1)Which of the following is not true with respect to fixed overhead costs? 

a) They do not automatically increase or decrease with the level of activity within the relevant range. 

b) Although fixed overhead costs are unitized and allocated for inventory costing, managers should concentrate on total lump-sum costs when forecasting fixed costs. 

c) They are determined to support specific planned production. 

d) They are significantly affected by the overhead allocation bases, such as MH or DLH used for production. 

2) Which of the journal entries is correct to record unfavorable efficiency variance and favorable spending variance? 

a) Variable Overhead Control xx Variable Overhead Spending Variance x Variable Overhead Allocated xx Variable Overhead Efficiency Variance x 

b) Variable Overhead Allocated xx Variable Overhead Spending Variance x Variable Overhead Control xx Variable Overhead Efficiency Variance x 

c) Variable Overhead Control xx Variable Overhead Efficiency Variance x Variable Overhead