Hw. 10

1. The variable overhead spending variance measures the aggregate effect of differences between the

	a.	the total variable overhead and the applied variable overhead.
	b.	the total variable overhead and total budgeted overhead costs.
	c.	the total variable overhead and the budgeted overhead for the expected activity.
	d.	the actual variable overhead rate and the standard variable overhead rate.
	e.	None of these.

Figure 11-2. Lawson, Inc. produces plastic grocery bags. Lawson has developed a static budget for the month of July based on 8,000 direct labor hours. During the quarter, the actual activity was 9,000 direct labor hours. Data for July are summarized as follows:

	Static budget (8,000 hours)	Actual costs (9,000 hours)
Direct materials cost	$ 96,000	$118,000
Power	40,000	47,000
Salary of plant supervisor	6,000	6,000
Total	$142,000	$171,000

5. Refer to Figure 11-2. Comparing the static budget to the actual costs, we can conclude that

	a.	the manager spent more than should have been spent.
	b.	immediate action is needed to reduce costs.
	c.	the plant manager was clearly not efficient.
	d.	the plant manager should be dismissed.
	e.	None of these.

6. Refer to Figure 11-2. What is the flexible budget for July?

	a.	$142,000
	b.	$159,000
	c.	$171,000
	d.	$165,000
	e.	None of these.

7. Refer to Figure 11-2. What is the flexible budget variance for July?

	a.	$12,000 U
	b.	$12,000 F
	c.	$29,000 U
	d.	$29,000 F
	e.	None of these.