general business data bank accounts

51. In regard to the investigation of variances under uncertainty, which of the following is not a positive (i.e., desirable) combination of courses of actionand states of nature?

A. Investigate; a random fluctuation has occurred.

B. Do not investigate; a random fluctuation has occurred.

C. Do not investigate; a noncontrollable fluctuation has occurred.

D. Investigate; a nonrandom fluctuation has occurred.

52. The difference between the total factory overhead cost in the flexible budget for the actual units produced and the amount of factory overhead cost applied to products using the standard overhead rate is called the factory overhead ______________

A. Flexible-budget variance.

B. Production-volume variance.

C. Total fixed cost variance.

D. Efficiency variance.

E. Controllable variance.

53. The difference between total factory overhead cost incurred during a period and the total standard factory overhead cost assigned to production of the period is the ______________

A. Flexible-budget variance.

B. Production-volume variance.

C. Total factory overhead variance.

D. Overhead efficiency variance.

E. Total overhead spending variance.

54. For product-costing purposes, which of the following statements is true?

A. It is necessary to "unitize" fixed overhead costs, under the absorption or full-costing approach.

B. The amount of standard fixed overhead costs for product-costing and control purposes is the same.

C. Only standard variable overhead costs are included since these costs change in response to cost drivers.

D. Standard costing is not permissible under generally accepted accounting principles.

E. Total fixed overhead costs are applied as a "lump-sum" amount.

55. All of the following choices exist for defining the denominator volume (denominator activity level) for assigning fixed overhead costs in a standard cost system, except:

A. Budgeted capacity utilization.

B. Actual capacity utilization.

C. Theoretical capacity.

D. Practical capacity.

E. Normal capacity.

56. In terms of allocating fixed overhead cost to products, generally accepted accounting principles:

A. Require that such allocations be based on normal capacity.

B. Allow for the use of either practical capacity or theoretical capacity.

C. Don't apply since the resulting data are used only internally (for control purposes).

D. Specify only that such costs be "reasonably allocated" to outputs.

57. For internal reporting purposes, it is recommended that fixed overhead allocation rates in a standard costing system be based on:

A. Budgeted capacity usage.

B. Theoretical capacity since this is the level required under generally accepted accounting principles.

C. Actual capacity utilization.

D. Expected capacity usage.

E. Practical capacity.

58. The "death-spiral" effect refers to:

A. The allocation of fixed overhead costs over time to an increasing volume of output.

B. A possible consequence when variable, not full, costing is used.

C. A likely consequence when fixed overhead allocation rates are based on practical capacity.

D. The continual raising of prices in an attempt to recover fixed costs.

E. Increases in product demand over time in response to increases in fixed promotional costs.

59. Which one of the following journal entries in a standard cost system is needed to record the completion of production for the period?

A. A debit to Work-in-Process Inventory, at standard cost.

B. A debit to Work-in-Process Inventory, at actual cost.

C. A credit to Cost of Goods Sold, at standard cost.

D. A debit to Finished Goods Inventory, at standard cost.

E. A debit to Finished Goods Inventory, at actual cost.

60. Which one of the following journal entries in a standard cost system is needed at the end of the period to close out to Cost of Goods Sold an unfavorable production-volume variance?

A. A credit to Finished Goods Inventory, at standard cost.

B. A credit to Cost of Goods sold, at standard cost.

C. A credit to Cost of Goods sold, at actual cost.

D. A debit to the Production-Volume Variance account.

E. A debit to Cost of Goods sold.

61. Which one of the following journal entries in a standard cost system would be used to apply factory overhead costs to production?

A. A debit to the factory overhead account, at standard cost.

B. A credit to the factory overhead account, at standard cost.

C. A debit to WIP inventory, at actual cost.

D. A credit to Finished Goods Inventory, at standard cost.

62. Some accountants would argue that any variances from standard costs, when such standards are current, should be written off to cost of goods sold. The principal rationale for this treatment is:

A. This is the treatment required currently under generally accepted accounting principles.

B. To allocate such variances implies that asset values on the balance sheet (i.e., inventories) contain the cost of inefficiencies.

C. The negligible effect this treatment has on total cost of goods sold for the period.

D. Consistency with current income tax provisions.

63. If standard cost variances are allocated (i.e., prorated) to inventory and cost of goods sold (CGS) accounts at the end of a period, which of the following is correct?

A. Conceptually, the amount allocated to each account is based on the relative amount of the current period's standard cost in the end-of-period balance in each account.

B. The resulting balances represent relative actual cost in each of the affected accounts.

C. There is a presumption that the net variance for the period is immaterial in amount.

D. The amount allocated to inventories is generally larger than the amount allocated to CGS.

64. Which of the following statement is true regarding choice of the denominator volume level in conjunction with the process of allocating fixed manufacturing costs to production?

A. The choice typically will affect end-of-period asset values, but not the production-volume variance for the period.

B. The choice is important only if the company in question uses variable costing.

C. Under absorption (full) costing, this choice can affect reported profits for the period.

D. This choice has no effect on the standard overhead cost-allocation rate.

E. The choice affects the standard overhead cost-allocation rate but not product cost.

65. When a company uses absorption costing, there is the potential for income manipulation based on choice of the denominator volume for setting the fixed overhead allocation rate. In which case is this manipulation-potential manifested?

A. When sales volume > production volume, and the production-volume variance is prorated to inventories and cost of goods sold at the end of the period.

B. When sales volume < production volume, and the production-volume variance is prorated to inventories and cost of goods sold at the end of the period.

C. When the production-volume variance is written off entirely as an adjustment to cost of goods sold at the end of the period.

D. When budgeted output is used to develop the standard overhead cost-allocation rate.

66. The following budget data pertain to the Machining Department of Yolkenverst Co.:

The company prepared the budget at 85% of the maximum capacity level. The department uses machine hours as the basis for applying standard factory overhead costs to production. The standard fixed overhead application rate for the Machining Department is:

A. $2.89 per machine hour.

B. $3.40 per machine hour.

C. $3.47 per machine hour.

D. $4.08 per machine hour.

E. $8.50 per machine hour.

^67.The following budget data pertain to the Machining Department of Yolkenverst Co.:

The company prepared the budget at 85% of the maximum capacity level. The department uses machine hours as the basis for applying

standard factory overhead costs to production. The budgeted total factory overhead for the Machining Department is:

A. $617,100.

B. $875,000.

C. $883,500.

D. $892,500.

E. $1,050,000.

A. The following budget data pertain to the Machining Department of Yolkenverst Co.:

The company prepared the budget at 85% of the maximum capacity level. The department uses machine hours as the basis for applying standard factory overhead costs to production. During the year the Machining Department produced 50,000 units, consuming 127,500 machine hours and incurring $433,500 of fixed overhead. For the current year the department has a production-volume variance of:

A. $0.

B. $3,400 unfavorable.

C. $3,600 unfavorable.

D. $7,000 unfavorable.

E. $8,500 unfavorable.

69. The following information is available from Thinnews Co., a company that uses machine hours to apply factory overhead:

The total actual variable factory overhead cost incurred during the year was:

A. $13,000.

B. $14,000.

C. $14,100.

D. $14,400.

E. $15,000.

F. A

70. The following information is available from Thinnews Co., a company that uses machine hours to apply factory overhead:

The standard fixed overhead application rate is:

A. $1.00 per machine hour.

B. $2.00 per machine hour.

C. $3.00 per machine hour.

D. $4.00 per machine hour.

E. $5.00 per machine hour.

71. The following information is available from Thinnews Co., a company that uses machine hours to apply factory overhead:

The variable overhead spending variance is:

A. $600 unfavorable.

B. $1,000 favorable.

C. $1,400 unfavorable.

D. $1,500 favorable.

E. $2,100 favorable.

72.

The following information is available from Thinnews Co., a company that uses machine hours to apply factory overhead:

The variable factory overhead efficiency variance is:

A. $600 unfavorable.

B. $1,000 favorable.

C. $1,400 unfavorable.

D. $1,500 favorable.

E. $2,100 favorable.

73. The following information is available from Thinnews Co., a company that uses machine hours to apply factory overhead:

The factory overhead production-volume variance is:

A. $600 unfavorable.

B. $1,000 favorable.

C. $1,400 unfavorable.

D. $1,500 favorable.

E. $2,100 favorable.

74. The following information is available from Thinnews Co., a company that uses machine hours to apply factory overhead:

Under a three-variance breakdown (decomposition) of the total factory overhead variance, the total factory overhead spending variance is:

A. $0.

B. $600 unfavorable.

C. $1,400 favorable.

D. $1,400 unfavorable.

E. $2,000 favorable.

75. The following information is available from Thinnews Co., a company that uses machine hours to apply factory overhead:

Under a three-variance breakdown (decomposition) of the total factory overhead variance, the factory overhead efficiency variance is:

A. $400 favorable.

B. $600 unfavorable.

C. $1,400 favorable.

D. $1,400 unfavorable.

E. $2,000 favorable.

76.

The following information is available from Thinnews Co., a company that uses machine hours to apply factory overhead:

Under a three-variance breakdown (decomposition) of the total factory overhead variance, the factory overhead production-volume variance is:

A. $400 favorable.

B. $600 unfavorable.

C. $1,400 favorable.

D. $1,400 unfavorable.

E. $2,000 favorable.

77. The following information is available from Thinnews Co., a company that uses machine hours to apply factory overhead:

Under a two-variance breakdown (decomposition) of the total factory overhead variance, the factory overhead controllable variance (i.e., total flexible-budget variance) is:

A. $400 favorable.

B. $600 unfavorable.

C. $1,400 favorable.

D. $1,400 unfavorable.

E. $2,000 favorable.

78. The following information is available from Thinnews Co., a company that uses machine hours to apply factory overhead:

Under a two-variance breakdown (decomposition) of the total factory overhead variance, the factory overhead efficiency variance is:

A. $0.

B. $400 favorable.

C. $600 unfavorable.

D. $1,400 favorable.

E. $1,400 unfavorable.

79. The following information is available from Thinnews Co., a company that uses machine hours to apply factory overhead:

Under a two-variance breakdown (decomposition) of the total factory overhead variance, the factory overhead production-volume variance is:

A. $400 favorable.

B. $600 unfavorable.

C. $1,400 favorable.

D. $1,400 unfavorable.

E. $2,000 favorable.

^80. Bonehead Co. has the following factory overhead costs:

The total overhead flexible-budget (FB) variance is:

A. $4,000 unfavorable.

B. $7,000 favorable.

C. $10,000 favorable.

D. $11,000 unfavorable.

E. $14,000 unfavorable.

81. Bonehead Co. has the following factory overhead costs:

The factory overhead production-volume variance is:

A. $4,000 unfavorable.

B. $7,000 favorable.

C. $10,000 favorable.

D. $11,000 unfavorable.

E. $14,000 unfavorable.

82. Bonehead Co. has the following factory overhead costs:

The total underapplied or overapplied factory overhead for the period is:

A. $4,000 underapplied.

B. $7,000 overapplied.

C. $10,000 overapplied.

D. $11,000 underapplied.

E. $14,000 underapplied.

83. Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2010:

During 2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units. The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced, of which $6,000 was due to fixed factory overhead. In preparing a budget for 2011 Bluecap decided to raise the level of operation to 90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours. The standard variable overhead application rate per direct labor hour in 2010 was:

A. $4.30.

B. $4.50.

C. $6.90.

D. $9.30.

E. $9.60.

84. Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2010:

During 2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units. The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced, of which $6,000 was due to fixed factory overhead. In preparing a budget for 2011 Bluecap decided to raise the level of operation to 90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours. The total budget for fixed factory overhead in 2010 was:

A. $230,400.

B. $259,200.

C. $265,200.

D. $276,480.

E. $288,000.

85.

Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2010:

During 2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units. The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced, of which $6,000 was due to fixed factory overhead. In preparing a budget for 2011 Bluecap decided to raise the level of operation to 90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours. Under the assumption that the total budgeted fixed overhead for 2011 is the same as it was for 2010, what is the standard fixed overhead application rate per direct labor hour for 2011?

A. $4.30.

B. $4.50.

C. $6.90.

D. $9.30.

E. $9.60.

86. Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2010:

During 2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units. The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced, of which $6,000 was due to fixed factory overhead. In preparing a budget for 2011 Bluecap decided to raise the level of operation to 90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours. The variable overhead efficiency variance in 2010 is:

A. $3,440 favorable.

B. $8,000 unfavorable.

C. $9,200 favorable.

D. $11,440 unfavorable.

E. $17,200 unfavorable.

87. Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2010:

During 2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units. The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced, of which $6,000 was due to fixed factory overhead. In preparing a budget for 2011 Bluecap decided to raise the level of operation to 90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours.

The factory overhead spending variance in 2010, based on a three-variance breakdown (decomposition) of the total overhead variance is:

A. $3,200 favorable.

B. $11,440 unfavorable.

C. $15,040 favorable.

D. $17,280 favorable.

E. $17,440 unfavorable.

88. Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2010:

During 2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units. The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced, of which $6,000 was due to fixed factory overhead. In preparing a budget for 2011 Bluecap decided to raise the level of operation to 90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours. The variable overhead spending variance in 2010 is:

A. $6,000 unfavorable.

B. $8,000 unfavorable.

C. $9,200 favorable.

D. $11,440 unfavorable.

E. $17,440 unfavorable.

89.

Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2010:

During 2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units. The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced, of which $6,000 was due to fixed factory overhead. In preparing a budget for 2011 Bluecap decided to raise the level of operation to 90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours. The fixed overhead production-volume variance in 2010 is:

A. $11,280 favorable.

B. $17,280 favorable.

C. $28,800 unfavorable.

D. $34,800 unfavorable.

E. $51,840 favorable.

90. Bluecap Co. uses a standard cost system and flexible budgets for control purposes. The following budgeted information pertains to 2010:

During 2010, Bluecap worked 28,000 direct labor hours and manufactured 9,600 units. The actual factory overhead was $14,000 greater than the flexible budget amount for the units produced, of which $6,000 was due to fixed factory overhead. In preparing a budget for 2011 Bluecap decided to raise the level of operation to 90% of capacity, to manufacture 9,000 units at a budgeted total of 27,000 direct labor hours. The total overhead variance in 2010 is:

A. $14,000 unfavorable.

B. $15,040 favorable.

C. $17,280 favorable.

D. $37,840 favorable.

E. $37,840 unfavorable.

91. Neptune Inc. uses a standard cost system and has the following information for April:

The total underapplied or overapplied factory overhead is:

A. $1,900 underapplied.

B. $1,900 overapplied.

C. $3,200 underapplied.

D. $3,200 overapplied.

E. $5,100 overapplied.

92. Neptune Inc. uses a standard cost system and has the following information for April:

The total factory overhead spending variance is:

A. $940 unfavorable.

B. $1,040 favorable.

C. $1,980 favorable.

D. $2,160 favorable.

E. $3,200 favorable.

93. Neptune Inc. uses a standard cost system and has the following information for April:

The factory overhead production-volume variance is:

A. $940 unfavorable.

B. $1,040 favorable.

C. $1,980 favorable.

D. $2,160 favorable.

E. $3,200 favorable.

94. Neptune Inc. uses a standard cost system and has the following information for April:

The variable factory overhead efficiency variance is:

A. $940 unfavorable.

B. $1,040 favorable.

C. $1,980 favorable.

D. $2,160 favorable.

E. $3,200 favorable.

95. Neptune Inc. uses a standard cost system and has the following information for April:

The total factory overhead flexible-budget variance is:

A. $940 unfavorable.

B. $1,040 favorable.

C. $1,980 favorable.

D. $2,160 favorable.

96. At the denominator activity level, Norland Company's total overhead budget for 25,000 units of production shows variable overhead costs of $36,000 and fixed overhead costs of $32,000. During the most recent period, the company incurred total overhead costs of $61,400 to manufacture 20,000 units. The total factory overhead flexible-budget variance is:

A. $200 favorable.

B. $600 unfavorable.

C. $6,000 unfavorable.

D. $6,600 favorable.

E. $7,000 unfavorable.

97. At the denominator activity level, Norland Company's total overhead budget for 25,000 units of production shows variable overhead costs of $36,000 and fixed overhead costs of $32,000. During the most recent period, the company incurred total overhead costs of $61,400 to manufacture 20,000 units. The total factory overhead variance is:

A. $200 favorable.

B. $600 unfavorable.

C. $6,000 unfavorable.

D. $6,600 favorable.

E. $7,000 unfavorable.

98. Xero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH), calculated at 90% capacity = 900 standard DLHs. In December, the company operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300 was for fixed factory overhead. What is the factory overhead production-volume variance for December?

A. $0.

B. $150 unfavorable.

C. $225 favorable.

D. $425 unfavorable.

E. $650 unfavorable.

99. Xero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH), calculated at 90% capacity = 900 standard DLHs. In December, the company operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300 was for fixed factory overhead. If the company uses a two-way breakdown (decomposition) of the total overhead variance, what is the total factory overhead flexible-budget variance for December?

A. N/A—this variance doesn't exist under a two-way breakdown of the total overhead variance.

B. $225 favorable.

C. $425 unfavorable.

D. $650 unfavorable.

E. $690 unfavorable.

100. Xero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH), calculated at 90% capacity = 900 standard DLHs. In December, the company operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300 was for fixed factory overhead. Assuming the use of a two-way breakdown (decomposition) of the total overhead variance, what is the factory overhead efficiency variance for December?

A. N/A—this variance does not exist under a two-way breakdown of the total overead variance.

B. $90 unfavorable.

C. $150 unfavorable.

D. $225 favorable.

E. $425 unfavorable.