Chapter 11
Flexible Budgeting and Analysis of Overhead Costs
Answer Key
True / False Questions
1. Flexible budgets reflect a company's anticipated costs based on variations in activity
levels.
TRUE
AACSB: Refle
...
Chapter 11
Flexible Budgeting and Analysis of Overhead Costs
Answer Key
True / False Questions
1. Flexible budgets reflect a company's anticipated costs based on variations in activity
levels.
TRUE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Research
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-01
Feedback True: Correct! Flexible budgets are based on a relevant range of activity levels.
Feedback False: Flexible budgets are based on a relevant range of activity levels.
2. The units of output are meaningful measures in multiproduct firms.
FALSE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Research
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-01
Feedback True: Units of output usually are not meaningful measures in multiproduct firms, because you must add numbers of unlike
products.
Feedback False: Correct! Units of output usually are not meaningful measures in multiproduct firms, because you must add numbers of
unlike products.
11-1
Chapter 11 - Flexible Budgeting and Analysis of Overhead Costs
3. A flexible budget for 15,000 hours revealed variable manufacturing overhead of $90,000
and fixed manufacturing overhead of $120,000. The budget for 25,000 hours would reveal
total overhead costs of $210,000.
FALSE
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 11-02
Feedback True: The amount of $210,000 is incorrect; it should be: $270,000, based on [($6 x 25,000) + $120,000].
Feedback False: Correct! The amount of $210,000 is incorrect; it should be: $270,000, based on [($6 x 25,000) + $120,000].
4. The formula flexible budget is more general than the columnar flexible budget, because the
formula allows managers to compute budgeted overhead costs at any activity level.
TRUE
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
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