Leesburg Bags produces backpacks. The costs and prices for the backpacks follow (Assume the same unit costs in all years): $\begin{array}{lr} \text { Selling price }&\$ 23.00 \text { per backpack }\\ \text { Variable costs: }\\ \text { Production } & \$ 11.00 \text { per backpack } \\ \text { Selling } & \$ 2.00 \text { per backpack }\\ \text { Fixed Costs: }\\ \text { Production }&\$ 900,000 \text { per Year }\\ \text { Selling and administrative }&\$540,000 \text { per Year } \end{array}$ Leesburg Bags produced 250,000 backpacks for the year and sold 200,000. There was no beginning inventory, and costs throughout the year were stable. How much is the cost of ending inventory under full costing?

A) $730,000 B) $550,000 C) $650,000 D) $938,000 A) $730,000 B) $550,000 C) $650,000 D) $938,000

Cold City Blowers produces snow blowers. The selling price per snow blower is $100. Costs involved in production are: $\begin{array}{lr} \text { Direct material per unit } & \$ 22 \\ \text { Direct labor per unit } & 15 \\ \text { Variable manufacturing overhead per unit } & 6 \\ \text { Fixed manufacturing overhead per year } & 23,400 \end{array}$ In addition, the company has fixed selling and administrative costs of $9,360 per year. During the year, Cold City Blowers produced 780 snow blowers and sold 800 snow blowers. Beginning inventory consisted of 50 snow blowers. How much is variable cost of goods sold?

A) $34,400 B) $33,540 C) $29,600 D) None of these answer choices are correct. A) $34,400 B) $33,540 C) $29,600 D) None of these answer choices are correct.

WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it sells for $8.00 each. The following information is available (Assume the same unit costs in all years): $\begin{array}{ll} \text { Variable costs: }\\ \text { Product royalty fees } & \$ 3.30 \text { per DVD } \\ \text { DVD production } & \$ 1.20 \text { per DVD } \\ \text { Selling and admin costs } & \$ 0.80 \text { per DVD }\\ \text { Fixed Costs: }\\ \text { Production } & \$ 128,000 \text { per month } \\ \text { Selling and administration } & \$ 130,000 \text { per month } \end{array}$ During June, 160,000 DVDs were produced and 144,000 were sold. There were 17,000 DVDs in beginning inventory. How much is net income per month under variable costing?

A) $143,600 B) $130,800 C) $130,640 D) None of these answer choices are correct. A) $143,600 B) $130,800 C) $130,640 D) None of these answer choices are correct.

WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it sells for $8.00 each. The following information is available (Assume the same unit costs in all years): $\begin{array}{ll} \text { Variable costs: }\\ \text { Product royalty fees } & \$ 3.30 \text { per DVD } \\ \text { DVD production } & \$ 1.20 \text { per DVD } \\ \text { Selling and admin costs } & \$ 0.80 \text { per DVD }\\ \text { Fixed Costs: }\\ \text { Production } & \$ 128,000 \text { per month } \\ \text { Selling and administration } & \$ 130,000 \text { per month } \end{array}$ During June, 160,000 DVDs were produced and 144,000 were sold. There were 17,000 DVDs in beginning inventory. How much is net income per month under full costing?

A) $143,600 B) $130,640 C) $130,800 D) None of these answer choices are correct. A) $143,600 B) $130,640 C) $130,800 D) None of these answer choices are correct.

Leesburg Bags produces backpacks. The costs and prices for the backpacks follow (Assume the same unit costs in all years): $\begin{array}{lr} \text { Selling price }&\$ 23.00 \text { per backpack }\\ \text { Variable costs: }\\ \text { Production } & \$ 11.00 \text { per backpack } \\ \text { Selling } & \$ 2.00 \text { per backpack }\\ \text { Fixed Costs: }\\ \text { Production }&\$ 900,000 \text { per Year }\\ \text { Selling and administrative }&\$540,000 \text { per Year } \end{array}$ Leesburg Bags produced 250,000 backpacks for the year and sold 200,000. There was no beginning inventory, and costs throughout the year were stable. How much is net income under full costing?

A) $560,000 B) $380,000 C) $340,000 D) $740,000 A) $560,000 B) $380,000 C) $340,000 D) $740,000

Ranger Productions experienced the following costs in 2014: \[\begin{array} { l r } \text { Direct materials } & \$ 1.50 \text { per unit } \\ \text { Direct labor } & \$ 2.60 \text { per unit } \\ \text { Variable manufacturing overhead } & \$ 1.20 \text { per unit } \\ \text { Variable selling costs } & \$ 4.40 \text { per unit } \\ \text { Fixed manufacturing overhead } & \$ 84,000 \\ \text { Fixed selling costs } & \$ 32,000 \\ \text { Fixed administrative costs } & \$ 15,000 \end{array}\] During 2014, the company manufactured 65,000 units and sold 62,000 units. The unit cost is the same throughout the year. Beginning inventory is zero. How much will the company report as total variable product costs on its 2014 contribution income statement?

A) $328,600 B) $601,400 C) $344,500 D) $630,500 A) $328,600 B) $601,400 C) $344,500 D) $630,500

Affinity makes a single product, pool pumps. Information for 2014 appears below (Assume the same unit costs in all years): \[\begin{array} { l r } \text { Sales in units } & 5,800 \\ \text { Production in units } & 6,200 \\ \text { Beginning inventory } & 1,500 \\ \text { Variable production cost per unit } & \$ 46.00 \\ \text { Variable selling cost per unit } & \$ 6.00 \\ \text { Fixed production cost per year } & \$ 31,000 \\ \text { Fixed selling and administrative cost per year } & \$ 24,000 \\ \text { Selling price per unit } & \$ 75.00 \end{array}\] How much is the full cost per unit of inventory?

A) $46.00 B) $51.00 C) $57.00 D) $52.00 A) $46.00 B) $51.00 C) $57.00 D) $52.00

Aerotrino produces and sells popular t-shirts. Following is information about its t-shirts for 2014: $\begin{array}{ll} \text { Selling price }& \$ 15.00 \text { per } t \text {-shirt } \\ \text { Variable costs: }\\ \text { Production (manufacturing costs) } & \$ 3.00 \text { per } t \text {-shirt } \\ \text { Selling \& administration } & \$ 1.00 \text { per } t \text {-shirt }\\ \text { Fixed costs: }\\ \text { Production (manufacturing costs) } & \$ 1,000,000 \text { per year } \\ \text { Selling \& administration } & \$ 2,000,000 \text { per year } \end{array}$ During 2014, the company produced 400,000 t-shirts and sold 350,000 of them. Assume that there was no beginning inventory. How much is the inventory under variable costing at December 31, 2014?

A) $150,000 B) $275,000 C) $200,000 D) $325,000 A) $150,000 B) $275,000 C) $200,000 D) $325,000

Acosta Supplies experienced the following costs in 2014: \[\begin{array} { l r } \text { Direct materials } & \$ 1.50 \text { per unit } \\ \text { Direct labor } & \$ 4.50 \text { per unit } \\ \text { Variable manufacturing overhead } & \$ 2.00 \text { per unit } \\ \text { Variable selling } & \$ 1.00 \text { per unit } \\ \text { Fixed manufacturing overhead } & \$ 70,000 \\ \text { Fixed selling and administrative } & \$ 80,000 \end{array}\] During 2014, the company manufactured 4,000 units and sold 4,200 units. Assume the same unit costs in all years. Beginning inventory consists of 800 units. How much are total variable costs on the company's 2014 contribution margin income statement?

A) $37,800 B) $36,000 C) $33,600 D) $32,000 A) $37,800 B) $36,000 C) $33,600 D) $32,000

Data from Rannier Metals for 2014 is as follows: $\begin{array}{lr} \text { Sales } & \$ 20 \text { per unit } \\ \text { Variable cost of goods sold } & ? ? \\ \text { Fixed manufacturing overhead } & \$ 85,000 \\ \text { Variable selling \& admini strative costs } & ? ? \\ \text { Fixed selling \& administrative costs } & \$ 150,000 \end{array}$ The company produced 145,000 units during the year and sold 130,000 units. Variable production costs per unit and fixed costs have remained constant all year. Net income for the year was $1,000,000. How much was the company's contribution margin?

A) $765,000 B) $1,235,000 C) $1,365,000 D) Not enough information is provided to determine the answer A) $765,000 B) $1,235,000 C) $1,365,000 D) Not enough information is provided to determine the answer

Exam 5: Variable Costing

Leesburg Bags produces backpacks. The costs and prices for the backpacks follow (Assume the same unit costs in all years): Selling price \ 23.00 per backpack Variable costs: Production \ 11.00 per backpack Selling \ 2.00 per backpack Fixed Costs: Production \ 900,000 per Year Selling and administrative \5 40,000 per Year Leesburg Bags produced 250,000 backpacks for the year and sold 200,000. There was no beginning inventory, and costs throughout the year were stable. How much is the cost of ending inventory under full costing?

(Multiple Choice)

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Question 41

Which of the following items on a variable costing income statement will change in direct proportion to a change in sales?

(Multiple Choice)

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Question 42

Cold City Blowers produces snow blowers. The selling price per snow blower is $100. Costs involved in production are: Direct material per unit \ 22 Direct labor per unit 15 Variable manufacturing overhead per unit 6 Fixed manufacturing overhead per year 23,400 In addition, the company has fixed selling and administrative costs of $9,360 per year. During the year, Cold City Blowers produced 780 snow blowers and sold 800 snow blowers. Beginning inventory consisted of 50 snow blowers. How much is variable cost of goods sold?

(Multiple Choice)

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Question 43

Which is most consistent with cost-volume-profit analysis?

(Multiple Choice)

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Question 44

WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it sells for $8.00 each. The following information is available (Assume the same unit costs in all years): Variable costs: Product royalty fees \ 3.30 per DVD DVD production \ 1.20 per DVD Selling and admin costs \ 0.80 per DVD Fixed Costs: Production \ 128,000 per month Selling and administration \ 130,000 per month During June, 160,000 DVDs were produced and 144,000 were sold. There were 17,000 DVDs in beginning inventory. How much is net income per month under variable costing?

(Multiple Choice)

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Question 45

Which method provides an incentive for managers to produce more units in order to increase income for performance evaluations?

(Multiple Choice)

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Question 46

Which of the following is treated as a product cost in full costing?

(Multiple Choice)

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Question 47

WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it sells for $8.00 each. The following information is available (Assume the same unit costs in all years): Variable costs: Product royalty fees \ 3.30 per DVD DVD production \ 1.20 per DVD Selling and admin costs \ 0.80 per DVD Fixed Costs: Production \ 128,000 per month Selling and administration \ 130,000 per month During June, 160,000 DVDs were produced and 144,000 were sold. There were 17,000 DVDs in beginning inventory. How much is net income per month under full costing?

(Multiple Choice)

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Question 48

If a company's income is positive and fixed costs exist, which of the following items will increase or decrease at a greater rate than the change in the amount of sales on a variable costing income statement?

(Multiple Choice)

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Question 49

Contribution margin is reported on an absorption costing income statement.

(True/False)

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Question 50

Variable costing facilitates CVP analysis.

(True/False)

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Question 51

Leesburg Bags produces backpacks. The costs and prices for the backpacks follow (Assume the same unit costs in all years): Selling price \ 23.00 per backpack Variable costs: Production \ 11.00 per backpack Selling \ 2.00 per backpack Fixed Costs: Production \ 900,000 per Year Selling and administrative \5 40,000 per Year Leesburg Bags produced 250,000 backpacks for the year and sold 200,000. There was no beginning inventory, and costs throughout the year were stable. How much is net income under full costing?

(Multiple Choice)

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Question 52

Ranger Productions experienced the following costs in 2014: Direct materials \ 1.50 per unit Direct labor \ 2.60 per unit Variable manufacturing overhead \ 1.20 per unit Variable selling costs \ 4.40 per unit Fixed manufacturing overhead \ 84,000 Fixed selling costs \ 32,000 Fixed administrative costs \ 15,000 During 2014, the company manufactured 65,000 units and sold 62,000 units. The unit cost is the same throughout the year. Beginning inventory is zero. How much will the company report as total variable product costs on its 2014 contribution income statement?

(Multiple Choice)

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Question 53

Affinity makes a single product, pool pumps. Information for 2014 appears below (Assume the same unit costs in all years): Sales in units 5,800 Production in units 6,200 Beginning inventory 1,500 Variable production cost per unit \ 46.00 Variable selling cost per unit \ 6.00 Fixed production cost per year \ 31,000 Fixed selling and administrative cost per year \ 24,000 Selling price per unit \ 75.00 How much is the full cost per unit of inventory?

(Multiple Choice)

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Question 54

Sticker Creations' fixed manufacturing overhead costs totaled $68,000 and its variable selling costs totaled $45,000. Under full costing, how should these costs be classified? Period Costs Product Costs A. \ 68,000 \ 45,000 B. \ 113,000 \ 0 C. \ 0 \ 113,000 D. \ 45,000 \ 68,000

(Short Answer)

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Question 55

Aerotrino produces and sells popular t-shirts. Following is information about its t-shirts for 2014: Selling price \ 15.00 per t -shirt Variable costs: Production (manufacturing costs) \ 3.00 per t -shirt Selling \& administration \ 1.00 per t -shirt Fixed costs: Production (manufacturing costs) \ 1,000,000 per year Selling \& administration \ 2,000,000 per year During 2014, the company produced 400,000 t-shirts and sold 350,000 of them. Assume that there was no beginning inventory. How much is the inventory under variable costing at December 31, 2014?

(Multiple Choice)

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Question 56

Acosta Supplies experienced the following costs in 2014: Direct materials \ 1.50 per unit Direct labor \ 4.50 per unit Variable manufacturing overhead \ 2.00 per unit Variable selling \ 1.00 per unit Fixed manufacturing overhead \ 70,000 Fixed selling and administrative \ 80,000 During 2014, the company manufactured 4,000 units and sold 4,200 units. Assume the same unit costs in all years. Beginning inventory consists of 800 units. How much are total variable costs on the company's 2014 contribution margin income statement?

(Multiple Choice)

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Question 57

The inventoriable cost per unit can be reduced, under variable costing, by decreasing the number of units produced.

(True/False)

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Question 58

Data from Rannier Metals for 2014 is as follows: Sales \ 20 per unit Variable cost of goods sold ?? Fixed manufacturing overhead \ 85,000 Variable selling \& admini strative costs ?? Fixed selling \& administrative costs \ 150,000 The company produced 145,000 units during the year and sold 130,000 units. Variable production costs per unit and fixed costs have remained constant all year. Net income for the year was $1,000,000. How much was the company's contribution margin?

(Multiple Choice)

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Question 59

The cost of goods sold is always greater using variable costing than when full costing is used.

(True/False)

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Question 60

Which of the following items on a variable costing income statement will change in direct proportion to a change in sales?

Which is most consistent with cost-volume-profit analysis?

Which method provides an incentive for managers to produce more units in order to increase income for performance evaluations?

Which of the following is treated as a product cost in full costing?

If a company's income is positive and fixed costs exist, which of the following items will increase or decrease at a greater rate than the change in the amount of sales on a variable costing income statement?

Contribution margin is reported on an absorption costing income statement.

Variable costing facilitates CVP analysis.

Sticker Creations' fixed manufacturing overhead costs totaled $68,000 and its variable selling costs totaled $45,000. Under full costing, how should these costs be classified? Period Costs Product Costs A. \ 68,000 \ 45,000 B. \ 113,000 \ 0 C. \ 0 \ 113,000 D. \ 45,000 \ 68,000

The inventoriable cost per unit can be reduced, under variable costing, by decreasing the number of units produced.

The cost of goods sold is always greater using variable costing than when full costing is used.

Managerial Accounting in the Information Age

Job-Order Costing for Manufacturing and Service Companies

Process Costing

Cost-Volume-Profit Analysis

Cost Allocation and Activity-Based Costing

The Use of Cost Information in Management Decision Making

Pricing Decisions

Capital Budgeting Decisions

Budgetary Planning and Control

Standard Costs and Variance Analysis

Decentralization and Performance Evaluation

Statement of Cash Flows

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