ACCT 349 Week 4 Midterm

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1. (TCO 5) The following information is available from the Taylor Company.
Actual factory overhead $15,000
Fixed overhead expenses, actual $7,200
Fixed overhead expenses, budgeted $7,000
Actual hours 3,500
Standard hours 3,800
Variable overhead rate per direct labor hour $2.50
Assuming that Taylor uses a three-way analysis of overhead variances, what is the spending variance?
(Points : 11) $750 favorable $750 unfavorable $950 favorable $200 unfavorable

EXPLANATION:
The spending variance is the difference between the actual total factory overhead and the budgeted amount for the actual output.
Budgeted $7,000 + (3,500 x $2.50) $15,750
Actual (15,000) $750 F

2. (TCO 5) In an activity-based costing system, what should be used to assign a department’s manufacturing overhead costs to products produced in varying lot sizes? (Points : 11) A single cause-and-effect relationship Multiple cause-and-effect relationships Relative net sales value of the products A product’s ability to bear cost allocations

EXPLANATION:
Instead of using a single allocation base for overhead, and ABC system determines the multiple activities associated with the incurrence of costs and then accumulates a cost pool for each activity using the appropriate activity base (cost driver). Consequently, overhead is assigned based on the multiple cause-and-effect relationships between activities and their cost drivers.

3. (TCO 1) An examination of Boener Company’s past maintenance records disclosed the following costs and volume measures the following. Highest Lowest
Cost per month $39,200 $32,000