Chapter 8-3

Question 1

the difference between actual variance overhead costs and flexible budget variable overhead amounts

Answer 1

variable overhead flexible budget variance

Question 2

the difference between the actual quantity of the cost allocation base used and the budgeted quantity of the cost allocation base

Answer 2

variable overhead efficiency variance

Question 3

the difference between the actual variable overhead cost rate and the budgeted variable overhead cost rate

Answer 3

variable overhead spending variance

Question 4

highlights differences between actual costs and quantities versus budgeted costs and quantities for the actual output level of 10,000 jackets

Answer 4

flexible budget

Question 5

$10,500 unfavorable for variable overhead flexible budget variance means what

Answer 5

indicates that the actual variable overhead exceeded the flexible budget amount by 10,500

Question 6

• whether more machine hours were ysed than planned
• if workers were less skilled than expected in using machines
• if there was an increase in variable overhead costs, such as maintenance

Answer 6

possible questions behind an unfavorable variance

Question 7

measures the efficiency in using the variable overhead resources

Answer 7

efficiency variance

Question 8

measures the difference between the actual spending on variable overhead and the expected spending based on the flexible budget

Answer 8

spending variance

Question 9

variance can be subdivided into

Answer 9

1. efficiency variance
2. spending variance

Question 10

unfavorable variance of $15,000 under variable overhead efficiency variance indicates what

Answer 10

that more machine hours were used than budgeted, increasing potential variable overhead costs

Question 11

$4500 favorable variance under variable overehead spending variance indicates what

Answer 11

the actual cost per unit is lower than the budgeted cost per unit

Question 12

managers use variance analysis to

Answer 12

evaluate performance and learn for future improvements

Question 13

• skillful negoiation by the purchasing manager
• market oversupply
• lower quality of inputs

Answer 13

potential causes for lower actual prices

Question 14

• higher skill levels of workers
• better machine maintenance
• improved manufacturing processes

Answer 14

potential causes for efficient use of resources

Question 15

a favorable variance is not always desirable why

Answer 15

could be a result from lower quality inputs, less skilled workers, etc.