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Multiple Choice Accounting costing questions


Michele, Inc. is in the process of evaluating its manufacturing overhead costs. Michele uses a four-variance analysis of its manufacturing overhead costs. The results for April are as follows:

Budgeted direct labor hours per unit is used to allocate variable manufacturing overhead. Fixed overhead is allocated on a per unit basis.

Budgeted amounts for April 1999 are:

Direct labor hours 0.30/Unit
Variable labor hour overhead rate $20/DLH
Fixed manufacturing overhead $600,000
Budgeted output (denominator level output) 30,000 Units

Actual amounts for April 1999 are:

Variable manufacturing overhead $340,000
Fixed manufacturing overhead $590,000
Direct labor hours 16,000
Actual output 40,000

What is the Fixed Spending Variance using four-variance analysis?
a. $10,000 favorable
b. $10,000 unfavorable
c. $13,500 unfavorable
d. $13,500 favorable

What are the Fixed Efficiency and the Fixed Production Volume Variances, respectively,
using four-variance analysis?
a. No efficiency variance, $200,000 favorable
b. No efficiency variance, $200,000 unfavorable
c. $50,500 favorable, $199,998 unfavorable
d. $50,500 unfavorable, $199,998 favorable

#11. What are the respective spending, efficiency, and production volume variances using three-
variance analysis?
a. $10,000 unfavorable, $80,000 favorable, $200,000 unfavorable
b. $10,000 unfavorable, $80,000 unfavorable, $200,000 favorable
c. $5,000 favorable, $25,000 unfavorable, $0
d. $5,000 unfavorable, $25,000 favorable. $0

#12. The total flexible-budget variance is:
a. $90,000 favorable
b. $90,000 unfavorable
c. $80,000 unfavorable
d. $80,000 favorable.


Solution Summary

Answers and explanations to 4 Multiple Choice Accounting costing questions.