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ACC3303 Final Exam Questions And
Answers |Latest 2025 | Guaranteed Pass.
Overhead costs are a major part of costs for most companies — more than 50% of all costs for
some companies. - Answer✔True
At the start of the budget period, management will have made most decisions regarding the
level of variable costs to be incurred. - Answer✔False; fixed costs
One way to manage both variable and fixed overhead costs is to eliminate nonvalue-adding
activities. - Answer✔True
In a standard costing system, the variable-overhead rate per unit is generally expressed as a
standard cost per output unit. - Answer✔True
For calculating the cost of products and services, a standard costing system does not have to
keep track of actual costs. - Answer✔True
The budget period for variable-overhead costs is typically less than 3 months. - Answer✔False;
12 months
A favorable variable overhead spending variance can be the result of paying lower prices than
budgeted for variable overhead items such as energy. - Answer✔True
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, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 1:26 PM A+
The variable overhead efficiency variance is computed in a different way than the efficiency
variance for direct-cost items. - Answer✔False; same way as the efficiency variance for direct-
cost items
The variable overhead flexible-budget variance measures the difference between standard
variable overhead costs and flexible-budget variable overhead costs. - Answer✔False; between
the actual variable overhead costs and the flexible-budget variable-overhead costs
The variable overhead efficiency variance measures the efficiency with which the cost-
allocation base is used. - Answer✔True
The variable overhead efficiency variance can be interpreted the same way as the efficiency
variance for direct-cost items. - Answer✔False; The interpretations are different. The variable
overhead efficiency variance focuses on the quantity of allocation-base used, while the
efficiency variance for direct-cost items focuses on the quantity of materials and labor-hours
used.
An unfavorable variable overhead efficiency variance indicates that variable overhead costs
were wasted and inefficiently used. - Answer✔False; the company used more than planned of
the cost-allocation base
Causes of a favorable variable overhead efficiency variance might include using lower-skilled
workers than expected. - Answer✔False; higher-skilled workers
For fixed overhead costs, the flexible-budget amount is always the same as the static-budget
amount. - Answer✔True
The fixed overhead flexible-budget variance is the difference between actual fixed overhead
costs and the fixed overhead costs in the flexible budget. - Answer✔True
There is never an efficiency variance for fixed costs. - Answer✔True
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All unfavorable overhead variances decrease operating income compared to the budget. -
Answer✔True
A favorable fixed overhead flexible-budget variance indicates that actual fixed costs exceeded
the lump-sum amount budgeted. - Answer✔False; actual fixed costs less than the lump-sum
amount
Caution is appropriate before interpreting the production-volume variance as a measure of the
economic cost of unused capacity. - Answer✔True
The production-volume variance arises whenever the actual level of the denominator differs
from the level used to calculate the budgeted fixed overhead rate. - Answer✔True
The lump sum budgeted for fixed overhead will always be the same amount for the static
budget and the flexible budget. - Answer✔True
A favorable production-volume variance arises when manufacturing capacity planned for is not
used. - Answer✔False; unfavorable
Managers should use unitized fixed manufacturing overhead costs for planning and control. -
Answer✔False; should not utilize
Both financial and nonfinancial performance measures are key inputs when evaluating the
performance of managers. - Answer✔True
In the journal entry that records overhead variances, the manufacturing overhead allocated
accounts are closed. - Answer✔True
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, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 1:26 PM A+
Variance analysis of fixed nonmanufacturing costs, such as distribution costs, can also be useful
when planning for capacity. - Answer✔True
Variance analysis of fixed overhead costs is also useful when a company uses activity-based
costing. - Answer✔True
An unfavorable fixed setup overhead spending variance could be due to higher lease costs of
new setup equipment. - Answer✔True
A favorable variable setup overhead efficiency variance could be due to actual setup-hours
exceeding the setup-hours planned for the units produced. - Answer✔False; unfavorable
Overhead costs have been increasing due to all of the following EXCEPT
a. increased automation.
b. more complexity in distribution processes.
c. tracing more costs as direct costs with the help of technology.
d. product proliferation. - Answer✔c. tracing more costs as direct costs with the help of
technology.
Effective planning of variable overhead costs means that a company performs those variable
overhead costs that primarily add value
a. for the current shareholders.
b. for the customer using the products or services.
c. for plant employees.
d. for major suppliers of component parts. - Answer✔b. for the customer using the products or
services.
Variable overhead costs include
a. plant-leasing costs.
4|P a g e
ACC3303 Final Exam Questions And
Answers |Latest 2025 | Guaranteed Pass.
Overhead costs are a major part of costs for most companies — more than 50% of all costs for
some companies. - Answer✔True
At the start of the budget period, management will have made most decisions regarding the
level of variable costs to be incurred. - Answer✔False; fixed costs
One way to manage both variable and fixed overhead costs is to eliminate nonvalue-adding
activities. - Answer✔True
In a standard costing system, the variable-overhead rate per unit is generally expressed as a
standard cost per output unit. - Answer✔True
For calculating the cost of products and services, a standard costing system does not have to
keep track of actual costs. - Answer✔True
The budget period for variable-overhead costs is typically less than 3 months. - Answer✔False;
12 months
A favorable variable overhead spending variance can be the result of paying lower prices than
budgeted for variable overhead items such as energy. - Answer✔True
1|P a g e
, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 1:26 PM A+
The variable overhead efficiency variance is computed in a different way than the efficiency
variance for direct-cost items. - Answer✔False; same way as the efficiency variance for direct-
cost items
The variable overhead flexible-budget variance measures the difference between standard
variable overhead costs and flexible-budget variable overhead costs. - Answer✔False; between
the actual variable overhead costs and the flexible-budget variable-overhead costs
The variable overhead efficiency variance measures the efficiency with which the cost-
allocation base is used. - Answer✔True
The variable overhead efficiency variance can be interpreted the same way as the efficiency
variance for direct-cost items. - Answer✔False; The interpretations are different. The variable
overhead efficiency variance focuses on the quantity of allocation-base used, while the
efficiency variance for direct-cost items focuses on the quantity of materials and labor-hours
used.
An unfavorable variable overhead efficiency variance indicates that variable overhead costs
were wasted and inefficiently used. - Answer✔False; the company used more than planned of
the cost-allocation base
Causes of a favorable variable overhead efficiency variance might include using lower-skilled
workers than expected. - Answer✔False; higher-skilled workers
For fixed overhead costs, the flexible-budget amount is always the same as the static-budget
amount. - Answer✔True
The fixed overhead flexible-budget variance is the difference between actual fixed overhead
costs and the fixed overhead costs in the flexible budget. - Answer✔True
There is never an efficiency variance for fixed costs. - Answer✔True
2|P a g e
, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 1:26 PM A+
All unfavorable overhead variances decrease operating income compared to the budget. -
Answer✔True
A favorable fixed overhead flexible-budget variance indicates that actual fixed costs exceeded
the lump-sum amount budgeted. - Answer✔False; actual fixed costs less than the lump-sum
amount
Caution is appropriate before interpreting the production-volume variance as a measure of the
economic cost of unused capacity. - Answer✔True
The production-volume variance arises whenever the actual level of the denominator differs
from the level used to calculate the budgeted fixed overhead rate. - Answer✔True
The lump sum budgeted for fixed overhead will always be the same amount for the static
budget and the flexible budget. - Answer✔True
A favorable production-volume variance arises when manufacturing capacity planned for is not
used. - Answer✔False; unfavorable
Managers should use unitized fixed manufacturing overhead costs for planning and control. -
Answer✔False; should not utilize
Both financial and nonfinancial performance measures are key inputs when evaluating the
performance of managers. - Answer✔True
In the journal entry that records overhead variances, the manufacturing overhead allocated
accounts are closed. - Answer✔True
3|P a g e
, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 1:26 PM A+
Variance analysis of fixed nonmanufacturing costs, such as distribution costs, can also be useful
when planning for capacity. - Answer✔True
Variance analysis of fixed overhead costs is also useful when a company uses activity-based
costing. - Answer✔True
An unfavorable fixed setup overhead spending variance could be due to higher lease costs of
new setup equipment. - Answer✔True
A favorable variable setup overhead efficiency variance could be due to actual setup-hours
exceeding the setup-hours planned for the units produced. - Answer✔False; unfavorable
Overhead costs have been increasing due to all of the following EXCEPT
a. increased automation.
b. more complexity in distribution processes.
c. tracing more costs as direct costs with the help of technology.
d. product proliferation. - Answer✔c. tracing more costs as direct costs with the help of
technology.
Effective planning of variable overhead costs means that a company performs those variable
overhead costs that primarily add value
a. for the current shareholders.
b. for the customer using the products or services.
c. for plant employees.
d. for major suppliers of component parts. - Answer✔b. for the customer using the products or
services.
Variable overhead costs include
a. plant-leasing costs.
4|P a g e
