Question

Q1:

The standard costs and actual costs for factory overhead for the manufacture of 2,700 units of actual production are as follows:

Standard Costs
Fixed overhead (based on 10,000 hours)	3 hours per unit @ $0.73 per hour
Variable overhead	3 hours per unit @ $2.03 per hour
Actual Costs
Total variable cost, $18,000
Total fixed cost, $8,100

The amount of the fixed factory overhead volume variance is

$1,110 unfavorable

$1,387 unfavorable

$1,110 favorable

$0

Q2:

The standard costs and actual costs for factory overhead for the manufacture of 2,600 units of actual production are as follows:

Standard Costs
Fixed overhead (based on 10,000 hours)	3 hours per unit @ $0.76 per hour
Variable overhead	3 hours per unit @ $1.96 per hour
Actual Costs
Total variable cost, $17,900
Total fixed cost, $8,200

The amount of the variable factory overhead controllable variance is

$0

$2,090 favorable

$2,612 favorable

$2,612 unfavorable

Q3:

ABC Corporation has three service departments with the following costs and activity base:

Service Department	Cost	Activity Base for Allocation
Graphics Production	$200,000	number of copies
Accounting	500,000	number of invoices processed
Personnel Department	400,000	number of employees

ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:

	Micro	Macro	Super
Direct revenues	$700,000	$850,000	$650,000
Direct operating expenses	50,000	70,000	100,000
Number of copies made	20,000	30,000	50,000
Number of invoices processed	700	800	500
Number of employees	130	145	125

What is the service department charge rate for the Accounting Department?

a.$250

b.$0.004

c.$625

d.$714

Q4:

ABC Corporation has three service departments with the following costs and activity base:

Service Department	Cost	Activity Base for Allocation
Graphics Production	$200,000	number of copies
Accounting	500,000	number of invoices processed
Personnel Department	400,000	number of employees

ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:

	Micro	Macro	Super
Direct revenues	$700,000	$850,000	$650,000
Direct operating expenses	50,000	70,000	100,000
Number of copies made	20,000	30,000	50,000
Number of invoices processed	700	800	500
Number of employees	130	145	125

How much service department cost will be allocated to the Micro Division?

a.$145,000

b.$200,000

c.$345,000

d.$60,000

Answer 1

Q 1. 0

Explanation: Fixed Overhead volume variance will be zero because standard production and budgeted production is same. Fixed Overhead Volume varaince is the differnce between standard and budgeted fixed overhead.

Q 2. $ 2612 unfavourable

Explanation:

Variable controllable variance	Actual Factory Overhead-Budgeted allowance based on sthandard hours allowed
	17900-(2600*3*1.96)
	2612	unfavourable

3. $ 250

Explanation:

Total Cost of Accounting Department = $ 500,000

No of invoice processed (700+800+500) =2000

Rate =$ 500000/2000

= $ 250

4. C $ 3,45,000

Explanation:

Service Department	Cost	Activity Base for Allocation	No of cost driver	Rate
Graphics Production	$200,000	number of copies	100000	2
Accounting	500,000	number of invoices processed	2000	250
Personnel Department	400,000	number of employees	400	1000
Cost allocated to micro
	rate	activity	cost allocated
Graphics Production	2	20000	40000
Accounting	250	700	175000
Personnel Department	1000	130	130000
	Total		345000