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ACO 311 - Flexible Budgeting And Analysis 0f Overhead Costs

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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 [Show More]

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