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Norris Company uses a two-way analysis of overhead variances. Selected data for the March production activity are as follows: Norris Company uses a two-way analysis of overhead variances. Selected data for the March production activity are as follows: Assuming that budgeted fixed overhead costs are equal to actual fixed costs, the controllable variance for March is A) $2,000 B) $4,000 U. C) $4,000 D) $6,000 F. Assuming that budgeted fixed overhead costs are equal to actual fixed costs, the controllable variance for March is


A) $2,000
B) $4,000 U.
C) $4,000
D) $6,000 F.

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

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Expected standards generally yield unfavorable variances.

A) True
B) False

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The standard predominantly used in Western cultures for motivational purposes is a(n) ____ standard.


A) expected annual
B) ideal
C) practical
D) theoretical

E) All of the above
F) A) and B)

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A favorable fixed overhead volume variance occurs if


A) there is a favorable labor efficiency variance.
B) there is a favorable labor rate variance.
C) production is less than planned.
D) production is greater than planned.

E) A) and D)
F) C) and D)

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Ritchie Company Ritchie Company uses a standard cost system for its production process. Ritchie Company applies overhead based on direct labor hours. The following information is available for July: Ritchie Company Ritchie Company uses a standard cost system for its production process. Ritchie Company applies overhead based on direct labor hours. The following information is available for July: Refer to Ritchie Company Using the four-variance approach, what is the variable overhead spending variance? A) $7,950 U B) $25 F C) $7,975 U D) $10,590 U Refer to Ritchie Company Using the four-variance approach, what is the variable overhead spending variance?


A) $7,950 U
B) $25 F
C) $7,975 U
D) $10,590 U

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

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Ideal standards are an effective means of controlling variances and motivating workers.

A) True
B) False

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Starr Company has made the following information available for its production facility for the current month. Fixed overhead was estimated at 22,000 machine hours for the production cycle. Actual machine hours for the period were 21,700, which generated 4,200 units. Starr Company has made the following information available for its production facility for the current month. Fixed overhead was estimated at 22,000 machine hours for the production cycle. Actual machine hours for the period were 21,700, which generated 4,200 units. Starr Company's standard costs are as follows: Determine the following items: Starr Company's standard costs are as follows: Starr Company has made the following information available for its production facility for the current month. Fixed overhead was estimated at 22,000 machine hours for the production cycle. Actual machine hours for the period were 21,700, which generated 4,200 units. Starr Company's standard costs are as follows: Determine the following items: Determine the following items: Starr Company has made the following information available for its production facility for the current month. Fixed overhead was estimated at 22,000 machine hours for the production cycle. Actual machine hours for the period were 21,700, which generated 4,200 units. Starr Company's standard costs are as follows: Determine the following items:

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The standard cost card contains quantities and costs for


A) direct material only.
B) direct labor only.
C) direct material and direct labor only.
D) direct material, direct labor, and overhead.

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

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Unfavorable variances are represented by credit balances in the overhead account.

A) True
B) False

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Hoover Company Hoover Company applies overhead based on direct labor hours and has the following available for the current month: Hoover Company Hoover Company applies overhead based on direct labor hours and has the following available for the current month: Refer to Hoover Company. Compute all the appropriate variances using the four-variance approach. Refer to Hoover Company. Compute all the appropriate variances using the four-variance approach.

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Fleetwood Company Fleetwood Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for May when Fleetwood produced 4,500 units: Fleetwood Company Fleetwood Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for May when Fleetwood produced 4,500 units: Refer to Fleetwood Company. Using the one-variance approach, what is the total overhead variance? A) $6,062.50 U B) $3,625.00 U C) $9,687.50 U D) $6,562.50 U Refer to Fleetwood Company. Using the one-variance approach, what is the total overhead variance?


A) $6,062.50 U
B) $3,625.00 U
C) $9,687.50 U
D) $6,562.50 U

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

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A bill of material does not include


A) quantity of component inputs.
B) price of component inputs.
C) quality of component inputs.
D) type of product output.

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

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National Toy Company National Toy Company has developed standard overhead costs based on a capacity of 180,000 machine hours as follows: National Toy Company National Toy Company has developed standard overhead costs based on a capacity of 180,000 machine hours as follows: During November, 85,000 units were scheduled for production, but only 80,000 units were actually produced. The following data relate to November: Actual machine hours used were 165,000. Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed) . All inventories are carried at standard cost. Refer to National Toy Company. The variable overhead efficiency variance for November was A) $15,000 U. B) $23,000 U. C) $38,000 F. D) $38,000 U. During November, 85,000 units were scheduled for production, but only 80,000 units were actually produced. The following data relate to November: Actual machine hours used were 165,000. Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed) . All inventories are carried at standard cost. Refer to National Toy Company. The variable overhead efficiency variance for November was


A) $15,000 U.
B) $23,000 U.
C) $38,000 F.
D) $38,000 U.

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

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Which of the following factors should not be considered when deciding whether to investigate a variance?


A) magnitude of the variance
B) trend of the variances over time
C) likelihood that an investigation will reduce or eliminate future occurrences of the variance
D) whether the variance is favorable or unfavorable

E) All of the above
F) None of the above

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A variable overhead spending variance is caused by


A) using more or fewer actual hours than the standard hours allowed for the production achieved.
B) paying a higher/lower average actual overhead price per unit of the activity base than the standard price allowed per unit of the activity base.
C) larger/smaller waste and shrinkage associated with the resources involved than expected.
D) both b and c are causes.

E) None of the above
F) All of the above

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A one-variance approach calculates only a total overhead variance.

A) True
B) False

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Genesis Company Genesis Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for September when Genesis produced 5,000 units: Genesis Company Genesis Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for September when Genesis produced 5,000 units: Refer to Genesis Company. Using the four-variance approach, what is the variable overhead spending variance? A) $2,525U B) $4,075 F C) $4,075 U D) $4,325 U Refer to Genesis Company. Using the four-variance approach, what is the variable overhead spending variance?


A) $2,525U
B) $4,075 F
C) $4,075 U
D) $4,325 U

E) All of the above
F) C) and D)

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Wimberly Company Wimberly Company has the following information available for March when 4,200 units were produced (round answers to the nearest dollar) . Wimberly Company Wimberly Company has the following information available for March when 4,200 units were produced (round answers to the nearest dollar) . Refer to Wimberly Company. What is the labor rate variance? A) $3,780 F B) $3,780 U C) $3,825 F D) $3,825 U Refer to Wimberly Company. What is the labor rate variance?


A) $3,780 F
B) $3,780 U
C) $3,825 F
D) $3,825 U

E) C) and D)
F) All of the above

Correct Answer

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A flexible budget is an effective tool for budgeting factory overhead.

A) True
B) False

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The formula for price/rate variance is (AP - SP) ´ AQ.

A) True
B) False

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