Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 11, Problem 8RQ
Jeffries Company’s only variable-
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Which of the following statements is true for a firm that uses variable costing?
A. The cost of a unit of product changes because of changes in number of units manufactured.B. Profits fluctuate with sales.C. An idle facility variation is calculated.D. Product costs include variable administrative costs.
The conventional CVP (Cost-volume and profit) analysis has some underlying assumptions regarding costs and selling price. Which one of the following is NOT one of those assumptions:
a. The selling price per unit will remain unchanged.
b. Fixed costs per unit will decrease.
c. The costs can be expressed as straight lines in a BEP (Break-even-point) graph.
d. The actual variable costs per unit vary over the production range.
Which of the following statements is true for a company that uses variable costing?
Profit fluctuates with sales.
Product costs include variable administration costs.
Any underapplied overhead is included in the product cost.
The unit product cost changes because of changes in the number of units manufactured.
Chapter 11 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 11 - Distinguish between static and flexible budgets.Ch. 11 - Explain the advantage of using a flexible budget.Ch. 11 - Why are flexible overhead budgets based on...Ch. 11 - Distinguish between a columnar and a formula...Ch. 11 - Show, using T-accounts, how production overhead is...Ch. 11 - How have advances in manufacturing technology...Ch. 11 - What is the interpretation of the...Ch. 11 - Jeffries Companys only variable-overhead cost is...Ch. 11 - What is the interpretation of the...Ch. 11 - Distinguish between the interpretations of the...
Ch. 11 - What is the fixed-overhead budget variance?Ch. 11 - What is the correct interpretation of the...Ch. 11 - Describe a common but misleading interpretation of...Ch. 11 - Draw a graph showing budgeted and applied fixed...Ch. 11 - What types of organizations use flexible budgets?Ch. 11 - What is the conceptual problem of applying fixed...Ch. 11 - Distinguish between the control purpose and the...Ch. 11 - Why are fixed-overhead costs sometimes called...Ch. 11 - Draw a graph showing both budgeted and applied...Ch. 11 - Give one example of a plausible activity base to...Ch. 11 - Explain how an activity-based flexible budget...Ch. 11 - Crystal Glassware Company has the following...Ch. 11 - Refer to the data in the preceding exercise. Use...Ch. 11 - Crystal Glassware Company has the following...Ch. 11 - The following data are the actual results for...Ch. 11 - Evening Star, Inc. produces binoculars of two...Ch. 11 - The controller for Rainbow Childrens Hospital,...Ch. 11 - You recently received the following note from the...Ch. 11 - You brought your work home one evening, and your...Ch. 11 - Refer to DCdesserts.coms activity-based flexible...Ch. 11 - Montoursville Control Company, which manufactures...Ch. 11 - Prob. 33ECh. 11 - The following data pertain to Aurora Electronics...Ch. 11 - Calgary Paper Company produces paper for...Ch. 11 - Gibralter Insurance Company uses a flexible...Ch. 11 - Country time Studios is a recording studio in...Ch. 11 - Newark Plastics Corporation developed its overhead...Ch. 11 - Johnson Electrical produces industrial ventilation...Ch. 11 - Fall City Hospital has an outpatient clinic....Ch. 11 - Maxwell Company uses a standard cost accounting...Ch. 11 - Mark Fletcher, president of SoftGro, Inc., was...Ch. 11 - LawnMate Company manufactures power mowers that...Ch. 11 - For each of the following independent Cases A and...Ch. 11 - Prob. 45PCh. 11 - Prob. 46PCh. 11 - WoodCrafts, Inc. is a manufacturer of furniture...Ch. 11 - Rutherford Wheel and Axle, Inc. has an automated...Ch. 11 - Chillco Corporation produces containers of frozen...Ch. 11 - Montreal Scholastic Supply Company uses a...Ch. 11 - College Memories, Inc. publishes college...Ch. 11 - While Mountain Sled Company manufactures childrens...Ch. 11 - Cleveland Computer Accessory Company (CCAC)...Ch. 11 - Prob. 54CCh. 11 - Prob. 55C
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- If there were no variances, how much was the company's absorption costing income?arrow_forwardWhich of the following statements is true? 1. The variable overhead efficiency variance does not actually measure how efficiently variable manufacturing overhead resources were used. 2. The variable overhead efficiency variance measures the difference between the actual level of activity and the standard activity allowed for the actual output, multiplied by the variable part of the predetermined overhead rate. 3. If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to have a favorable labor rate variance and unfavorable variable overhead rate variance for the same period.arrow_forwardIf variable manufacturing overhead is applied to production on the basis of direct labor-hours and the direct labor efficiency variance is unfavorable, will the variable overhead efficiency variance be favorable or unfavorable, or could it be either?arrow_forward
- Which of the following statements about margin of safety is false? O a. If only the fixed costs increase but the number of units sold and unit selling price and unit variable cost are all constant, the margin of safety decreases. O b. Margin of safety measures the difference between budgeted revenues and breakeven revenues. none of the given answers is false. O d. If the variable cost per unit decreases but the number of units sold, unit selling price and total fixed cost are all constant, the margin of safety increases. If only the fixed costs decrease but the number of units sold and unit selling price and all constant, the margin of safety decreases.arrow_forwardA break-even chart has been set up to show the current break-even point. Due to an increase in the price of raw materials, the variable cost per unit has increased. Assume all other costs and the selling price per unit remains constant. How does this change in the variable cost per unit affect the break-even chart?arrow_forwardIf variable manufacturing overhead is applied to production on the basis of direct labor-hours and the direct labor efficiency variance is unfavorable, will the variable overhead efficiency variance be favorable or unfavorable, or could it be either? Explain.arrow_forward
- Which of the following costs would be classified as variable and which would be classified as fixed, if units produced is the activity base? A. Direct materials costs B. Electricity costs of 0.35 per kilowatt-hourarrow_forwardWhat are some possible reasons for a direct labor time variance? A. utility usage decrease B. less qualified workers C. office supplies spending D. sales declinearrow_forwardWhich of the following statements is true for a company that uses variable costing? Multiple Choice paved The manufacturing cost per unit decreases when the volume of production increases. Net income is affected by fluctuations in production. Fixed manufacturing overhead is treated like a period cost. Fixed manufacturing overhead costs incurred in the current period may be recognized as expense in a later periocarrow_forward
- These are true/false questions ____ 26. Average rate of return equals estimated average annual income divided by average investment. ____ 27. If direct materials cost per unit increases, the break-even point will increase. ____ 28. A production supervisor's salary that does not vary with the number of units produced is an example of a fixed cost. ____ 29. The difference between the standard cost of a product and its actual cost is called a variance. ____ 30. Both process and job order cost systems maintain perpetual inventory accounts with subsidiary ledgers.arrow_forwardCost A is a fixed cost, while B is a variable cost. During the current year, the volume of output has decreased. In terms of cost per unit of output, we would expect that: cost A has decreased. cost B has remained unchanged. cost B has decreased. cost A has remained unchanged.arrow_forwardVariable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is favorable, the variable overhead efficiency variance will be: Multiple Choice favorable. unfavorable. zero.arrow_forward
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