Connect 1-Semester Access Card for Managerial Accounting: Creating Value in a Dynamic Business Environment (NEW!!)
11th Edition
ISBN: 9781259727788
Author: Hilton & Platt
Publisher: MCG
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Chapter 11, Problem 8RQ
Jeffries Company’s only variable-
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Which of the following is NOT true of variable costing?
a. Profits may increase though sales decrease.
b. Profits fluctuate with sales.
c. The cost of the product consists of all variable production costs.
d. The income statement under variable costing does not include overhead volume variance.
The conventional CVP (Cost-volume and profit) analysis has some underlying assumptions regarding costs and selling price. Which one of the following is NOT one of those assumptions:
a. The selling price per unit will remain unchanged.
b. Fixed costs per unit will decrease.
c. The costs can be expressed as straight lines in a BEP (Break-even-point) graph.
d. The actual variable costs per unit vary over the production range.
Which of the following statements is true?
1. The variable overhead efficiency variance does not actually measure how efficiently variable manufacturing overhead resources were used.
2. The variable overhead efficiency variance measures the difference between the actual level of activity and the standard activity allowed for the actual output, multiplied by the variable part of the predetermined
overhead rate.
3. If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to have a favorable labor rate variance and unfavorable variable overhead rate variance for the same period.
Chapter 11 Solutions
Connect 1-Semester Access Card for Managerial Accounting: Creating Value in a Dynamic Business Environment (NEW!!)
Ch. 11 - Distinguish between static and flexible budgets.Ch. 11 - Explain the advantage of using a flexible budget.Ch. 11 - Why are flexible overhead budgets based on...Ch. 11 - Distinguish between a columnar and a formula...Ch. 11 - Show, using T-accounts, how production overhead is...Ch. 11 - How have advances in manufacturing technology...Ch. 11 - What is the interpretation of the...Ch. 11 - Jeffries Companys only variable-overhead cost is...Ch. 11 - What is the interpretation of the...Ch. 11 - Distinguish between the interpretations of the...
Ch. 11 - What is the fixed-overhead budget variance?Ch. 11 - What is the correct interpretation of the...Ch. 11 - Describe a common but misleading interpretation of...Ch. 11 - Draw a graph showing budgeted and applied fixed...Ch. 11 - What types of organizations use flexible budgets?Ch. 11 - What is the conceptual problem of applying fixed...Ch. 11 - Distinguish between the control purpose and the...Ch. 11 - Why are fixed-overhead costs sometimes called...Ch. 11 - Draw a graph showing both budgeted and applied...Ch. 11 - Give one example of a plausible activity base to...Ch. 11 - Explain how an activity-based flexible budget...Ch. 11 - Crystal Glassware Company has the following...Ch. 11 - Refer to the data in the preceding exercise. Use...Ch. 11 - Crystal Glassware Company has the following...Ch. 11 - The following data are the actual results for...Ch. 11 - Evening Star, Inc. produces binoculars of two...Ch. 11 - The controller for Rainbow Childrens Hospital,...Ch. 11 - You recently received the following note from the...Ch. 11 - You brought your work home one evening, and your...Ch. 11 - Refer to DCdesserts.coms activity-based flexible...Ch. 11 - Montoursville Control Company, which manufactures...Ch. 11 - Prob. 33ECh. 11 - The following data pertain to Aurora Electronics...Ch. 11 - Calgary Paper Company produces paper for...Ch. 11 - Gibralter Insurance Company uses a flexible...Ch. 11 - Country time Studios is a recording studio in...Ch. 11 - Newark Plastics Corporation developed its overhead...Ch. 11 - Johnson Electrical produces industrial ventilation...Ch. 11 - Fall City Hospital has an outpatient clinic....Ch. 11 - Maxwell Company uses a standard cost accounting...Ch. 11 - Mark Fletcher, president of SoftGro, Inc., was...Ch. 11 - LawnMate Company manufactures power mowers that...Ch. 11 - For each of the following independent Cases A and...Ch. 11 - Prob. 45PCh. 11 - Prob. 46PCh. 11 - WoodCrafts, Inc. is a manufacturer of furniture...Ch. 11 - Rutherford Wheel and Axle, Inc. has an automated...Ch. 11 - Chillco Corporation produces containers of frozen...Ch. 11 - Montreal Scholastic Supply Company uses a...Ch. 11 - College Memories, Inc. publishes college...Ch. 11 - While Mountain Sled Company manufactures childrens...Ch. 11 - Cleveland Computer Accessory Company (CCAC)...Ch. 11 - Prob. 54CCh. 11 - Prob. 55C
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- Is this correct?arrow_forwardWhich of the following statements about margin of safety is false? O a. If only the fixed costs increase but the number of units sold and unit selling price and unit variable cost are all constant, the margin of safety decreases. O b. Margin of safety measures the difference between budgeted revenues and breakeven revenues. none of the given answers is false. O d. If the variable cost per unit decreases but the number of units sold, unit selling price and total fixed cost are all constant, the margin of safety increases. If only the fixed costs decrease but the number of units sold and unit selling price and all constant, the margin of safety decreases.arrow_forwardWhat are some possible reasons for a direct labor time variance? A. utility usage decrease B. less qualified workers C. office supplies spending D. sales declinearrow_forward
- These are true/false questions ____ 26. Average rate of return equals estimated average annual income divided by average investment. ____ 27. If direct materials cost per unit increases, the break-even point will increase. ____ 28. A production supervisor's salary that does not vary with the number of units produced is an example of a fixed cost. ____ 29. The difference between the standard cost of a product and its actual cost is called a variance. ____ 30. Both process and job order cost systems maintain perpetual inventory accounts with subsidiary ledgers.arrow_forwardCost A is a fixed cost, while B is a variable cost. During the current year, the volume of output has decreased. In terms of cost per unit of output, we would expect that: cost A has decreased. cost B has remained unchanged. cost B has decreased. cost A has remained unchanged.arrow_forwardAn unfavorable direct labor cost variance occurs when a company: Group of answer choices Incurs more direct labor costs per unit than the standard direct labor cost per unit. Hires employees at a wage rate less than the standard rate. Pays more wages per hour than the standard rate. Uses more hours per unit of output than it should have used.arrow_forward
- Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is favorable, the variable overhead efficiency variance will be: Multiple Choice favorable. unfavorable. zero.arrow_forwardWhich of the following statements about margin of safety is false? a. Margin of safety measures the difference between budgeted revenues and breakeven revenues. b. If the variable cost per unit decreases but the number of units sold, unit selling price and total fixed cost are all constant, the margin of safety decreases. c. If only the fixed costs decrease but the number of units sold and unit selling price and unit variable cost are all constant, the margin of safety increases. d. If only the fixed costs increase but the number of units sold and unit selling price and unit variable cost are all constant, the margin of safety decreases. e. none of the given answers is false.arrow_forwardHello, my follow up question is as follows: Is the $90 for the fixed factory overhead volume variance favorable or unfavorable?arrow_forward
- 1. If demand is insufficient to keep everyone busy and workers are not laid off, which of the following labor efficiency variance often will be a result: A) favorable. B) unfavorable. C) zero. D) either favorable or unfavorable 2. A/an ______________ materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period. A) favorable. B) unfavorable. C) zero. D) either favorable or unfavorable 3. When the materials price variance is recorded at the time of purchase, raw materials are recorded as inventory at: A) replacement cost B) standard cost C) absorption cost D) actual cost 4.When more hours of labor time are necessary to complete a job than the standard allows, the labor efficiency variance is A) favorable. B) unfavorable. C) zero D) either favorable or unfavorable.arrow_forwardWhich of the following is NOT a use of CVP (Cost-Volume-Profit) analysis? a.what is the impact on the break-even point of an increase or decrease in fixed costs b.how many units must be sold to break even c.the identification of price and efficiency variances d.the ability to conduct sensitivity analysis of cost or price changesarrow_forwardGodoarrow_forward
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