ACC 350 Week 9 Quiz – Strayer New
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Quiz 7 Chapter 8
Flexible Budgets, Overhead Cost
Variances, and Management Control
1)
Overhead
costs are a major part of costs for most companiesmore than 50% of all costs for
some companies.
2)
At the
start of the budget period, management will have made most decisions regarding
the level of variable costs to be incurred.
3)
One way
to manage both variable and fixed overhead costs is to eliminate
nonvalue-adding activities.
4)
The
planning of fixed overhead costs does not differ from the planning of variable
overhead costs.
5)
In a
standard costing system, the variable-overhead rate per unit is generally
expressed as a standard cost per output unit.
6)
For
calculating the cost of products and services, a standard costing system does
not have to track actual costs.
7)
Standard
costing is a cost system that allocates overhead costs on the basis of overhead
cost rates based on actual overhead costs times the standard quantities of the
allocation bases allowed for the actual outputs produced.
8)
The
budget period for variable-overhead costs is typically less than 3 months.
9)
A
favorable variable overhead spending variance can be the result of paying lower
prices than budgeted for variable overhead items such as energy.
10)
The
variable overhead efficiency variance is computed in a different way than the
efficiency variance for direct-cost items.
11)
The
variable overhead flexible-budget variance measures the difference between
standard variable overhead costs and flexible-budget variable overhead
costs.
12)
The
variable overhead efficiency variance measures the efficiency with which the
cost-allocation base is used.
13)
The
variable overhead efficiency variance can be interpreted the same way as the
efficiency variance for direct-cost items.
14)
An
unfavorable variable overhead efficiency variance indicates that variable
overhead costs were wasted and inefficiently used.
15)
Causes
of a favorable variable overhead efficiency variance might include using
lower-skilled workers than expected.
16)
If the
production planners set the budgeted machine hours standards too tight, one
could anticipate there would be an unfavorable variable overhead efficiency
variance.
17)
If the
production planners set the budgeted machine hours standards too tight, one
could anticipate there would be an unfavorable fixed overhead efficiency
variance.
18)
For
fixed overhead costs, the flexible-budget amount is always the same as the
static-budget amount.
19)
The
fixed overhead flexible-budget variance is the difference between actual fixed
overhead costs and the fixed overhead costs in the flexible budget.
20)
There is
never an efficiency variance for fixed costs.
21)
All
unfavorable overhead variances decrease operating income compared to the
budget.
22)
A
favorable fixed overhead flexible-budget variance indicates that actual fixed
costs exceeded the lump-sum amount budgeted.
23)
Fixed
costs for the period are by definition a lump sum of costs that remain
unchanged and therefore the fixed overhead spending variance is always
zero.
24)
Caution
is appropriate before interpreting the production-volume variance as a measure
of the economic cost of unused capacity.
25)
The
production-volume variance arises whenever the actual level of the denominator
differs from the level used to calculate the budgeted fixed overhead rate.
26)
The lump
sum budgeted for fixed overhead will always be the same amount for the static
budget and the flexible budget.
27)
A
favorable production-volume variance arises when manufacturing capacity planned
for is not used.
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