Exam 2 Review

Question 1

Production volume variance equation

Answer 1

Production volume variance =(Budgeted fixed MOH) - (FMOH allocated using budgeted cost per output unit allowed for actual output produced)

Question 2

Variable overhead efficiency variance equation?

Answer 2

Variable (V) O H efficiency variance =[(actual Q of V O H cost allocation base used for actual output) - (budgeted Q of V O H cost allocation base allowed for actual output)] X budgeted V O H cost per unit of cost allocation base

Question 3

Variable overhead spending variance equation?

Answer 3

Variable overhead spending variance =(actual V O H cost per unit of cost allocation base - budgeted V O H cost per unit of cost allocation base) X(actual Q V O H cost allocation base used for actual output)

Question 4

Static budget variance equation

Answer 4

Static budget variance for operating income =(Actual result) - (static budget amount)

Question 5

flexible budget?

Answer 5

Calculates budgeted revenues and budgeted costs based on actual output level of the Budget period

Question 6

Why is it useful to develop a flexible budget?

Answer 6

Flexible budgets help managers gain more insight into the causes of variances than is available from static budget

Question 7

Price variance AKA Input price variance AKA Rate variance, e

Answer 7

Price variance = (actual price of input - budgeted price of input) X actual quantity Of input

Question 8

Efficiency variance equation?

Answer 8

Efficiency variance =(actual quantity input used - budgeted quantity of input allowed) For actual output X budgeted price of input

Question 9

Direct Manufacturing Labor efficiency variance equation

Answer 9

Direct manufacturing labor efficiency variance =
(actual quantity input used - budgeted quantity of input allowed) For actual output X budgeted price of input