Exam 16: Super-Variable Costing

Labadie Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 25,000 units and sold 22,000 units. The company's only product is sold for $251 per unit. The company is considering using either super-variable costing or a variable costing system that assigns $23 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

Super-variable costing is most appropriate where:

Stubenrauch Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 38,000 units and sold 32,000 units. The company's only product is sold for $240 per unit. Assume that the company uses a variable costing system that assigns $14 of direct labor cost to each unit that is produced. The net operating income under this costing system is:

Schubert Corporation manufactures and sells one product. In the company's first year of operations, the variable cost consisted solely of direct materials of $86 per unit. The annual fixed costs were $510,000 of direct labor cost, $2,210,000 of fixed manufacturing overhead expense, and $1,209,000 of fixed selling and administrative expense. The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 34,000 units and sold 31,000 units. The company's only product is sold for $232 per unit. Required: a. Assume the company uses super-variable costing. Compute the unit product cost for the year and prepare an income statement for the year. b. Assume that the company uses a variable costing system that assigns $15 of direct labor cost to each unit that is produced. Compute the unit product cost for the year and prepare an income statement for the year.

Letcher Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 56,000 units and sold 54,000 units. The company's only product is sold for $227 per unit. The net operating income for the year under super-variable costing is:

Tremble Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 49,000 units and sold 45,000 units. The company's only product is sold for $233 per unit. Assume that the company uses an absorption costing system that assigns $11 of direct labor cost and $75 of fixed manufacturing overhead to each unit that is produced. The net operating income under this costing system is:

Paparelli Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 40,000 units and sold 33,000 units. The company's only product is sold for $240 per unit. The net operating income for the year under super-variable costing is:

Union Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 24,000 units and sold 17,000 units. The company's only product is sold for $232 per unit. Assume that the company uses an absorption costing system that assigns $22 of direct labor cost and $68 of fixed manufacturing overhead to each unit that is produced. The net operating income under this costing system is:

Tremble Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 49,000 units and sold 45,000 units. The company's only product is sold for $233 per unit. Assume that the company uses a variable costing system that assigns $11 of direct labor cost to each unit that is produced. The net operating income under this costing system is: