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Question;101. 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. Under a three-way breakdown (decomposition) of;the total overhead variance, what is the total factory overhead spending;variance for December?;A.;N/A?this variance doesn't exist under a;three-way breakdown of the total overhead variance.;B.;$225 favorable.;C.;$425 unfavorable.;D.;$560 unfavorable.;E.;$600 unfavorable.;102. 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. Under a four-way breakdown (decomposition) of;the total overhead variance, what is the variable factory overhead spending;variance for December?;A.;$50 favorable.;B.;$225 favorable.;C.;$425 unfavorable.;D.;$610 unfavorable.;E.;$650 unfavorable.;103. 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 four-way breakdown;(decomposition) of the total overhead variance, what is the variable factory;overhead efficiency variance for December?;A.;$90 unfavorable.;B.;$150 unfavorable.;C.;$225 favorable.;D.;$425 unfavorable.;E.;$650 unfavorable.;104. 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 was the fixed factory overhead spending;variance for December?;A.;$50 favorable.;B.;$225 favorable.;C.;$425 unfavorable.;D.;$560 unfavorable.;E.;$610 unfavorable.;105. 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 a four-variance breakdown;(decomposition) of the total overhead variance, what is the fixed factory;overhead efficiency variance for the period?;A.;N/A?this variance does not exist.;B.;$225 favorable.;C.;$425 unfavorable.;D.;$650 unfavorable.;106. Gerhan;Company's flexible budget for the units actually manufactured in May shows;$15,640 of total factory overhead, this output level represents 70% of;available capacity. During May the company applied overhead to production at;the rate of $3.00 per direct labor hour (DLH), based on a denominator volume;level of 6,120 DLHs, which represents 90% of available capacity. The company;spent 5,000 DLHs and incurred $16,500 of total factory overhead cost during;May, including $6,800 for fixed factory overhead. What is the factory overhead;production-volume variance for May?;A.;$180 unfavorable.;B.;$380 unfavorable.;C.;$680 unfavorable.;D.;$860 unfavorable.;E.;$1,360 unfavorable.;107.;Gerhan Company's flexible budget for the units actually manufactured in May;shows $15,640 of total factory overhead, this output level;represents 70% of available capacity.;During May the company applied overhead to production at the rate of $3.00 per;direct labor hour (DLH), based on a denominator volume level of 6,120 DLHs;which represents 90% of available capacity. The company spent 5,000 DLHs and;incurred $16,500 of total factory overhead cost during May, including $6,800;for fixed factory overhead.;What;is the total factory overhead flexible-budget variance for May?;A.;$380 unfavorable.;B.;$680 unfavorable.;C.;$860 unfavorable.;D.;$1,160 unfavorable.;E.;$1,360 unfavorable.;108. Gerhan;Company's flexible budget for the units actually manufactured in May shows;$15,640 of total factory overhead, this output level represents 70% of;available capacity. During May the company applied overhead to production at;the rate of $3.00 per direct labor hour (DLH), based on a denominator volume;level of 6,120 DLHs, which represents 90% of available capacity. The company;spent 5,000 DLHs and incurred $16,500 of total factory overhead cost during;May, including $6,800 for fixed factory overhead.;What is the;factory overhead efficiency variance for May, under the assumption that the;company uses a two-variance breakdown (decomposition) of the total overhead;variance?;A.;N/A?this variance does not exist under a;two-variance breakdown of the total overead variance.;B.;$180 unfavorable.;C.;$300 favorable.;D.;$480 unfavorable.;E.;$680 unfavorable.;B.;Gerhan Company's flexible budget for the;units actually manufactured in May shows $15,640 of total factory overhead;this output level represents 70% of available capacity. During May the company;applied overhead to production at the rate of $3.00 per direct labor hour;(DLH), based on a denominator volume level of 6,120 DLHs, which represents 90%;of available capacity. The company spent 5,000 DLHs and incurred $16,500 of total;factory overhead cost during May, including $6,800 for fixed factory overhead.;Under a three-variance breakdown (decomposition) of the total overhead;variance, what is the total factory overhead spending variance for May?;A.;N/A?this variance does not exist in a;three-variance analysis of the total overhead variance.;B.;$300 favorable.;C.;$380 unfavorable.;D.;$480 unfavorable.;E.;$1,160 unfavorable.;110. Gerhan;Company's flexible budget for the units actually manufactured in May shows;$15,640 of total factory overhead, this output level represents 70% of;available capacity. During May the company applied overhead to production at;the rate of $3.00 per direct labor hour (DLH), based on a denominator volume;level of 6,120 DLHs, which represents 90% of available capacity. The company;spent 5,000 DLHs and incurred $16,500 of total factory overhead cost during;May, including $6,800 for fixed factory overhead.;What is the variable;factory overhead spending variance in May assuming the company uses a;four-variance breakdown (decomposition) of the total overhead variance?;A.;$180 unfavorable.;B.;$300 favorable.;C.;$380 unfavorable.;D.;$480 unfavorable.;E.;N/A?this variance is not;defined under the four-way breakdown of the total OVH variance.;111. Gerhan;Company's flexible budget for the units actually manufactured in May shows;$15,640 of total factory overhead, this output level represents 70% of;available capacity. During May the company applied overhead to production at;the rate of $3.00 per direct labor hour (DLH), based on a denominator volume;level of 6,120 DLHs, which represents 90% of available capacity. The company;spent 5,000 DLHs and incurred $16,500 of total factory overhead cost during;May, including $6,800 for fixed factory overhead.;What is the;factory overhead efficiency for May under the assumption that the company uses;a four-variance breakdown (decomposition) of the total overhead variance?;A.;$180 unfavorable.;B.;$380 favorable.;C.;$380 unfavorable.;D.;$480 unfavorable.;E.;$480 favorable.;112. Gerhan;Company's flexible budget for the units actually manufactured in May shows;$15,640 of total factory overhead, this output level represents 70% of;available capacity. During May the company applied overhead to production at;the rate of $3.00 per direct labor hour (DLH), based on a denominator volume;level of 6,120 DLHs, which represents 90% of available capacity. The company;spent 5,000 DLHs and incurred $16,500 of total factory overhead cost during;May, including $6,800 for fixed factory overhead. What is the fixed factory;overhead spending variance for December?;A.;$0.;B.;$180 unfavorable.;C.;$300 favorable.;D.;$480 unfavorable.;E.;$680 unfavorable.;113.Oslund;Company manufactures only one product and uses a standard cost system. During;the past month, the following variances were observed;Oslund applies variable overhead using a;standard rate of $20 per standard DLH allowed. During the month, Oslund used;20% more DLHs than the total standard hours for the units manufactured.;What;were the total standard hours for the units manufactured?;A.;1,000.;B.;2,500.;C.;4,000.;D.;5,000.;E.;6,000;114.;Oslund Company;manufactures only one product and uses a standard cost system. During the past;month, the following variances were observed;Oslund;applies variable overhead using a standard rate of $20 per standard DLH;allowed. During the month, Oslund used 20% more DLHs than the total standard;hours for the units manufactured. What were the total actual direct hours;worked?;A.;1,200.;B.;3,000.;C.;4,800.;D.;6,000.;E.;7,200.;115. Megan;Inc. uses the following standard costs per unit for one of its products: Direct;labor (2 hrs @ $5/hr) = $10, overhead (2 hrs @ $2.50/hr) = $5. The flexible;budget for overhead is $120,000 plus $1 per direct labor hour (DLH). Actual;data for the month show total overhead costs of $225,000, total fixed overhead;of $123,000, 85,000 hours worked, and 40,000 units produced. What is the;budgeted denominator activity level in direct labor hours?;A.;24,000.;B.;48,000.;C.;60,000.;D.;80,000.;E.;100,000.;116. Megan;Inc. uses the following standard costs per unit for one of its products: Direct;labor (2 hrs @ $5/hr) = $10, overhead (2 hrs @ $2.50/hr) = $5. The flexible;budget for overhead is $120,000 plus $1 per direct labor hour (DLH). Actual;data for the month show total overhead costs of $225,000, total fixed overhead;of $123,000, 85,000 hours worked, and 40,000 units produced. The total overhead;variance for the month is;A.;$0.;B.;$3,000 unfavorable.;C.;$5,000 unfavorable.;D.;$20,000 unfavorable.;E.;$25,000 unfavorable.;117. Megan;Inc. uses the following standard costs per unit for one of its products: Direct;labor (2 hrs @ $5/hr) = $10, overhead (2 hrs @ $2.50/hr) = $5. The flexible;budget for overhead is $120,000 plus $1 per direct labor hour (DLH). Actual;data for the month show total overhead costs of $225,000, total fixed overhead;of $123,000, 85,000 hours worked, and 40,000 units produced. The overhead;production-volume variance is;A.;$0.;B.;$3,000 unfavorable.;C.;$5,000 unfavorable.;D.;$20,000 unfavorable.;E.;None of the above.;118. Megan;Inc. uses the following standard costs per unit for one of its products: Direct;labor (2 hrs @ $5/hr) = $10, overhead (2 hrs @ $2.50/hr) = $5. The flexible;budget for overhead is $120,000 plus $1 per direct labor hour (DLH). Actual;data for the month show total overhead costs of $225,000, total fixed overhead;of $123,000, 85,000 hours worked, and 40,000 units produced. The variable;overhead spending variance is;A.;$0.;B.;$3,000 unfavorable.;C.;$5,000 unfavorable.;D.;$17,000 unfavorable.;E.;$25,000 unfavorable.;119. Megan;Inc. uses the following standard costs per unit for one of its products: Direct;labor (2 hrs @ $5/hr) $10. Overhead (2 hrs @ $2.50/hr) 5. The flexible budget;for overhead is $120,000 plus $1 per direct labor hour (DLH). Actual data for;the month show total overhead costs of $225,000, total fixed overhead of;$123,000, 85,000 hours worked, and 40,000 units produced. The fixed overhead;spending variance is;A.;$0.;B.;$3,000 unfavorable.;C.;$5,000 unfavorable.;D.;$17,000 unfavorable.;E.;$25,000 unfavorable.;120. Megan;Inc. uses the following standard costs per unit for one of its products: Direct;labor (2 hrs @ $5/hr) $10. Overhead (2 hrs @ $2.50/hr) 5. The flexible budget;for overhead is $120,000 plus $1 per direct labor hour (DLH). Actual data for;the month show total overhead costs of $225,000, total fixed overhead of;$123,000, 85,000 hours worked, and 40,000 units produced. The variable factory;overhead efficiency variance is;A.;$0.;B.;$3,000 unfavorable.;C.;$5,000 unfavorable.;D.;$17,000 unfavorable.;E.;$25,000 unfavorable.;121.;The following information is available from the Taro Company;What is the;total overhead spending variance for the period?;A.;$750 favorable.;B.;$750 unfavorable.;C.;$950 favorable.;D.;$1,150 unfavorable.;E.;$2,100 favorable.;122.;The following information is available from the Taro Company;What is the;total overhead efficiency variance for the period?;A.;$750 favorable.;B.;$750 unfavorable.;C.;$950 favorable.;D.;$1,150 unfavorable.;E.;$1,150 favorable.;123.;The following information is available from the Taro Company;What is the;overhead production volume-variance for the period?;A.;$200 unfavorable.;B.;$600 favorable.;C.;$750 favorable.;D.;$950 favorable.;E.;$2,100 favorable.;124.;The following information is available from the Taro Company;What is the;variable overhead spending variance for the period?;A.;$200 unfavorable.;B.;$600 favorable.;C.;$750 favorable.;D.;$950 favorable.;E.;$1,700 favorable.;125.;The following information is available from the Taro Company;What is the;fixed overhead spending variance for the period?;A.;$200 unfavorable.;B.;$600 favorable.;C.;$750 favorable.;D.;$950 favorable.;E.;$2,100 favorable.;126.;The following information is available from the Taro Company;The total under;or over applied overhead for the period is;A.;$1,400 overapplied.;B.;$1,700 underapplied.;C.;$1,700 overapplied.;D.;$2,100 underapplied.;E.;$2,100 overapplied.;127.;The following information is available from the Taro Company;The total;overhead flexible-budget (FB) variance for the period is;A.;$550 favorable.;B.;$750 favorable.;C.;$1,500 favorable.;D.;$1,700 favorable.;E.;$2,100 favorable.;128.;Air Inc. uses a standard cost system. Overhead cost information for Product;CX10 for the month of October is as follows;What is the;total overhead variance for October?;A.;$300 unfavorable.;B.;$500 favorable.;C.;$800 favorable.;D.;$4,100 unfavorable.;E.;$4,600 unfavorable.;129.;Air Inc. uses a standard cost system. Overhead cost information for Product;CX10 for the month of October is as follows;What;is the total overhead spending variance for the month?;A.;$300 unfavorable.;B.;$500 favorable.;C.;$800 favorable.;D.;$4,600 unfavorable.;E.;$4,900 unfavorable.;130.;Air Inc. uses a standard cost system. Overhead cost information for Product;CX10 for the month of October is as follows;What is the;variable overhead efficiency variance for October?;A.;$300 unfavorable.;B.;$500 favorable.;C.;$800 favorable.;D.;$4,100 unfavorable.;E.;$4,600 unfavorable.;131.;Air Inc. uses a standard cost system. Overhead cost information for Product;CX10 for the month of October is as follows;What is the overhead;production-volume variance for the period?;A.;$300 unfavorable.;B.;$500 favorable.;C.;$800 favorable.;D.;$4,100 unfavorable.;E.;$4,600 unfavorable.;132.;The following information is available from the Terry Company;What is the;total overhead spending variance for the period?;A.;$800 unfavorable.;B.;$1,000 unfavorable.;C.;$1,200 unfavorable.;D.;$1,400 unfavorable.;E.;$2,000 unfavorable.;133.;The following information is available from the Terry Company;What is the;variable overhead efficiency variance for the period?;A.;$600 favorable.;B.;$800 unfavorable.;C.;$1,200 unfavorable.;D.;$1,400 unfavorable.;E.;$2,000 unfavorable.;134.;The;following information is available from the Terry Company;What is the;overhead production-volume variance for the period?;A.;$600 favorable.;B.;$1,000 unfavorable.;C.;$1,200 unfavorable.;D.;$1,400 favorable.;E.;$1,400 unfavorable.;135.;The following information is available from the Terry Company;What is the;variable overhead (VOH) spending variance for the period?;A.;$600 favorable.;B.;$800 unfavorable.;C.;$1,000 unfavorable.;D.;$1,400 favorable.;E.;$1,400 unfavorable.;136.;The following information is available from the Terry Company;The fixed overhead;spending variance for the period is;A.;$600 favorable.;B.;$800 unfavorable.;C.;$1,000 unfavorable.;D.;$1,200 unfavorable.;E.;$1,200 favorable.;137.;The following information is available from the Terry Company;The total under;or over applied overhead for the period is;A.;$800 overapplied.;B.;$800 underapplied.;C.;$2,600 underapplied.;D.;$3,000 overapplied.;E.;$3,000 underapplied.;138.;The following information is available from the Terry Company;The total;overhead flexible-budget (FB) variance for the period is;A.;$800 unfavorable.;B.;$1,400 unfavorable.;C.;$2,000 unfavorable.;D.;$2,600 unfavorable.;E.;$3,000 unfavorable.;139.;For which one of the;following reasons is the calculation of overhead variances in conjunction with;an activity-based cost (ABC) system desirable from the standpoint of;management?;A.;The resulting cost-management system is;currently required by generally accepted accounting principles (GAAP).;B.;Such a system would be;consistent with the goal of managing activities rather than cost.;C.;Such a system is likely;to be less costly to design and implement.;D.;Far fewer variances;would likely be expected under such a system.;E.;Conventional systems;though appropriate for a manufacturing setting, are not applicable to the;service sector.;140. Which;of the following is a characteristic of calculating standard cost variances for;manufacturing overhead costs under an activity-based cost (ABC) system?;A.;Only non-volume-related cost drivers are;used in the cost-allocation process.;B.;An ABC system would;likely have a greater number of standard cost variances reported each period.;C.;Fewer variances need to;be reported, compared to the number of overhead variances calculated under a;traditional cost system.;D.;Flexible budgets are;used for planning but not cost-control purposes.;E.;The flexible budget;variance will be the same under both a traditional cost system and an ABC;system.;141. Which;one of the following characteristics is associated with standard cost variance;analysis for manufacturing overhead under a traditional versus an;activity-based cost (ABC) system?;A.;The total manufacturing overhead;variance will be the same under either system.;B.;The traditional cost;system does not meet the current International Financial Reporting Standards;for internal control and product costing.;C.;The traditional system;but not the ABC system, is acceptable for income tax purposes.;D. Cost;variances under an ABC system must be closed to cost of goods sold (CGS), while;those calculated under a traditional system can also be prorated (allocated) to;CGS and inventory accounts.;E.;Under both cost systems;a flexible budget (FB) is used for control purposes.;142.;When there is a standard batch size for production activity;A. A;modification of the traditional approach to constructing the flexible budget;for control purposes allows for a more detailed analysis of batch-related;overhead costs.;B.;It is not possible to;construct a flexible budget for cost-control purposes.;C.;Standard cost variances;for only the variable portion of batch-related manufacturing overhead costs can;be calculated.;D.;The variable portion of;the total flexible-budget variance for batch-related costs can be further;decomposed into a spending and a volume variance, which leads to better cost;control.;143.;Which one of the;following standard cost variances is not available when analyzing;batch-related manufacturing overhead costs using an activity-based cost (ABC);system?;A.;Production-volume variance.;B.;Variable setup spending;variance.;C.;Fixed spending variance.;D.;Fixed flexible-budget;variance.;E.;Sales volume variance.;144. Which;of the following is not a cost system proposed as an extension to ABC;systems, with the overall goal of more accurately allocating manufacturing;overhead costs to outputs?;A.;Resource consumption accounting (RCA).;B.;Flexible standard;costing.;C.;GPK (Grenzplankostenregnung).;D.;Variable costing.;145.;A comprehensive management accounting and control system regarding;manufacturing overhead costs;A.;Includes nonfinancial but not financial;performance indicators.;B.;Relies on direct;managerial observation rather than a formal system for cost-control purposes.;C.;Provides information for;strategic but not operational control.;D.;Provides;financial-control information to operating personnel, while both financial and;nonfinancial performance indicators to managers.;E.;Includes both financial;performance indicators as well as nonfinancial performance indicators.;146.;What are the steps in;establishing the standard application rate for variable factory overhead cost?;Does the procedure differ for product-costing versus cost control purposes?;147. What;are the steps in determining the standard fixed factory overhead application;rate? Does the procedure differ for product-costing versus cost-control;purposes?;148. "Firms;need to use the capacity of the equipment or division that is the ?bottleneck;of the manufacturing process as the denominator volume in setting the fixed;overhead allocation rate. In cases where there is more than one ?bottleneck,;the denominator should be the smallest capacity among the bottleneck production;processes.;Required;(a) What type of variance is related to this "denominator?" Explain.;(b) Why should a firm;choose the smallest capacity "bottleneck" as the denominator in a;manufacturing process?;149. "In;fact, a ?favorable' production-volume variance of a ?non-bottleneck' machine or;operation is not favorable to the firm as a whole, rather, it increases work;and costs for the firm." Why?;150. Eileen;Bellows is controller at a new, rapidly growing company that produces;replacement windows for existing houses or for initial installation in new;houses. Competition is stiff in this industry, but the company for which Eileen;works is aggressive in sales development, and just showed a modest profit for;the first year since its founding four years ago. Howard Zeller is controller;at Accents Incorporated, an established drapery and blinds manufacturer. Accent;is an industry leader and has experienced sustained growth in both sales and;profits for the past five years. Eileen: Our manufacturing support costs seem;to be growing over time. For planning and control purposes we're using;currently attainable" standards in our standard cost system, including;the costing of manufacturing overhead. But now that we're making profit, I've;been thinking of a switch to tighter standards. Howard: We've always used ideal;standards, although our enforcement of these goals hasn't been strict. It seems;to work for us.;Required;What does this conversation say about each company's expectations regarding;their standard cost system and anticipatedvariances from each of the;two different systems?;151. Erie;Co. uses machine hours to apply standard overhead cost to production. The;following data pertain to October;Required;Compute the following variances using machine hours as the activity variable;used to assign standard overhead costs toproduction. Show calculations.;(a);Variable overhead;spending variance;(b);Variable overhead;efficiency variance;(c);Fixed overhead spending;variance;(d);Fixed overhead;production-volume variance;152. Bluetop;Company uses standard costs. For the month of April, the firm budgeted $160,000;for total factory overhead based on 40,000 machine hours. The standard calls;for 4 machine hours for each finished units. During April the firm used 39,000;machine hours to manufacture 9,500 units and incurred $159,000 in total factory;overhead.;Required;(a) Determine the total amount of standard factory overhead cost charged to;production in April.;(b) Provide;the correct journal entry to record the application of standard factory;overhead costs to production. (Assume that the company uses a single overhead;account, Manufacturing Overhead.);153. McAllister;Company's master budget for the year just completed was based on 100% capacity;and included 40,000 machine hours and $240,000 total factory overhead. The;budgeted fixed overhead at 75% of factory capacity would be $160,000 (and;30,000 machine hours). The company actually operated at 90% capacity for the;year, and incurred $252,000 total factory overhead.;Required;(a) Determine the factory overhead flexible-budget variance for the year. Show;calculations. (b) Calculate the factoryoverhead production-volume;variance for the year. Show calculations.;154.;Bike Pedals manufactures;bicycle seats. The company budgeted to manufacture 25,000 seats in April with;0.05 standard machine hours per seat. The total variable factory overhead was;budgeted at $30,000 for the operation. During April the company manufactured;30,000 seats using 1,600 machine hours. It incurred $34,000 of variable factory;overhead (VOH) costs.;Required;Determine each of the following variances. Show calculations.;(a);Variable overhead;spending variance.;(b);Variable overhead;efficiency variance.;(c);Variable overhead;flexible-budget variance.;155. Ben;Simon Corp. has the following information about its standards and production;activity for the month of November;Required;Calculate and show supporting calculations for each of the following variances;(a) Variable overhead flexible-budgetvariance. (b) Fixed overhead;spending variance. (c) Fixed overhead production-volume variance.;156.;Dillard, Inc., has;developed the following standard cost data based on a denominator volume of;60,000 direct labor hours (DLHs), which is 75% of the firm's capacity. Budgeted;fixed overhead is $360,000 and budgeted variable overhead is $180,000 at this;level of activity.;During the last period, the company used;48,000 DLHs to produce 128,000 units. It incurred the following manufacturing;costs;Required;Determine all variances for direct materials, direct labor, and factory;overhead. Use a 4-variance breakdown (decomposition)of the total;overhead variance for the period.;157. Harrison;Corporation's direct labor rate variance for May was $200 favorable, and the;direct labor efficiency variance was $150 unfavorable. The total direct labor;payroll for the month was $10,050.;Required;(a) Prepare the summary journal entry (May 31) to accrue payroll costs, to;charge Work in Process Inventory for the standardlabor cost of the;goods manufactured in May, and to record the direct labor variances for the;month.;(b) Assuming that;the direct labor variances are not material, prepare the journal entry that;Harrison would make to close the variance accounts.;158.;Redtop;Co. uses a standard cost system and flexible budgets. The following flexible;budget was prepared at the 80% operating level for the year;However;for purposes of calculating the fixed overhead application rate, the company;defined the denominator volume as the 90% capacity level. The standard calls;for four DLHs per unit manufactured. During the year, Redtop worked 33,600 DLHs;to manufacture 8,500 units. The actual factory overhead was $12,000 greater;than the flexible-budget amount for the units produced, of which $5,000 was due;to fixed factory overhead.;Required;Calculate (and provide supporting details for) each of the following variances;(a);The standard variable;overhead application rate.;(b);The variable overhead efficiency;variance.;(c);The factory overhead;spending variance.;(d);The factory overhead;production-volume variance.;(e);The variable overhead;spending variance.;(f);Provide an;interpretation for each of the above variances you calculated.;159. Carl;Jones Company's master budget for the year just completed was based on 100%;capacity and included 50,000 machine hours and $300,000 total factory overhead.;(That is, the denominator volume, for purposes of calculating the fixed;overhead application rate, is defined as 100% capacity.) Budgeted fixed;overhead at 70% factory capacity is $200,000 (and 35,000 machine hours). The;company operated at 80% capacity for the year, and incurred $275,000 total;factory overhead.;Required;(a) Determine the factory overhead flexible-budget variance for the year just;completed. Show calculations. (b) Calculate thefactory overhead;production-volume variance for the year just completed. Show calculations. (c);Supply an interpretation of each of the two variances calculated above.;160. ABN;Corp. has the following information about its standards and production activity;in May;Required;Calculate and show calculations for each of the following variances;(a);Variable overhead;flexible-budget (FB) variance.;(b);Fixed overhead spending;variance.;(c);Fixed overhead;production-volume variance.;(d);Provide and;interpretation of each of the above variances.;161.You are provided with;the following summary of overhead-related costs for the most recent accounting;period;Required;Prepare the appropriate journal entries for each of the above events. Assume;that the company uses a single account;Manufacturing;Overhead. For entry (f), assume that any overhead variances are closed to Cost;of Goods Sold (CGS).;162.;You are provided with;the following summary of overhead-related costs for the most recent accounting;period for a company that uses a single overhead account, Factory Overhead;into which it records both actual and standard overhead costs during the period;Required;Prepare the proper journal entry for each of the following events;(a);Incurrence of actual FOH;costs for the period.;(b);Incurrence of actual VOH;costs for the period.;(c);Application of standard;overhead costs to production (i.e., WIP inventory).;(d);Recording of standard;overhead costs for units completed during the period.;(e);Recording of the four;standard cost variances for the period.;(f) Closing;the standard cost variances under the assumption that the company closes these;variances entirely to Cost of Goods Sold (CGS).;(g) Closing;the standard cost variances under the assumption that the company prorates the;variances to the CGS and inventory accounts.;163. Management;is currently deciding whether or not to investigate a cost variance that was;identified by the accounting system. To help address this question, you have;generated the following data;Possible States of;Nature;1. The underlying;operation is in control (i.e., is operating normally).;2. The underlying;operation is out of control (and therefore is in need of an intervention);Possible;Decisions/Courses of Action;1. Investigate;the variance (to determine its underlying cause(s)). 2. Do not investigate the;variance;Estimated Costs and;Probabilities;1. Cost of investigating;the variance = I = $5,000.;2. Cost of;correcting an out-of-control process (if the process is found to be out of;control) = C = $10,000. 3. Losses from not correcting an out-of-control;process = L = $110,000.;4.;Probability, p, of the process being out of control = 60% Required;1. Recast the above information in a payoff table.;2. What is the expected;cost of the decision to investigate the variance? Show calculations.;3. What is the expected;cost of the decision to not investigate the variance? Show calculations.;4.;What is the break-even probability of the process being out of control, p;that would make management indifferent between investigating and not;investigating the observed variance? Demonstrate that, in fact, this is the;break-even probability by showing the expected value of each management action.;Show calculations.;164.Management;is currently deciding whether or not to investigate a cost variance that was;identified by the accounting system. To help address this question, you have;generated the following data;Possible States of;Nature;1. The underlying;operation is in control (i.e., is operating normally).;2. The underlying;operation is out of control (and therefore is in need of an intervention);Possible;Decisions/Courses of Action;1. Investigate;the variance (to determine its underlying cause(s)). 2. Do not investigate the;variance.;Estimated Costs and;Probabilities;1.;Cost of investigating the variance = I;= $1,500.;2.;Cost of correcting an;out-of-control process (if the process is found to be out of control) = C

Paper#44929 | Written in 18-Jul-2015

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