Exam 8: Absorption and Variable Costing,and Inventory Management

Figure 8-6. Bailey Company incurred the following costs in manufacturing desk calculators: During the period,the company produced and sold 2,000 units. Refer to Figure 8-6.What is the inventory cost per unit using variable costing?

Prepare a segmented income statement for Mario Co.for the coming year,using variable costing. A sales commission of 2% of sales is paid for each of the two product lines.Direct fixed selling and administrative expense was estimated to be $32,000 for the leather jackets and $66,000 for the suede jackets.Common fixed overhead for the factory was estimated to be $83,000 and common selling and administrative expense was estimated to be $14,000. Required: Prepare a segmented income statement for Mario Co.for the coming year,using variable costing.

The _______________ income statement groups expenses according to cost behavior.

Figure 8-1. Last year,Fabre Company produced 20,000 units and sold 18,000 units at a price of $12.Costs for last year were as follows: Fixed factory overhead is applied based on expected production.Last year,Fabre expected to produce 20,000 units. Refer to Figure 8-1.Assuming that beginning inventory was zero,what is the value of ending inventory under variable costing?

The inventory cost that can include insurance,inventory taxes,and obsolescence is called

Figure 8-5. Sanders Company has the following information for 2011: There were no beginning inventories. Refer to Figure 8-5.What is the income for Sanders using the absorption costing method?

Ellie Manufacturing Company produces three products: A,B,and C.The income statement for 2011 is as follows: The sales,contribution margin ratios,and direct fixed expenses for the three types of products are as follows: Required: Prepare income statements segmented by products.Include a column for the entire firm in the statement.

Figure 8-9. The following information pertains to Stark Corporation: Refer to Figure 8-9.What is the value of ending inventory using the variable costing method?

The formula for total carrying cost is

When the economic order quantity (EOQ)model is applied to units produced within the company,ordering costs become

Under a JIT system,

Figure 8-12. Assume the following information for a product line: Refer to Figure 8-12.What is the segment margin of the product line?

The profit contribution each segment makes toward covering a company's common fixed costs is called ______________.

Which of the following is not a traditional reason for carrying inventory?

Figure 8-12. Assume the following information for a product line: Refer to Figure 8-12.What is the contribution margin of the product line?

Figure 8-2. Loring Company had the following data for the month: Fixed overhead is $4,000 per month; it is applied to production based on normal activity of 2,000 units.During the month,2,000 units were produced.Loring started the month with 300 units in beginning inventory,with unit product cost equal to this month's unit product cost.A total of 2,100 units were sold during the month at price of $14.Selling and administrative expense for the month,all fixed,totaled $3,600. Refer to Figure 8-2.What is operating income under absorption costing?

________________ is the time required to receive the economic order quantity once an order is placed.

A ____________ is a subunit of a company of sufficient importance to warrant the production of performance reports.

JIT relies on a push system to control finished good inventory.

Figure 8-2. Loring Company had the following data for the month: Fixed overhead is $4,000 per month; it is applied to production based on normal activity of 2,000 units.During the month,2,000 units were produced.Loring started the month with 300 units in beginning inventory,with unit product cost equal to this month's unit product cost.A total of 2,100 units were sold during the month at price of $14.Selling and administrative expense for the month,all fixed,totaled $3,600. Refer to Figure 8-2.What is the unit product cost under absorption costing?