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Cost Accounting 101 Practice Test: Flexible Budgets, Overhead Cost Variances, and Management Control
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Overhead cost variance is the difference between the actual and budgeted overhead costs allocated to products or services. It can indicate how well a company is managing its resources, controlling its costs, and pricing its products or services.  Overhead cost variance is made up of four variances: Variable overhead rate variance, Variable overhead efficiency variance, Fixed overhead spending variance, and Volume variance.  To calculate the overall overhead cost variance, subtract the standard overhead costs from the actual overhead costs. If the standard overhead cost is higher than the... Show more
Cost Accounting 101 Practice Test: Flexible Budgets, Overhead Cost Variances, and Management Control
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25 Questions

1. Standard costing is a costing system that allocates overhead costs on the basis of the standard overhead-cost rates times the standard quantities of the allocation bases allowed for the actual outputs produced.
2. Variable overhead costs can be managed by:
3. The budget period for variable-overhead costs is typically less than 3 months.
4. The fixed overhead cost variance can be further subdivided into the:
5. Under activity-based costing, the flexible-budget amount equals the static-budget amount for fixed overhead costs.
6. If the production planners set the budgeted machine hours standards too tight, one could anticipate there would be an unfavorable fixed overhead efficiency variance.
7. When machine-hours are used as an overhead cost-allocation base and annual leasing costs for equipment unexpectedly increase, the most likely result would be to report a(n):
8. A favorable variable overhead spending variance can be the result of paying lower prices than budgeted for variable overhead items such as energy.
9. An unfavorable fixed overhead spending variance indicates that:
10. Fixed overhead costs must be unitized for:
11. For purposes of allocating fixed overhead costs to products, managers may view the fixed overhead costs as if they had a variable-cost behavior pattern.
12. An unfavorable variable overhead spending variance indicates that:
13. Causes of a favorable variable overhead efficiency variance might include using lower-skilled workers than expected.
14. For fixed manufacturing overhead, there is no:
15. For calculating the costs of products and services, a standard costing system:
16. The lump sum budgeted for fixed overhead will always be the same amount for the static budget and the flexible budget.
17. Overhead costs have been increasing due to all of the following EXCEPT:
18. Fixed and variable cost variances can ________ be applied to activity-based costing systems.
19. An unfavorable variable overhead efficiency variance indicates that:
20. Excess capacity is a sign:
21. The variable overhead efficiency variance measures the efficiency with which the cost-allocation base is used.
22. The variable overhead efficiency variance is computed ________ and interpreted ________ the direct-cost efficiency variance.
23. A favorable fixed overhead flexible-budget variance indicates that actual fixed costs exceeded the lump-sum amount budgeted.
24. For variable manufacturing overhead, there is no:
25. In flexible budgets, costs that remain the same regardless of the output levels within the relevant range are:

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