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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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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:

A) $17.91 per MH
B) $18.59 per MH
C) $18.00 per MH
D) $18.50 per MH

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

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Question 32

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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?

A) $66 Favorable
B) $231 Favorable
C) $231 Unfavorable
D) $165 Unfavorable

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

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Question 33

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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.

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.

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:

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:

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?

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

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?

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

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:

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?

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?

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

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:

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:

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.

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 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:

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.