Ch08 - CHAPTER 8 FLEXIBLE BUDGETS, OVERHEAD COSTS,...

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Unformatted text preview: CHAPTER 8 FLEXIBLE BUDGETS, OVERHEAD COSTS, VARIANCES, AND MANAGEMENT CONTROL 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 Terms to Learn : total-overhead variance 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 Terms to Learn : total-overhead variance 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 Terms to Learn : total-overhead variance 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 Terms to Learn : standard costing 5. For calculating the cost of products and services, a standard costing system does not have to track actual costs. Answer : True Difficulty : 3 Objective : 2 Terms to Learn : standard costing 6. The budget period for variable-overhead costs is typically less than 3 months. Answer : False Difficulty : 1 Objective : 3 Terms to Learn : total-overhead variance The budget period for variable-overhead costs is typically 12 months. 8-1 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 Terms to Learn : variable overhead spending variance 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 Terms to Learn : variable overhead efficiency variance 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 Terms to Learn : variable overhead flexible-budget variance The variable overhead flexible-budget variance measures the difference between the actual variable overhead costs and the flexible-budget variable-overhead costs. 10. The variable overhead efficiency variance measures the efficiency with which the cost-allocation base is used. Answer : True Difficulty : 1 Objective : 3 Terms to Learn : variable overhead efficiency variance 11. The variable overhead efficiency variance can be interpreted the same way as the efficiency variance for direct-cost items....
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Ch08 - CHAPTER 8 FLEXIBLE BUDGETS, OVERHEAD COSTS,...

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