Consider the Seven Statements That Follow

question 39

Essay

Consider the seven statements that follow.
1. An analysis of fixed overhead will typically result in the computation of the fixed-overhead spending variance and the fixed-overhead volume variance.
2. The standard rate for fixed overhead is computed by dividing a company's budgeted fixed overhead for the period by the planned manufacturing activity.
3. A company uses direct labour hours to apply manufacturing overhead to units of production. If the company reports an unfavourable labour efficiency variance, that same firm might report a favourable variable-overhead efficiency variance in the same accounting period.
4. The amount of actual fixed overhead for an accounting period is used to compute the fixed-overhead volume variance.
5. If a company's standard hours allowed for the manufacturing activity attained exceeds the planned manufacturing activity, the firm will report a favourable fixed-overhead volume variance.
6. The amount of fixed overhead that a company has budgeted for an accounting period will increase or decrease with the actual number of units produced.
7. The fixed-overhead volume variance indicates whether the level of production activity attained is higher or lower than the level originally anticipated.
Required:
Determine whether the preceding statements are true or false. If a statement is false, briefly explain why it is false.

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Definitions:

Recency

The principle that the most recently presented items or experiences will most likely be remembered best.

Automatic Processing

A type of information processing that occurs without the need for conscious attention, enabling tasks to be performed without deliberation.

Memory Consolidation

The process by which the brain converts short-term memories into long-term memories, making them stable over time.

Mood-Congruent Memory

Refers to the tendency of individuals to remember information that is consistent with their current mood or emotional state.