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    Cost II 3 and 4 Test

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    Nigus Ayele
    Budget variance is the difference between actual fixed overhead costs and overhead costs incurred at the standard level of activity. A flexible budget is adjusted for different activity levels, while a static budget is prepared for a single level of activity. If actual overhead costs are $187,500 for 11,000 units produced, the difference between actual and flexible budget costs is $2,500 unfavorable. The industry volume variance for August was $24,000 favorable and the market share variance was $12,000 unfavorable.

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    Cost II 3 and 4 Test

    Uploaded by

    Nigus Ayele
    15 views2 pages
    Budget variance is the difference between actual fixed overhead costs and overhead costs incurred at the standard level of activity. A flexible budget is adjusted for different activity levels, while a static budget is prepared for a single level of activity. If actual overhead costs are $187,500 for 11,000 units produced, the difference between actual and flexible budget costs is $2,500 unfavorable. The industry volume variance for August was $24,000 favorable and the market share variance was $12,000 unfavorable.

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    Cost II 3 and 4 test

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    Budget variance is the difference between actual fixed overhead costs and overhead costs incurred at the standard level of activity. A flexible budget is adjusted for different activity levels, while a static budget is prepared for a single level of activity. If actual overhead costs are $187,500 for 11,000 units produced, the difference between actual and flexible budget costs is $2,500 unfavorable. The industry volume variance for August was $24,000 favorable and the market share variance was $12,000 unfavorable.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    15 views2 pages

    Cost II 3 and 4 Test

    Uploaded by

    Nigus Ayele
    Budget variance is the difference between actual fixed overhead costs and overhead costs incurred at the standard level of activity. A flexible budget is adjusted for different activity levels, while a static budget is prepared for a single level of activity. If actual overhead costs are $187,500 for 11,000 units produced, the difference between actual and flexible budget costs is $2,500 unfavorable. The industry volume variance for August was $24,000 favorable and the market share variance was $12,000 unfavorable.

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    of 2

    1.

    Budget variance is:


    A. The difference between actual fixed overhead costs and overhead costs incurred at the standard
    level of activity
    B. The difference between budgeted fixed overhead costs and overhead costs incurred at the
    standard level of activity
    C. Favorable if the company operates at an activity level greater than planned for the period
    D. Unfavorable if actual fixed overhead costs are greater than budgeted fixed overhead costs
    2. What is the primary difference between a static budget and a flexible budget?
    A. The static budget contains only fixed costs, while the flexible budget contains only variable
    costs.
    B. The static budget is adjusted for different activity levels, while a flexible budget is prepared
    for a single level of activity.
    C. The static budget is prepared for a single level of activity, while a flexible budget is adjusted
    for different activity levels.
    D. Both the static budget and the flexible budget are adjusted for different activity levels.
    3. M Company prepared a static budget of 50,000 direct labor hours, with estimated overhead
    costs of $250,000 for variable overhead and $60,000 for fixed overhead. Trepid then prepared a
    flexible budget at 38,000 labor hours. How much is total overhead costs at this level of activity?
    a) $190,000b) $247,000c) $250,000d) $260,000
    4. W Company uses flexible budgets. At normal capacity of 10,000 units, budgeted manufacturing
    overhead is: $50,000 variable and $135,000 fixed. If W Company had actual overhead costs of
    $187,500 for 11,000 units produced, what is the difference between actual and flexible budget
    costs?
    a) $2,500 unfavorable b) $2,500 favorable c) $4,500 unfavorable d) $6,000 favorable1
    The following information is for questions 5-6
    Marketing manager of Jean’s World estimated the sales of 20,000 jeans in August with an
    industry volume of 200,000 jeans for the month and the standard contribution margin of $6 per
    jean sold. The actual industry sales figure was around 160,000 jeans out of which Jean’s World
    sold 18,000 jeans.
    5. What is the industry volume variance for the month of August?
    a. $24,000 F. b. $12,000 F. c. $24,000 U. d. $28,000 U.
    6. What is the market share variance for the month of August?
    a. $24,000 U b. $12,000 U. c. $18,000 F. d. $12,000 F.
    7. Which of the following statements is incorrect?
    a. The sales mix variance measures the impact of substitution.
    b. The sales quantity variance measures the variance in sales quantity, holding the sales mix
    constant.
    c. The sales activity variance can be divided into two components: sales mix and market share.
    d. A sales mix variance provides useful information for a company that sells multiple products 1
    8. The difference between budgeted contribution margin for actual sales mix and budgeted sales
    mix is called
    A. sales quantity variance B. cost mix variance C. volume mix variance D. sales mix variance
    9. If the budgeted contribution margin for budgeted and actual sales mix are $35000 and $27000,
    then the sales mix variance will be
    A. $8,000 B. $80,000 C. $62,000 D. $35,000

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