Ch 8 Cost Accounting Exam
CHAPTER 8: FLEXIBLE BUDGETS, VARIANCES, AND MANAGEMENT
CONTROL: II
TRUE/FALSE
1. Overhead costs are a major part of costs for most companies – more than 50% of all costs for some companies.
Answer: True Difficulty: 1 Objective: 1
2. At the start of the budget period, management will have made most decisions regarding the level of variable costs to be incurred.
Answer: False Difficulty: 1 Objective: 1 At the start of the budget period, management will have made most decisions regarding the level of fixed costs to be incurred.
3. One way to manage both variable and fixed overhead costs is to eliminate nonvalue-adding activities.
Answer: True Difficulty: 1 Objective: 1
4. In a standard costing system, the variable-overhead rate per unit is generally expressed as a standard cost per output unit.
Answer: True Difficulty: 1 Objective: 2 5. For calculating the cost of products and services, a standard costing system does not have to keep track of actual costs.
Answer: True Difficulty: 3 Objective: 2
6. The budget period for variable-overhead costs is typically less than 3 months.
Answer: False Difficulty: 1 Objective: 3 The budget period for variable-overhead costs is typically 12 months.
7. 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 Difficulty: 1 Objective: 3
8. The variable overhead efficiency variance is computed in a different way than the efficiency variance for direct-cost items.
Answer: False Difficulty: 1 Objective: 3 The variable overhead efficiency variance is computed the same way as the efficiency variance for direct-cost items.
9. The variable overhead flexible-budget variance measures the difference between standard variable overhead costs and flexible-budget variable overhead costs.
Answer: False Difficulty: 1 Objective: 3 The variable overhead flexible-budget
CONTROL: II
TRUE/FALSE
1. Overhead costs are a major part of costs for most companies – more than 50% of all costs for some companies.
Answer: True Difficulty: 1 Objective: 1
2. At the start of the budget period, management will have made most decisions regarding the level of variable costs to be incurred.
Answer: False Difficulty: 1 Objective: 1 At the start of the budget period, management will have made most decisions regarding the level of fixed costs to be incurred.
3. One way to manage both variable and fixed overhead costs is to eliminate nonvalue-adding activities.
Answer: True Difficulty: 1 Objective: 1
4. In a standard costing system, the variable-overhead rate per unit is generally expressed as a standard cost per output unit.
Answer: True Difficulty: 1 Objective: 2 5. For calculating the cost of products and services, a standard costing system does not have to keep track of actual costs.
Answer: True Difficulty: 3 Objective: 2
6. The budget period for variable-overhead costs is typically less than 3 months.
Answer: False Difficulty: 1 Objective: 3 The budget period for variable-overhead costs is typically 12 months.
7. 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 Difficulty: 1 Objective: 3
8. The variable overhead efficiency variance is computed in a different way than the efficiency variance for direct-cost items.
Answer: False Difficulty: 1 Objective: 3 The variable overhead efficiency variance is computed the same way as the efficiency variance for direct-cost items.
9. The variable overhead flexible-budget variance measures the difference between standard variable overhead costs and flexible-budget variable overhead costs.
Answer: False Difficulty: 1 Objective: 3 The variable overhead flexible-budget