,Test bank for introduction to managerial acco
|! |! |! |! |! |!
unting 7th edition brewer garrison
|! |! |! |!
Appendix 8A |!
|! Predetermined Overhead Rates and Overhead Analysis in a Standard
|! |! |! |! |! |! |! |!
Costing
|!
System
True |!/ |!False |!Questions
1. A |!company |!has |!a |!standard |!cost |!system |!in |!which |!fixed |!and |!variable |!manufacturing |!overhead |!costs
|!are |!applied |!to |!products |!on |!the |!basis |!of |!direct |!labor-hours. |!A |!fixed |!manufacturing |!overhead |!volume
|!variance |!will |!NOT |!necessarily |!occur |!in |!a |!month |!in |!which |!production |!volume |!differs |!from |!sales
|!volume.
True False
2. The |!fixed |!manufacturing |!overhead |!volume |!variance |!is |!more |!meaningful |!than |!the |!budget |!variance |!for
|!cost |!control |!purposes.
True False
3. In |!a |!standard |!costing |!system, |!if |!the |!actual |!fixed |!manufacturing |!overhead |!cost |!exceeds |!the |!budgeted
|!fixed |!manufacturing |!overhead |!cost |!for |!the |!period, |!then |!fixed |!manufacturing |!overhead |!cost |!would |!be
|!overapplied |!for |!the |!period.
True False
4. If |!all |!four |!of |!Argo |!Corporation's |!overhead |!variances |!are |!favorable, |!Argo's |!overhead |!will |!be |!underapplied.
True False
5. A |!company |!has |!a |!standard |!cost |!system |!in |!which |!fixed |!and |!variable |!manufacturing |!overhead |!costs
|!are |!applied |!to |!products |!on |!the |!basis |!of |!direct |!labor-hours. |!The |!company's |!choice |!of |!the |!denominator
App8A-1
Copyright |!© |!2016 |!McGraw-Hill |!Education. |!All |!rights |!reserved. |!No |!reproduction |!or |!distribution |!without |!the |!prior |!written
|!consent |!of | ! McGraw-Hill |!Education.
, level |!of |!activity |!affects |!the |!fixed |!manufacturing |!overhead |!budget |!variance.
|!
True False
6. The |!higher |!the |!denominator |!activity |!level |!used |!to |!compute |!the |!predetermined |!overhead |!rate, |!the |!lower
|!the |!predetermined |!overhead |!rate.
True False
App8A-2
Copyright |!© |!2016 |!McGraw-Hill |!Education. |!All |!rights |!reserved. |!No |!reproduction |!or |!distribution |!without |!the |!prior |!written
|!consent |!of | ! McGraw-Hill |!Education.
, 7. An |!unfavorable |!volume |!variance |!means |!that |!a |!firm |!operated |!at |!an |!activity |!level |!that |!was |!below |!the
|!activity |!level |!planned |!for |!the |!period.
True False
8. A |!company |!has |!a |!standard |!cost |!system |!in |!which |!fixed |!and |!variable |!manufacturing |!overhead |!costs
|!are |!applied |!to |!products |!on |!the |!basis |!of |!direct |!labor-hours. |!A |!fixed |!manufacturing |!overhead |!volume
|!variance |!will |!NOT |!necessarily |!occur |!in |!a |!month |!in |!which |!the |!fixed |!manufacturing |!overhead
|!applied |!to |!units |!of |!product |!on |!the |!basis |!of |!standard |!hours |!allowed |!differs |!from |!the |!budgeted |!fixed
|!manufacturing |!overhead.
True False
9. A |!fixed |!manufacturing |!overhead |!volume |!variance |!occurs |!as |!the |!result |!of |!a |!difference |!between |!the
|!denominator |!level |!of |!activity |!(in |!hours) |!and |!the |!standard |!hours |!allowed |!for |!the |!actual |!output |!of |!the
|!period.
True False
10. A |!company |!has |!a |!standard |!cost |!system |!in |!which |!fixed |!and |!variable |!manufacturing |!overhead |!costs
|!are |!applied |!to |!products |!on |!the |!basis |!of |!direct |!labor-hours. |!A |!fixed |!manufacturing |!overhead |!volume
|!variance |!will |!NOT |!necessarily |!occur |!in |!a |!month |!in |!which |!there |!is |!a |!fixed |!manufacturing |!overhead
|!budget |!variance.
True False
11. In |!a |!standard |!costing |!system |!where |!the |!denominator |!activity |!for |!the |!predetermined |!overhead |!rate |!is
|!labor- |!hours, |!overhead |!costs |!are |!applied |!to |!work |!in |!process |!on |!the |!basis |!of |!the |!standard |!labor-hours
|!allowed |!for |!the |!actual |!output.
True False
12. A |!company |!has |!a |!standard |!cost |!system |!in |!which |!fixed |!and |!variable |!manufacturing |!overhead |!costs
|!are |!applied |!to |!products |!on |!the |!basis |!of |!direct |!labor-hours. |!The |!company's |!choice |!of |!the |!denominator
|!level |!of |!activity |!has |!no |!effect |!on |!the |!variable |!portion |!of |!the |!predetermined |!overhead |!rate.
True False
13. A |!favorable |!volume |!variance |!means |!that |!the |!company |!operated |!at |!an |!activity |!level |!greater |!than |!that
|!planned |!for |!the |!period.
True False
14. A |!company |!has |!a |!standard |!cost |!system |!in |!which |!fixed |!and |!variable |!manufacturing |!overhead |!costs
|!are |!applied |!to |!products |!on |!the |!basis |!of |!direct |!labor-hours. |!The |!company's |!choice |!of |!the |!denominator
|!level |!of |!activity |!affects |!the |!fixed |!manufacturing |!overhead |!volume |!variance.
True False
App8A-3
Copyright |!© |!2016 |!McGraw-Hill |!Education. |!All |!rights |!reserved. |!No |!reproduction |!or |!distribution |!without |!the |!prior |!written
|!consent |!of | ! McGraw-Hill |!Education.
|! |! |! |! |! |!
unting 7th edition brewer garrison
|! |! |! |!
Appendix 8A |!
|! Predetermined Overhead Rates and Overhead Analysis in a Standard
|! |! |! |! |! |! |! |!
Costing
|!
System
True |!/ |!False |!Questions
1. A |!company |!has |!a |!standard |!cost |!system |!in |!which |!fixed |!and |!variable |!manufacturing |!overhead |!costs
|!are |!applied |!to |!products |!on |!the |!basis |!of |!direct |!labor-hours. |!A |!fixed |!manufacturing |!overhead |!volume
|!variance |!will |!NOT |!necessarily |!occur |!in |!a |!month |!in |!which |!production |!volume |!differs |!from |!sales
|!volume.
True False
2. The |!fixed |!manufacturing |!overhead |!volume |!variance |!is |!more |!meaningful |!than |!the |!budget |!variance |!for
|!cost |!control |!purposes.
True False
3. In |!a |!standard |!costing |!system, |!if |!the |!actual |!fixed |!manufacturing |!overhead |!cost |!exceeds |!the |!budgeted
|!fixed |!manufacturing |!overhead |!cost |!for |!the |!period, |!then |!fixed |!manufacturing |!overhead |!cost |!would |!be
|!overapplied |!for |!the |!period.
True False
4. If |!all |!four |!of |!Argo |!Corporation's |!overhead |!variances |!are |!favorable, |!Argo's |!overhead |!will |!be |!underapplied.
True False
5. A |!company |!has |!a |!standard |!cost |!system |!in |!which |!fixed |!and |!variable |!manufacturing |!overhead |!costs
|!are |!applied |!to |!products |!on |!the |!basis |!of |!direct |!labor-hours. |!The |!company's |!choice |!of |!the |!denominator
App8A-1
Copyright |!© |!2016 |!McGraw-Hill |!Education. |!All |!rights |!reserved. |!No |!reproduction |!or |!distribution |!without |!the |!prior |!written
|!consent |!of | ! McGraw-Hill |!Education.
, level |!of |!activity |!affects |!the |!fixed |!manufacturing |!overhead |!budget |!variance.
|!
True False
6. The |!higher |!the |!denominator |!activity |!level |!used |!to |!compute |!the |!predetermined |!overhead |!rate, |!the |!lower
|!the |!predetermined |!overhead |!rate.
True False
App8A-2
Copyright |!© |!2016 |!McGraw-Hill |!Education. |!All |!rights |!reserved. |!No |!reproduction |!or |!distribution |!without |!the |!prior |!written
|!consent |!of | ! McGraw-Hill |!Education.
, 7. An |!unfavorable |!volume |!variance |!means |!that |!a |!firm |!operated |!at |!an |!activity |!level |!that |!was |!below |!the
|!activity |!level |!planned |!for |!the |!period.
True False
8. A |!company |!has |!a |!standard |!cost |!system |!in |!which |!fixed |!and |!variable |!manufacturing |!overhead |!costs
|!are |!applied |!to |!products |!on |!the |!basis |!of |!direct |!labor-hours. |!A |!fixed |!manufacturing |!overhead |!volume
|!variance |!will |!NOT |!necessarily |!occur |!in |!a |!month |!in |!which |!the |!fixed |!manufacturing |!overhead
|!applied |!to |!units |!of |!product |!on |!the |!basis |!of |!standard |!hours |!allowed |!differs |!from |!the |!budgeted |!fixed
|!manufacturing |!overhead.
True False
9. A |!fixed |!manufacturing |!overhead |!volume |!variance |!occurs |!as |!the |!result |!of |!a |!difference |!between |!the
|!denominator |!level |!of |!activity |!(in |!hours) |!and |!the |!standard |!hours |!allowed |!for |!the |!actual |!output |!of |!the
|!period.
True False
10. A |!company |!has |!a |!standard |!cost |!system |!in |!which |!fixed |!and |!variable |!manufacturing |!overhead |!costs
|!are |!applied |!to |!products |!on |!the |!basis |!of |!direct |!labor-hours. |!A |!fixed |!manufacturing |!overhead |!volume
|!variance |!will |!NOT |!necessarily |!occur |!in |!a |!month |!in |!which |!there |!is |!a |!fixed |!manufacturing |!overhead
|!budget |!variance.
True False
11. In |!a |!standard |!costing |!system |!where |!the |!denominator |!activity |!for |!the |!predetermined |!overhead |!rate |!is
|!labor- |!hours, |!overhead |!costs |!are |!applied |!to |!work |!in |!process |!on |!the |!basis |!of |!the |!standard |!labor-hours
|!allowed |!for |!the |!actual |!output.
True False
12. A |!company |!has |!a |!standard |!cost |!system |!in |!which |!fixed |!and |!variable |!manufacturing |!overhead |!costs
|!are |!applied |!to |!products |!on |!the |!basis |!of |!direct |!labor-hours. |!The |!company's |!choice |!of |!the |!denominator
|!level |!of |!activity |!has |!no |!effect |!on |!the |!variable |!portion |!of |!the |!predetermined |!overhead |!rate.
True False
13. A |!favorable |!volume |!variance |!means |!that |!the |!company |!operated |!at |!an |!activity |!level |!greater |!than |!that
|!planned |!for |!the |!period.
True False
14. A |!company |!has |!a |!standard |!cost |!system |!in |!which |!fixed |!and |!variable |!manufacturing |!overhead |!costs
|!are |!applied |!to |!products |!on |!the |!basis |!of |!direct |!labor-hours. |!The |!company's |!choice |!of |!the |!denominator
|!level |!of |!activity |!affects |!the |!fixed |!manufacturing |!overhead |!volume |!variance.
True False
App8A-3
Copyright |!© |!2016 |!McGraw-Hill |!Education. |!All |!rights |!reserved. |!No |!reproduction |!or |!distribution |!without |!the |!prior |!written
|!consent |!of | ! McGraw-Hill |!Education.
