29 Jun Question 1. Cost behavior for variable overhead is
Question
1. Cost behavior for variable overhead is more difficult to predict than for direct material or direct labor cost for all the following reasons except:
A. Multiple cost drivers are involved with variable overhead.
B. Direct material and direct labor contain no semi-variable component.
C. The variable portion of overhead must first be separated from the fixed portion.
D. Variable overhead is a relatively small part of total overhead.
2. Finding a single cost driver that changes in the same proportion as variable factory overhead costs is:
A. Simplified by breaking out the fixed portion of overhead cost.
B. The first step in variable overhead cost assignment.
C. Difficult but manageable using advanced statistical techniques.
D. An important goal of effective cost system design.
E. Virtually impossible because of the underlying nature of variable overhead costs.
3. An activity-based cost (ABC) driver applies factory overhead to products or services according to the:
A. Activity output as measured by the units produced.
B. Activity level of hours of direct labor.
C. Resource demands/resource consumption of the firm’s outputs.
D. Budgeted activity level for the period.
E. Volume of output (i.e., units produced) during the period.
4. A manufacturing company that uses standard costs and flexible budgets can break the variable factory overhead flexible-budget variance down into:
A. Volume and efficiency components.
B. Spending and efficiency variances.
C. Spending and production volume variances.
D. Spending variances only.
5. Which of the following factors is not usually important when deciding whether to investigate a variance?
A. Magnitude of the variance.
B. Trend of the variance over time.
C. Whether the variance is favorable or unfavorable.
D. Cost of investigating the variance.
E. Likelihood that the variance will recur in the future.
6. A standard costing system will produce the same income as an actual costing system when end-of-period standard cost variances are assigned:
A. Only to work-in-process (WIP) inventory.
B. Only to finished goods inventory.
C. To work-in-process and finished goods inventories.
D. Entirely to cost of goods sold.
E. To cost of goods sold and all inventory accounts.
7. Many firms feel a strong obligation to establish and use a stand
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