Question

TRUE/FALSE.Write'T'if the statement is true and 'F' if the statement is false )

. 1) Flexible budgets reflect a company's anticipated costs based on variations in activity levels.

2) Both normal- and standard- costing systems use a predetermined overhead rate.

3) Efficient or inefficient use of a specific component of variable overhead(e.g.,electricity)will cause the firm to have a variable-overhead efficiency variance.

4) The activity-based flexible budget provides a more accurate benchmark against which to compare actual costs than does a conventional flexible budget.

5) The sales-price variance is the difference between the actual and budgeted sales prices multiplied by the actual sales volume

6) Admac Technologies has a standard variable overhead rate of $4.50 per machine hour,and each unit produced has a standard time allowed of three hours. The company's static budget was based on 46,000 units .Actual results for the year follow.

Actual units produced:42,000

Actual machine hours worked:120,000

Actual variable overhead incurred:$520,000

A dmac's variable-overhead spending variance is:

A) $27,000 favorable.

B) $20,000 unfavorable.

C) $20,000 favorable

. D) $27,000 unfavorable.

SHORT ANSWERS

7) Briefly describe the procedures that a reused to apply manufacturing overhead to production for companies that use

(1)normal costing systems

(2)those that use standard costing systems.

8) Consider the seven statements that follow.

Required: Determine whether the preceding statements are true or false. If a statement is false,briefly explain why it is false.

1.An analysis of fixed overhead will typically result in the computation of the fixed-overhead spending variance and the fixed-overhead volume variance.

2.The standard rate for fixed overhead is computed by dividing a company's budgeted fixed overhead for the period by the planned manufacturing activity.

3.A company uses direct labor hours to apply manufacturing overhead to units of production .If the company reports an unfavorable labor efficiency variance,that same firm might report a favorable variable-overhead efficiency variance in the same accounting period.

4.The amount of actual fixed overhead for an accounting period is used to compute the fixed-overhead volume variance.

5.If a company's standard hours allowed for the manufacturing activity attained exceeds the planned manufacturing activity, the firm will report a favorable fixed-overhead volume variance.

6.The amount of fixed overhead that a company has budgeted for an accounting period will increase or decrease with the actual number of units produced.

7.The fixed-overhead volume variance indicates whether the level of production activity attained is higher or lower than the level originally anticipated.

Answer 1