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Exam 15: Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

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Question 31

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Vette Tie Corporation has developed the following manufacturing overhead standards to use in applying overhead to the production of its hand-painted silk ties.Manufacturing overhead at Vette is applied to production on the basis of standard direct labor-hours (DLHs) . The above standards were based on an expected annual volume of 60,000 ties.The actual results for last year were as follows: What was Vette's variable overhead rate variance?

A) $2,800 Unfavorable
B) $13,200 Favorable
C) $16,000 Favorable
D) $68,000 Unfavorable

E) B) and C)
F) None of the above

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Question 32

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In a standard costing system where the denominator activity for the predetermined overhead rate is labor-hours,overhead costs are applied to work in process on the basis of the standard labor-hours allowed for the actual output.

A) True
B) False

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Question 33

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Sulema,Inc.repairs and refinishes antique furniture.Manufacturing overhead at Sulema is applied to production on the basis of standard direct labor-hours.Which overhead variance(s) at Sulema would be unfavorably affected if the cost of solvents used to strip the old paint from the furniture unexpectedly doubles in price?

In a standard cost system,overhead is applied to production on the basis of:

A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours.The company's choice of the denominator level of activity affects the fixed manufacturing overhead volume variance.

Nitrol Corporation manufactures brass vases using a standard cost system with standard machine-hours as the activity base for overhead.The following information relates to vase production at Nitrol for last year: The standard machine-hours per vase is 1.25.Last year Nitrol produced 84,000 vases. What was Nitrol's variable overhead rate variance for last year?

The Murray Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours (DLHs) .The company recorded the following activity and cost data for May: The amount of fixed manufacturing overhead cost applied during May was:

The fixed manufacturing overhead volume variance is more meaningful than the budget variance for cost control purposes.

Bruley Corporation applies manufacturing overhead to products on the basis of standard machine-hours.The company's predetermined overhead rate for fixed manufacturing overhead is $3.30 per machine-hour and the denominator level of activity is 3,500 machine-hours.In the most recent month,the total actual fixed manufacturing overhead was $11,570 and the company actually worked 3,430 machine-hours during the month.The standard hours allowed for the actual output of the month totaled 3,450 machine-hours.What was the overall fixed manufacturing overhead volume variance for the month?

Oldham Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $4.00 per machine-hour and fixed manufacturing overhead cost of $87,822 per period.If the denominator level of activity is 4,100 machine-hours,the fixed component in the predetermined overhead rate would be:

Derf Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours.Two direct labor-hours are required for each unit produced.The denominator activity was set at 9,000 units.Manufacturing overhead was budgeted at $135,000 for the period;20 percent of this cost was fixed.The 17,200 hours worked during the period resulted in production of 8,500 units.Variable manufacturing overhead cost incurred was $108,500 and fixed manufacturing overhead cost was $28,000. The variable overhead efficiency variance for the period was:

The Murray Corporation makes and sells a single product.The company recorded the following activity and cost data for May: The fixed component of the predetermined overhead rate is $0.95 per direct labor-hour. The amount of fixed manufacturing overhead cost applied to work in process during May was:

A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours.A fixed manufacturing overhead volume variance will NOT necessarily occur in a month in which there is a fixed manufacturing overhead budget variance.

Reidenbach Corporation applies manufacturing overhead to products on the basis of standard machine-hours.The budgeted fixed manufacturing overhead cost for the most recent month was $17,100 and the actual fixed manufacturing overhead cost for the month was $17,450.The company based its original budget on 4,500 machine-hours.The standard hours allowed for the actual output of the month totaled 4,810 machine-hours.What was the overall fixed manufacturing overhead budget variance for the month?

The Dillon Corporation makes and sells a single product.Overhead costs are applied on the basis of standard direct labor-hours.The standard cost card shows that 5 direct labor-hours are required per unit.The Dillon Corporation had the following budgeted and actual data for March: The variable overhead efficiency variance for March is:

The Claus Corporation makes and sells a single product and uses standard costing.During January,the company actually used 8,700 direct labor-hours (DLHs) and produced 3,000 units of product.The standard cost card for one unit of product includes the following: Variable factory overhead: 3.0 DLHs @ $4.00 per DLH. Fixed factory overhead: 3.0 DLHs @ $3.50 per DLH. For January,the company incurred $22,000 of actual fixed manufacturing overhead costs and recorded a $875 favorable volume variance. The fixed manufacturing overhead cost used to compute the predetermined overhead rate was:

Which of the following variances is generally the least significant from the standpoint of cost control?

A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours.The company's choice of the denominator level of activity has no effect on the variable portion of the predetermined overhead rate.

Dexter Corporation uses a standard cost system and applies manufacturing overhead cost to units of product on the basis of standard direct labor-hours (DLHs) .Information on Dexter Corporation's manufacturing overhead costs for last period is given below: Given these data,the underapplied or overapplied overhead cost for the period would be:

A manufacturing company 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 predetermined overhead rate per MH is closest to: