1. MDC company plans to make 7,000 units, and at this level of production, the cost

per unit would be $50. This $50 consists of $30 in variable costs and $20 in allocated

fixed overhead. What would the flexible budget show for total costs, if the company

makes 6,000 units?

2. Kinney-Borst anticipates production and sales of 100 units, total variable costs of

$6,000, and total fixed costs of $3,000. Actual production and sales were 200 units.

Calculate a flexible budget.

3.Following is selected information about the Hopi Popcorn company. All

information represents total amounts, not per unit amounts.

	Static Budget	Actual Results
Units made and sold	100	50
Direct materials costs	$5000	$2700
Direct materials used in production	1000 pounds	450 pounds
Fixed overhead	$3000	$4000

Hopi had no beginning or ending inventory of either finished product or raw materials.

Hopi allocates fixed overhead using units of output as the allocation base, and a budgeted

overhead rate with budgeted production in the denominator.

Required: Calculate the fixed overhead volume variance.

4. Assume the following information for the Centerville 2 plant of Polypar, which

manufactures only butyl.

Budgeted fixed overhead	$12,000,000
Plant production capacity	1,000,000 tons of buty1
Budgeted butyl production	500,000 tons of buty1
Actual butyl production	600,000 tons of butyl

Required:

A) Using budgeted butyl production in the denominator of the fixed overhead rate,

calculate the fixed overhead volume variance.

B) Using plant capacity in the denominator of the fixed overhead rate, calculate the

fixed overhead volume variance.

C) In one or two sentences, interpret what each of these variances represents.

5. Yellow Company budgeted fixed manufacturing overhead of $1,000,000, but

actually incurred fixed manufacturing overhead of $1,200,000. The company expected to

produce 100,000 units of product, but actually produced 80,000 units. The company

allocates fixed overhead using a budgeted rate, based on budgeted production in the

denominator.

Required:

A) Calculate the fixed overhead spending variance. Is this variance favorable or

unfavorable?

B) Calculate the fixed overhead volume variance. Is this variance favorable or

unfavorable?

C) Calculate the overallocated or underallocated fixed overhead.

6. If a factory is on a Standard Costing System, and has overallocated fixed overhead,

which of the following statements is certainly true?

(A) The factory made more units than planned.

(B) The factory has a favorable spending variance.

(C) The factory has a favorable production volume variance.

(D) The actually amount spent for fixed overhead was less than the amount of

fixed overhead allocated to inventory.