WorksheetsACC2706 Standard costs, flexible budgets & MOH Week 11
Total questions: 10
Worksheet time: 8mins
Static budgets are:
Prepared for a range of activity levels
Updated for the actual level of activity
Provide valid basis for comparing actual and expected costs
Prepared for a single, planned level of activity
Which of the following is true about flexible budgeting?
Flexible budgets are prepared for one specific activity level
Total variable costs change in direct proportion to changes in activity
Total fixed costs change within the relevant range
What does a favourable variable overhead spending variance indicate?
Actual variable overhead rate is higher than standard variable overhead rate
Actual variable overhead rate is lower than standard variable overhead rate
Actual variable overhead is lower than standard variable overhead
Actual variable overhead is higher than standard variable overhead
What does a favourable fixed overhead budget variance indicate?
Actual fixed overhead is lower than budgeted fixed overhead
Actual fixed overhead is higher than budgeted fixed overhead
Actual hours allowed is lower than standard hours allowed
Actual hours allowed is higher than standard hours allowed
Which variable overhead variance is more useful in controlling variable overhead costs, and why?
Efficiency variance, because it reflects how efficient our activity base is
Efficiency variance, because it measures the standard hours based on actual output
Spending variance, because it measures the difference between actual and standard direct labour hours
Spending variance, because it adjusts for actual quantity of cost driver and reflects how efficiently we have been using overheads
Given that:
VOH spending variance = 960F
VOH efficiency variance = 600F
Fixed OH budget variance = 2,100F
Fixed OH volume variance = 2,600U,
What would be in the journal entry to record these variances?
Debit VOH spending variance 960
Debit Fixed OH volume variance 2,600
Credit VOH efficiency variance 600
Credit Fixed OH budget variance 2,100
Given that:
VOH spending variance = 960F
VOH efficiency variance = 600F
Fixed OH budget variance = 2,100F
Fixed OH volume variance = 2,600U,
How much manufacturing overhead is under/overapplied?
$1,060 Underapplied
$1,060 Overapplied
$360 Underapplied
$360 Overapplied
What is the difference between standard and normal costing?
Standard costing uses actual hours, normal costing uses standard allowed hours
Quantity of hours used
No difference
Which of the following models describes activity based budgeting?
Which will be captured as product costs in the WIP account?
Actual variable overhead
Flexible budget for variable overhead, based on standard DLH allowed for actual output
Budget for variable overhead based on actual DLH
