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 ratesrather than actual overhead rates were very significant when actual production was substantially less than plannedproduction. The most likely explanation is that:a. cost of overhead were substantially less than anticipatedb.overhead was composed chiefly of variable costs.c. several products were produced simultaneouslyd. fixed manufacturing overhead was a significant costIn highly automated manufacturing, all of the following may be appropriate bases for manufacturing overheadapplication, except:a. machine hoursb. Direct labor hoursc. number of setupsd. movement of materialsWhen the amount of overapplied manufacturing overhead is significant, the entry to close Overapplied ManufacturingOverhead will most likely require:a. a debit to Cost of Goods Soldb.debits to Cost of Goods Sold, Finished Goods Inventory, and Work in Process Inventoryc. a credit to Cost of Goods Soldd.credits to Cost of Goods Sold, Finished Goods Inventory, and Work in Process InventoryThe 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 sheeta.b. report it as a miscellaneous expense on the income statement.c. debit it to Cost of Goods Soldd. prorate between Work in Process Inventory and Finished Goods InventoryAn objection to the use of predetermined overhead rate based on direct labor costs is that:these items are difficult to measurea.b.a job is charged with more overhead when highly paid operator works on the job than when a low paid operatorperforms the workc... overhead is allocated in relation to units produced by workersd.... 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 expensec. factory expenseb. indirect manufacturing costd. other expenseThis variance measures the amount by which actual overhead is more or less than the amount that should have beenspent for the activity level attained:a. Overhead varianceb. Volume variancea.Capacity varianceb. Budget variancec. Spending varianced. Price varianceThis variance is the difference between the actual manufacturing overhead incurred and the applied manufacturingoverhead.c. Spending varianced. material varianceThe difference between the actual manufacturing overhead incurred and the budgeted overhead based on a budgetcapacity used isa. Controllable varianceb. Volume variancec. Overhead varianced. Price varianceWhat 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 efficiencyb. Sales commission determinationc. Product costing and inventory valuationd. Income determination

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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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. What are the three primary reasons of using a standard cost system? In a business that routinely manufactures the same products or performs the same services, why are standards helpful? 2. What are ideal standards? What are currently attainable standards? Explain which standard is usually adopted and why. 3. Some people suggest that the direct labor rate variance is never controllable. Do you agree or disagree? Give reasons to support your answer.
Which of the following statements is false? A. The departmental and traditional costing methods create cost distortions when there is significant costs associated with batch activities. B. The manufacturing overhead is applied to product by applying the POHR to actual cost drivers that occur during the production period C. The activity based costing system provides the most accurate product costing results D. Actual manufacturing overhead costs and the actual cost driver amounts are used to create the predetermined overhead rate (POHR)
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Which of the following statements is false? (You may select more than one answer.)a. In recent years, most companies have experienced increasing manufacturing overhead costs in relation to direct labor costs.b. Activity-based costing systems may use direct labor-hours and/or machine-hoursto assign unit-level costs to products.c. Facility-level costs are not caused by particular products.d. Product-level costs are larger for high-volume products than for low-volumeproducts.
Which of the following statements is false? Cost allocations such as activity-based costing allow manager to evaluate profitability of their products. A budget is a quantitative plan for acquiring and using financial and other resources over a specific forthcoming time period. A detailed activity-based costing system is costly to implement. Using different allocation base does not affect manufacturing overhead costs allocated to each product.
18 The EUP will be the same under FIFO method and weighted average methos if there is no beginning work in process inventory. In process costing the cost per unit in a department is found by spreading the period’s production costs over the production activity. Group of answer choices Both statements are false. Only statement II is true. Both statements are true. Only statement I is true.
Which of the following statements regarding activity-based costing (ABC) is NOT correct? a. Under ABC cost centres are replaced by cost pools b. Blanket overhead recovery rates (OAR) are replaced with cost driver rates c. ABC uses one common overhead recovery rate, such as labour hours. d. ABC tackles the problems of absorption costing by adopting a much more accurate way of charging overhead to cost units.
Overallocated manufacturing overhead results when A. actual overhead is less than expected. OB. estimated overhead is less than actual overhead. OC. actual overhead is less than allocated overhead. OD. production is less than last year.
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