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27. SM Company found that the difference in product costs resulting from the application of predetermined overhead rates rather than actual overhead rates were very significant when actual production was substantially less than planned production. The most likely explanation is that: a. cost of overhead were substantially less than anticipated b. overhead was composed chiefly of variable costs. c. several products were produced simultaneously d. fixed manufacturing overhead was a significant cost

27. SM Company found that the difference in product costs resulting from the application of predetermined overhead rates rather than actual overhead rates were very significant when actual production was substantially less than planned production. The most likely explanation is that: a. cost of overhead were substantially less than anticipated b. overhead was composed chiefly of variable costs. c. several products were produced simultaneously d. fixed manufacturing overhead was a significant cost

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. SM Company found that the difference in product costs resulting from the application of predetermined overhead rates rather than actual overhead rates were very significant when actual production was substantially less than planned production. The most likely explanation is that: a. cost of overhead were substantially less than anticipated b. overhead was composed chiefly of variable costs. c. several products were produced simultaneously d. fixed manufacturing overhead was a significant cost In highly automated manufacturing, all of the following may be appropriate bases for manufacturing overhead application, except: a. machine hours b. Direct labor hours c. number of setups d. movement of materials When the amount of overapplied manufacturing overhead is significant, the entry to close Overapplied Manufacturing Overhead will most likely require: a. a debit to Cost of Goods Sold b. debits to Cost of Goods Sold, Finished Goods Inventory, and Work in Process Inventory c. a credit to Cost of Goods Sold d. credits to Cost of Goods Sold, Finished Goods Inventory, and Work in Process Inventory The most common treatment of the underapplied overhead at the end of the year would be to: carry it as a deferred charges on the balance sheet a. b. report it as a miscellaneous expense on the income statement. c. debit it to Cost of Goods Sold d. prorate between Work in Process Inventory and Finished Goods Inventory An objection to the use of predetermined overhead rate based on direct labor costs is that: these items are difficult to measure a. b. a job is charged with more overhead when highly paid operator works on the job than when a low paid operator performs the work c... overhead is allocated in relation to units produced by workers d.... overhead rates will be distributed inequitable when there are no wage differentials in the department. All of the following phrases are used as alternate terminology for manufacturing overhead except: a. manufacturing expense c. factory expense b. indirect manufacturing cost d. other expense This variance measures the amount by which actual overhead is more or less than the amount that should have been spent for the activity level attained: a. Overhead variance b. Volume variance a. Capacity variance b. Budget variance c. Spending variance d. Price variance This variance is the difference between the actual manufacturing overhead incurred and the applied manufacturing overhead. c. Spending variance d. material variance The difference between the actual manufacturing overhead incurred and the budgeted overhead based on a budget capacity used is a. Controllable variance b. Volume variance c. Overhead variance d. Price variance What does a favorable variance represent? a. The actual overhead cost were less than the costs applied to production. b. The actual overhead costs were more than the costs applied to production. C. The spending variance is more than the volume variance. d. The spending variance is less than the volume variance. Which one of the following is least likely to be an objective of cost accounting system? a. Department efficiency b. Sales commission determination c. Product costing and inventory valuation d. Income determination
Transcribed Image Text:27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. SM Company found that the difference in product costs resulting from the application of predetermined overhead rates rather than actual overhead rates were very significant when actual production was substantially less than planned production. The most likely explanation is that: a. cost of overhead were substantially less than anticipated b. overhead was composed chiefly of variable costs. c. several products were produced simultaneously d. fixed manufacturing overhead was a significant cost In highly automated manufacturing, all of the following may be appropriate bases for manufacturing overhead application, except: a. machine hours b. Direct labor hours c. number of setups d. movement of materials When the amount of overapplied manufacturing overhead is significant, the entry to close Overapplied Manufacturing Overhead will most likely require: a. a debit to Cost of Goods Sold b. debits to Cost of Goods Sold, Finished Goods Inventory, and Work in Process Inventory c. a credit to Cost of Goods Sold d. credits to Cost of Goods Sold, Finished Goods Inventory, and Work in Process Inventory The most common treatment of the underapplied overhead at the end of the year would be to: carry it as a deferred charges on the balance sheet a. b. report it as a miscellaneous expense on the income statement. c. debit it to Cost of Goods Sold d. prorate between Work in Process Inventory and Finished Goods Inventory An objection to the use of predetermined overhead rate based on direct labor costs is that: these items are difficult to measure a. b. a job is charged with more overhead when highly paid operator works on the job than when a low paid operator performs the work c... overhead is allocated in relation to units produced by workers d.... overhead rates will be distributed inequitable when there are no wage differentials in the department. All of the following phrases are used as alternate terminology for manufacturing overhead except: a. manufacturing expense c. factory expense b. indirect manufacturing cost d. other expense This variance measures the amount by which actual overhead is more or less than the amount that should have been spent for the activity level attained: a. Overhead variance b. Volume variance a. Capacity variance b. Budget variance c. Spending variance d. Price variance This variance is the difference between the actual manufacturing overhead incurred and the applied manufacturing overhead. c. Spending variance d. material variance The difference between the actual manufacturing overhead incurred and the budgeted overhead based on a budget capacity used is a. Controllable variance b. Volume variance c. Overhead variance d. Price variance What does a favorable variance represent? a. The actual overhead cost were less than the costs applied to production. b. The actual overhead costs were more than the costs applied to production. C. The spending variance is more than the volume variance. d. The spending variance is less than the volume variance. Which one of the following is least likely to be an objective of cost accounting system? a. Department efficiency b. Sales commission determination c. Product costing and inventory valuation d. Income determination
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