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Exam 21: Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

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Question 91

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Goolden Electronics Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) . The company had budgeted its fixed manufacturing overhead cost at $58,000 for the month and its level of activity at 2,500 MHs. The actual total fixed manufacturing overhead was $61,200 for the month and the actual level of activity was 2,600 MHs. What was the fixed manufacturing overhead budget variance for the month to the nearest dollar?

A) $880 Unfavorable
B) $880 Favorable
C) $3,200 Favorable
D) $3,200 Unfavorable

E) A) and D)
F) B) and C)

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Question 92

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Kiker Incorporated makes a single product-an electrical motor used in many long-haul trucks. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: The predetermined overhead rate is closest to:

A) $9.57 per machine-hour
B) $12.11 per machine-hour
C) $7.57 per machine-hour
D) $15.32 per machine-hour

E) A) and D)
F) A) and C)

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Question 93

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Zotta Enterprises uses standard costing and applies manufacturing overhead cost to products on the basis of standard direct labor-hours (DLHs) . Budgeted and actual data relating to manufacturing overhead for last year appear below: The fixed manufacturing overhead cost applied to products was:

The following data for May has been provided by Mccawley Corporation. The volume variance for May is:

Pickell Incorporated makes a single product--a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Required: a. Determine the variable overhead rate variance for the year. b. Determine the variable overhead efficiency variance for the year. c. Determine the fixed overhead budget variance for the year. d. Determine the fixed overhead volume variance for the year. e. Determine whether overhead was underapplied or overapplied for the year and by how much.

The Chuba Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours (DLHs) . During December, the company actually used 7,200 direct labor-hours and made 1,900 units of finished product. The standard cost card for one unit of product includes the following data concerning manufacturing overhead: Variable overhead: 4 DLHs @ $5.25 per DLH Fixed overhead: 4 DLHs @ $2.00 per DLH For December, the company incurred $16,550 in fixed manufacturing overhead costs and recorded an $800 unfavorable volume variance. The denominator activity level in direct labor-hours used by Chuba in setting the predetermined overhead rate was:

The economic impact of the inability to reach a target denominator level of activity would best be measured by:

Fleming Incorporated makes a single product-a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: The fixed overhead budget variance is:

Keeran Corporation estimates that its variable manufacturing overhead is $5.20 per machine-hour and its fixed manufacturing overhead is $242,048 per period. If the denominator level of activity is 6,100 machine-hours, the fixed component in the predetermined overhead rate would be:

The volume variance is nonzero whenever:

The budget variance for fixed manufacturing overhead is the difference between actual fixed manufacturing overhead costs incurred and the amount of fixed manufacturing overhead applied to work in process.

A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period: The overhead applied to products during the period was closest to:

Moozi Dairy Products processes and sells two products: milk and butter. Last year, Moozi budgeted $1,200,000 of fixed manufacturing overhead and chose a denominator level of activity of 80,000 machine-hours. Each unit of milk at Moozi has a standard of 0.1 machine-hours and each unit of butter has a standard of 0.08 machine-hours. Last year, Moozi processed 560,000 units of milk and 340,000 units of butter. Moozi's total fixed manufacturing overhead incurred last year was $1,256,000. Actual machine-hours incurred for the year were 82,000. Moozi applies manufacturing overhead to its products on the basis of standard machine-hours. Required: Compute Moozi's fixed manufacturing overhead variances for last year.

Rodarta Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company's predetermined overhead rate for fixed manufacturing overhead is $1.20 per machine-hour and the denominator level of activity is 6,600 machine-hours. In the most recent month, the total actual fixed manufacturing overhead was $8,340 and the company actually worked 6,400 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 6,480 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

A fixed manufacturing overhead budget variance occurs as the result of a difference between the denominator level of activity (in hours) and the standard hours allowed for the actual output of the period.

Recht Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $9.30 per machine-hour and fixed manufacturing overhead cost of $17,940 per period. If the denominator level of activity is 1,200 machine-hours, the fixed element in the predetermined overhead rate would be:

Arca Incorporated makes a single product-a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: The predetermined overhead rate is closest to: