Flexible Budgets, Overhead Cost Variances, And Management Control

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Questions Bank

The Manager and Management Accounting
An Introduction to Cost Terms and Purposes
Cost-Volume-Profit Analysis
Job Costing
Activity-Based Costing and Activity-Based Management
Master Budget and Responsibility Accounting
Flexible Budgets, Direct-Cost Variances, and Management Control
Flexible Budgets, Overhead Cost Variances, and Management Control
Inventory Costing and Capacity Analysis
Determining How Costs Behave
Decision Making and Relevant Information
Strategy, Balanced Scorecard, and Strategic Profitability Analysis
Pricing Decisions and Cost Management
Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis
Allocation of Support-Department Costs, Common Costs, and Revenues
Cost Allocation: Joint Products and Byproducts
Process Costing
Spoilage, Rework, and Scrap
Balanced Scorecard: Quality and Time
Inventory Management, Just-in-Time, and Simplified Costing Methods
Capital Budgeting and Cost Analysis
Management Control Systems, Transfer Pricing, and Multinational Considerations
Performance Measurement, Compensation, and Multinational Considerations

All Questions

Question 1

Free

Multiple Choice

Compared to variable overhead costs planning, fixed overhead cost planning has an additional strategic issue beyond undertaking only essential activities and efficient operations. That additional requirement is best described as:

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focusing on the highest possible quality

increasing the linearity between total costs and volume of production

choosing the appropriate level of capacity that will benefit the company in the long-run

identifying essential value-adding activities

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Question 2

Free

Multiple Choice

Effective planning of variable overhead costs means that managers must

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increase the expenditures in the variable overhead budgets

focus on activities that add value for the customer and eliminate nonvalue-added activities

increase the linearity between total costs and volume of production

identify the product advertising requirements and factor those into the variable overhead budget

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Question 3

Free

Multiple Choice

Which of the following is a true statement of energy costs?

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Energy costs are not controllable

Strategies to reduce energy costs will not impact variable cost budgets.

Energy costs are a fixed cost of doing business for a manufacturer.

Energy costs are a growing component of variable overhead costs.

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Question 4

Free

Multiple Choice

Fixed overhead costs include ________ .

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the cost of sales commissions

Leasing of machinery used in a factory

energy costs

indirect materials

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Question 5

Free

Multiple Choice

Effective planning of fixed overhead costs includes ________ .

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planning day-to-day operational decisions

eliminating value-added costs

determining which products are to be produced

choosing the appropriate level of investment in productive assets

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Question 6

Multiple Choice

Effective planning of variable overhead costs includes ________ .

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choosing the appropriate level of investment

eliminating value-added costs

redesigning products or processes to use fewer resources

reorganizing management structure

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Question 7

Multiple Choice

Most of the decisions determining the level of fixed overhead costs to be incurred will be made ________ .

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by the end of a budget period

by the middle of a budget period

on a day-to-day ongoing basis

at the start of a budget period

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Question 8

Multiple Choice

The major challenge when planning fixed overhead is ________ .

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calculating total costs

calculating the cost-allocation rate

choosing the appropriate level of capacity

choosing the appropriate planning period

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Question 9

True/False

An effective plan for variable overhead costs will eliminate activities that do not add value.

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True

False

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Question 10

True/False

At the start of the budget period, management will have made most decisions regarding the level of fixed overhead costs to be incurred.

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True

False

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Question 11

True/False

The planning of fixed overhead costs differs from the planning of variable overhead costs in terms of timing.

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True

False

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Question 12

True/False

The costs related to buildings (such as rent and insurance), equipment (such as lease payments or straight-line depreciation), and salaried labor in a factory are all examples of cost items that would be part of the fixed overhead budget.

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True

False

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Question 13

Multiple Choice

Which of the following mathematical expression is used to calculate budgeted variable overhead cost rate per output unit?

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Budgeted output allowed per input unit × Budgeted variable overhead cost rate per input unit

Budgeted input allowed per output unit ÷ Budgeted variable overhead cost rate per input unit

Budgeted output allowed per input unit ÷ Budgeted variable overhead cost rate per input unit

Budgeted input allowed per output unit × Budgeted variable overhead cost rate per input unit

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Question 14

Multiple Choice

While calculating the costs of products and services, a standard costing system ________ .

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allocates overhead costs on the basis of the actual overhead-cost rates

uses standard costs to determine the cost of products

does not keep track of overhead cost

traces direct costs to output by multiplying the standard prices or rates by the actual quantities

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Question 15

Multiple Choice

Which of the following best defines standard costing?

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It is the same as actual costing but done in real time.

It is a system that traces direct cost to output by multiplying actual process or rates by actual quantities of inputs + allocates overhead by on the basis of actual quantities of the allocation base used.

It is a system that traces direct costs to output produced by multiplying the standard prices or rates by the standard quantities of inputs allowed for the actual output produced.

It is a system that allocates overhead costs on the basis of standard overhead cost rates times the actual quantities of the allocation based used.

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Question 16

Multiple Choice

Which of the following is the mathematical expression for the budgeted fixed overhead cost per unit of cost allocation base?

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Budgeted fixed overhead cost per unit of cost allocation base = Actual total costs in fixed overhead cost pool ÷ Budgeted total quantity of cost allocation base

Budgeted fixed overhead cost per unit of cost allocation base = Budgeted total costs in fixed overhead cost pool ÷ Budgeted total quantity of cost allocation base

Budgeted fixed overhead cost per unit of cost allocation base = Actual total costs in fixed overhead cost pool ÷ Actual total quantity of cost allocation base

Budgeted fixed overhead cost per unit of cost allocation base = Budgeted total costs in fixed overhead cost pool ÷ Actual total quantity of cost allocation base

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Question 17

Multiple Choice

In flexible budgets the costs that are not "flexed" because they remain the same within a relevant range of activity (such as sales or output) are called ________ .

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total overhead costs

total budgeted costs

fixed costs

variable costs

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Question 18

Multiple Choice

Really Great Corporation manufactures industrial-sized landscaping trailers and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:

What is the budgeted variable overhead cost rate per output unit?

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$9.60

$12.40

$7.75

$31.00

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Question 19

Multiple Choice

Home Plate Corporation manufactures baseball uniforms and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:

What is the budgeted variable overhead cost rate per output unit?

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$6.26

$6.00

$17.00

$18.00

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Question 20

Multiple Choice

Healthy Earth Products Inc. produces fertilizer and distributes the product by using company trucks. The controller of the company uses budgeted fleet hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:

What is the budgeted variable overhead cost rate per output unit?

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$114.00

$117.00

$123.16

$120.00

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Flexible Budgets, Overhead Cost Variances, And Management Control

Compared to variable overhead costs planning, fixed overhead cost planning has an additional strategic issue beyond undertaking only essential activities and efficient operations. That additional requirement is best described as:

Effective planning of variable overhead costs means that managers must

Which of the following is a true statement of energy costs?

Fixed overhead costs include ________ .

Effective planning of fixed overhead costs includes ________ .

Effective planning of variable overhead costs includes ________ .

Most of the decisions determining the level of fixed overhead costs to be incurred will be made ________ .

The major challenge when planning fixed overhead is ________ .

An effective plan for variable overhead costs will eliminate activities that do not add value.

At the start of the budget period, management will have made most decisions regarding the level of fixed overhead costs to be incurred.

The planning of fixed overhead costs differs from the planning of variable overhead costs in terms of timing.

The costs related to buildings (such as rent and insurance), equipment (such as lease payments or straight-line depreciation), and salaried labor in a factory are all examples of cost items that would be part of the fixed overhead budget.

Which of the following mathematical expression is used to calculate budgeted variable overhead cost rate per output unit?

While calculating the costs of products and services, a standard costing system ________ .

Which of the following best defines standard costing?

Which of the following is the mathematical expression for the budgeted fixed overhead cost per unit of cost allocation base?

In flexible budgets the costs that are not "flexed" because they remain the same within a relevant range of activity (such as sales or output) are called ________ .

Really Great Corporation manufactures industrial-sized landscaping trailers and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:What is the budgeted variable overhead cost rate per output unit?

Home Plate Corporation manufactures baseball uniforms and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:What is the budgeted variable overhead cost rate per output unit?

Home Plate Corporation manufactures baseball uniforms and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:

What is the budgeted variable overhead cost rate per output unit?