead. In;preparing a budget for 2011 Bluecap decided to raise the level of operation to;90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000;direct labor hours. The total overhead variance in 2010 is;A.;$14,000 unfavorable.;B.;$15,040 favorable.;C.;$17,280 favorable.;D.;$37,840 favorable.;E.;$37,840 unfavorable.;91.;Neptune Inc. uses a standard cost system and has the following information for;April;The total;underapplied or overapplied factory overhead is;A.;$1,900 underapplied.;B.;$1,900 overapplied.;C.;$3,200 underapplied.;D.;$3,200 overapplied.;E.;$5,100 overapplied.;92.;Neptune Inc. uses a standard cost system and has the following information for;April;The total;factory overhead spending variance is;A.;$940 unfavorable.;B.;$1,040 favorable.;C.;$1,980 favorable.;D.;$2,160 favorable.;E.;$3,200 favorable.;93.;Neptune Inc. uses a standard cost system and has the following information for;April;The factory;overhead production-volume variance is;A.;$940 unfavorable.;B.;$1,040 favorable.;C.;$1,980 favorable.;D.;$2,160 favorable.;E.;$3,200 favorable.;94.;Neptune Inc. uses a standard cost system and has the following information for;April;The variable;factory overhead efficiency variance is;A.;$940 unfavorable.;B.;$1,040 favorable.;C.;$1,980 favorable.;D.;$2,160 favorable.;E.;$3,200 favorable.;95.;Neptune Inc. uses a standard cost system and has the following information for;April;The total;factory overhead flexible-budget variance is;A.;$940 unfavorable.;B.;$1,040 favorable.;C.;$1,980 favorable.;D.;$2,160 favorable.;96. At;the denominator activity level, Norland Company's total overhead budget for;25,000 units of production shows variable overhead costs of $36,000 and fixed;overhead costs of $32,000. During the most recent period, the company incurred;total overhead costs of $61,400 to manufacture 20,000 units. The total factory;overhead flexible-budget variance is;A.;$200 favorable.;B.;$600 unfavorable.;C.;$6,000 unfavorable.;D.;$6,600 favorable.;E.;$7,000 unfavorable.;97. At;the denominator activity level, Norland Company's total overhead budget for;25,000 units of production shows variable overhead costs of $36,000 and fixed;overhead costs of $32,000. During the most recent period, the company incurred;total overhead costs of $61,400 to manufacture 20,000 units. The total factory;overhead variance is;A.;$200 favorable.;B.;$600 unfavorable.;C.;$6,000 unfavorable.;D.;$6,600 favorable.;E.;$7,000 unfavorable.;98. Xero;Company's standard factory overhead rate is $3.75 per direct labor hour (DLH);calculated at 90% capacity = 900 standard DLHs. In December, the company;operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at;80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the;actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300;was for fixed factory overhead. What is the factory overhead production-volume;variance for December?;A.;$0.;B.;$150 unfavorable.;C.;$225 favorable.;D.;$425 unfavorable.;E.;$650 unfavorable.;99. Xero;Company's standard factory overhead rate is $3.75 per direct labor hour (DLH);calculated at 90% capacity = 900 standard DLHs. In December, the company;operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at;80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the;actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300;was for fixed factory overhead. If the company uses a two-way breakdown;(decomposition) of the total overhead variance, what is the total factory;overhead flexible-budget variance for December?;A.;N/A?this variance doesn't exist under a;two-way breakdown of the total overhead variance.;B.;$225 favorable.;C.;$425 unfavorable.;D.;$650 unfavorable.;E.;$690 unfavorable.;100. Xero;Company's standard factory overhead rate is $3.75 per direct labor hour (DLH);calculated at 90% capacity = 900 standard DLHs. In December, the company;operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at;80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the;actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300;was for fixed factory overhead. Assuming the use of a two-way breakdown;(decomposition) of the total overhead variance, what is the factory overhead;efficiency variance for December?;A.;N/A?this variance does not exist under a;two-way breakdown of the total overead variance.;B.;$90 unfavorable.;C.;$150 unfavorable.;D.;$225 favorable.;E.;$425 unfavorable.

 

Paper#44928 | Written in 18-Jul-2015

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