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    Multiple Choice Accounting costing questions

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    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.

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    Solution Summary

    Answers and explanations to 4 Multiple Choice Accounting costing questions.