MANAGEMENT ADVISORY SERVICES STANDARD COSTS AND VARIANCE ANALYSIS
NORMAL COSTING
One-Way Variance
Actual Overhead
25. Hayward applies overhead at $5 per machine hour. During March it worked 10,000 hours and overapplied
overhead by $3,000. Actual overhead was (E)
a. $53,000. c. $47,000.
b. $50,000. d. none of the above. L & H 10e
Applied Overhead
36. Gonzalez Company uses the equation $520,000 + $2 per direct labor hour to budget manufacturing overhead.
Gonzalez has budgeted 150,000 direct labor hours for the year. Actual results were 150,000 direct labor hours
and $817,500 total manufacturing overhead. The total overhead applied for the year is (E)
a. $300,000. c. $817,500.
b. $520,000. d. $820,000. L & H 10e
37. Gonzales Company uses the equation $540,000 + $2 per direct labor hour to budget manufacturing overhead.
Gonzalez has budgeted 160,000 direct labor hours for the year. Actual results were 160,000 direct labor hours
and $857,500 total manufacturing overhead. The total overhead variance for the year is (E)
a. $2,500 favorable. c. $2,500 unfavorable.
b. $12,500 favorable. d. Some other number. D, L & H 9e
Over-Applied
24. Spooner applies overhead based on direct labor cost. It had budgeted manufacturing overhead of $50,000 and
budgeted direct labor of $25,000. Actual overhead was $52,500, actual labor cost was $27,000. Overhead was
(E)
a. overapplied by $1,500. c. overapplied by $2,500.
b. overapplied by $2,000. d. underapplied by $2,000. L & H 10e
37. Gonzalez Company uses the equation $520,000 + $2 per direct labor hour to budget manufacturing overhead.
Gonzalez has budgeted 150,000 direct labor hours for the year. Actual results were 150,000 direct labor hours
and $817,500 total manufacturing overhead. The total overhead variance for the year is (E)
a. $2,500 favorable. c. $2,500 unfavorable.
b. $12,500 favorable. d. some other number. L & H 10e
44. Antaya Company uses the equation $375,000 + $1.20 per direct labor hour to budget manufacturing overhead.
Antaya has budgeted 75,000 direct labor hours for the year. Actual results were 81,000 direct labor hours,
$388,000 fixed overhead, and $98,600 variable overhead. The total overhead variance for the year is (E)
a. $14,400 c. $37,200
b. $15,600 d. $30,000. L & H 10e
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, MANAGEMENT ADVISORY SERVICES STANDARD COSTS AND VARIANCE ANALYSIS
.
i
Nil Co. uses a predetermined factory O/H application rate based on direct labor cost. For the year ended
December 31, Nil’s budgeted factory O/H was $600,000, based on a budgeted volume of 50,000 direct labor hours,
at a standard direct labor rate of $6 per hour. Actual factory O/H amounted to $620,000, with actual direct labor
cost of $325,000. For the year, over-applied factory O/H was (M)
a. $20,000 c. $30,000
b. $25,000 d. $50,000 AICPA 1186 II-29
30. Nil Co. uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs.
For the year ended December 31, Nil's estimated manufacturing overhead was $600,000, based on an estimated
volume of 50,000 direct labor hours, at a direct labor rate of $6.00 per hour. Actual manufacturing overhead
amounted to $620,000, with actual direct labor cost of $325,000. For the year, manufacturing overhead was: (M)
A. overapplied by $20,000. C. overapplied by $30,000.
B. underapplied by $22,000. D. underapplied by $30,000. G & N 10e
ii. Watson Company uses a predetermined factory overhead application rate based on direct labor cost. Watson's
budgeted factory overhead was $756,000 based on a budgeted volume of 60,000 direct labor hours, at a standard
direct labor rate of $7.20 per hour. Actual factory overhead amounted to $775,000 with actual direct labor cost of
$450,000 for the year ended December 31. How much was Watson's overapplied factory overhead? (M)
A. $12,500 C. $19,000
B. $18,000 D. $37,000 Gleim
Under-Applied
iii. The Kelley Company uses a predetermined overhead rate of $9 per direct labor hour to apply overhead. During
the year, 30,000 direct labor hours were worked. Actual overhead costs for the year were $240,000. The overhead
variance is (E)
a. $27,000 overlapped c. $30,000 underapplied
b. $26,670 underapplied d. $24,000 overapplied H&M
38. Bonds Company uses the equation $300,000 + $1.75 per direct labor hour to budget manufacturing overhead.
Bonds has budgeted 125,000 direct labor hours for the year. Actual results were 110,000 direct labor hours,
$297,000 fixed overhead, and $194,500 variable overhead. The total overhead variance for the year is (E)
a. $1,000. c. $35,000
b. $48,000. d. $36,000. L & H 10e
29. Malcolm Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing
overhead to jobs.
On September 1, the estimates for the month were:
Manufacturing overhead $17,000
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, MANAGEMENT ADVISORY SERVICES STANDARD COSTS AND VARIANCE ANALYSIS
Direct labor hours 13,600
During September, the actual results were:
Manufacturing overhead $18,500
Direct labor hours 12,000
The cost records for September will show: G & N 10e
A. Overapplied overhead of $1,500. C. Overapplied overhead of $3,500.
B. Underapplied overhead of $1,500. D. Underapplied overhead of $3,500.
Actual Direct Labor Hours
30. Hoyt Company applies overhead at $6 per direct labor hour. In March Hoyt incurred overhead of $144,000. Under-
applied overhead was $6,000. How many direct labor hours did TYV work? (E)
a. 25,000 c. 23,000
b. 24,000 d. 22,000 D, L & H 9e
. MNO Company applies overhead at P5 per direct labor hour. In March 2001, MNO incurred overhead of
P120,000. Under-applied overhead was P5,000. How many direct labor hours did MNO work? (E)
A. 25,000 C. 24,000
B. 22,000 D. 23,000 RPCPA 1001
iv
. Margolos, Inc. ends the month with a volume variance of $6,360 unfavorable. If budgeted fixed factory O/H was
$480,000, O/H was applied on the basis of 32,000 budgeted machine hours, and budgeted variable factory O/H
was $170,000, what were the actual machine hours (AH) for the month? (M)
a. 32,424 c. 31,687
b. 32,000 d. 31,576 J.B. Romal
41. Pinnini Co. uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to
jobs. Last year, Pinnini Company incurred $225,000 in actual manufacturing overhead cost. The Manufacturing
Overhead account showed that overhead was overapplied $14,500 for the year. If the predetermined overhead
rate was $5.00 per direct labor hour, how many hours did the company work during the year? (M)
A. 45,000 hours C. 42,100 hours
B. 47,900 hours D. 44,000 hours G & N 10e
42. Parsons Co. uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to
jobs. Last year Parsons incurred $250,000 in actual manufacturing overhead cost. The Manufacturing Overhead
account showed that overhead was overapplied in the amount of $12,000 for the year. If the predetermined
overhead rate was $8.00 per direct labor hour, how many hours were worked during the year? (M)
A. 31,250 hours C. 32,750 hours
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, MANAGEMENT ADVISORY SERVICES STANDARD COSTS AND VARIANCE ANALYSIS
B. 30,250 hours D. 29,750 hours G & N 10e
Three-Way Variance
Variable Overhead Spending Variance
39. Bonds Company uses the equation $300,000 + $1.75 per direct labor hour to budget manufacturing overhead.
Bonds has budgeted 125,000 direct labor hours for the year. Actual results were 110,000 direct labor hours,
$297,000 fixed overhead, and $194,500 variable overhead. The variable overhead spending variance for the year
is (E)
a. $2,000. c. $47,000.
b. $3,000. d. $48,000. L & H 10e
29. Baxter Corporation's master budget calls for the production of 5,000 units of its product monthly. The master
budget includes indirect labor of $144,000 annually; Baxter considers indirect labor to be a variable cost. During
the month of April, 4,500 units of product were produced, and indirect labor costs of $10,100 were incurred. A
performance report utilizing flexible budgeting would report a spending variance for indirect labor of: (E)
A. $1,900 unfavorable. C. $1,900 favorable.
B. $700 favorable. D. $700 unfavorable. G & N 10e
Fixed Overhead Budget Variance
40. Bonds Company uses the equation $300,000 + $1.75 per direct labor hour to budget manufacturing overhead.
Bonds has budgeted 125,000 direct labor hours for the year. Actual results were 110,000 direct labor hours,
$297,000 fixed overhead, and $194,500 variable overhead. The fixed overhead budget variance for the year is (E)
a. $2,000. c. $47,000.
b. $3,000. d. $48,000. L & H 10e
46. Antaya Company uses the equation $375,000 + $1.20 per direct labor hour to budget manufacturing overhead.
Antaya has budgeted 75,000 direct labor hours for the year. Actual results were 81,000 direct labor hours,
$388,000 fixed overhead, and $98,600 variable overhead. The fixed overhead budget variance for the year is (E)
a. $13,000. c. $17,000.
b. $47,000 d. $30,000. L & H 10e
Volume Variance
. ABC Company uses the equation P300,000 + P1.75 per direct labor hour to budget manufacturing overhead. ABC
has budgeted 125,000 direct labor hours for the year. Actual results were 110,000 direct labor hours, P297,000
fixed overhead, and P194,500 variable overhead. What is the fixed overhead volume variance for the year? (M)
A. P35,000 unfavorable. C. P2,000 favorable.
B. P36,000 unfavorable. D. P3,000 favorable. RPCPA 1001
CMA EXAMINATION QUESTIONS Page 4 of 934