Exam 5: Variable Costing

Which of the following is accounted for differently in full costing compared to variable costing?

Brislin Gifts makes ceramic mugs and has the following amounts during 2017 (Assume the same unit costs in all years): Selling price \ 9.00 per mug Variable production cost \ 2.50 per mug Variable selling cost \ 1.10 per mug Fixed production cost \ 100,000 per month Fixed selling and administrative cost \ 60,000 per month Production and sales in units for the first three months of 2017 are as follows: Year Production Sales January 50,000 44,000 February 40,000 45,000 March 50,000 45,000 Inventory at January 1, 2017 consisted of 1,000 mugs.How much is net income for February using variable costing?

Affinity makes a single product, pool pumps.Information for 2017 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 Under which method will net income be larger?

Income statements of manufacturing firms prepared for external purposes use variable costing because it provides higher profits for making decisions.

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 net income using variable costing?

When the number of units produced is greater than the number of units sold, variable costing yields higher income than full costing.

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

Absorption costing is another name for variable costing.

Boulder Blowers produces snow blowers.The selling price per snow blower is $100.Costs involved in production are: Direct material per unit 20 Direct labor per unit 12 Variable manufacturing overhead per unit 10 Fixed manufacturing overhead per year 148,500 In addition, the company has fixed selling and administrative costs of $150,000 per year.During the year, Boulder produces 45,000 snow blowers and sells 30,000 snow blowers.There was no beginning inventory.How much is the cost of goods sold using full costing?

Rango Enterprises' manufacturing costs for 2017 are as follows: Direct materials \ 65,000 Direct labor 118,000 Manufacturing supplies 9,000 Depreciation of factory equipment 22,000 Other fixed manufacturing overhead 43,000 What amount should be considered as product costs for external reporting purposes?

Last month, Brand Products manufactured 25,000 calculators and sold 23,000 of these calculators at a price of $10.00 each.Manufacturing costs consisted of direct labor, $30,000; direct materials, $32,000; variable manufacturing overhead, $3,500; fixed manufacturing overhead, $21,500.Selling and administrative costs are all fixed and totaled $24,000.Beginning inventory consists of no units.What is Brand Products' net income using variable costing?

Cold City Blowers produces snow blowers.The selling price per snow blower is $80.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 206,400 In addition, the company has fixed selling and administrative costs of $88,000 per year.During the year, Cold City Blowers produced 8,600 snow blowers and sold 8,000 snow blowers.There is no beginning inventory.Ignoring taxes, how much will full costing net income differ from variable costing net income?

Under full costing, ending inventory includes both fixed and variable manufacturing and nonmanufacturing costs.

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

Variable costing facilitates CVP analysis.

During the past year, Waxman Electronics manufactured 25,000 speakers during 2017 and sold 26,000 speakers.Production costs during the year were as follows: Fixed manufacturing overhead \ 546,000 Variable manufacturing overhead 234,000 Direct labor 312,000 Direct materials 780,000 Sales totaled $3,120,000, variable selling and administrative costs totaled $182,000, and fixed selling and administrative costs totaled $114,000.There were 2,200 speakers in beginning inventory.How much is the contribution margin per unit?

Brislin Gifts makes ceramic mugs and has the following amounts during 2017 (Assume the same unit costs in all years): Selling price \ 9.00 per mug Variable production cost \ 2.50 per mug Variable selling cost \ 1.10 per mug Fixed production cost \ 100,000 per year Fixed selling and administrative cost \ 60,000 per year $\text { Production and sales in units for the first three months of } 2017 \text { are as follows: }$ Year Production Sales January 50,000 44,000 February 40,000 45,000 March 50,000 45,000 Inventory at January 1, 2017 consisted of 1,000 mugs.How much is the inventory cost per unit under full costing during March?

Futon Delight experienced the following costs in 2017 (Assume the same unit costs in all years): Direct materials \ 2.00 per unit Direct labor \ 1.00 per unit Manufacturing Overhead Costs: Variable \ 1.50 per unit Fixed \4 5,000 There were 600 units in beginning inventory.During the year, the company manufactured 18,000 units and sold 17,600 units.If net income for the year was $54,000 using full costing, how much will net income be if the company uses variable costing?

The following information relates to Charlin Industries for the year ending December 31, 2017, the company's first year of operations: Units produced 100,000 Units sold 80,000 Units in ending inventory 20,000 Fixed manufacturing overhead \ 650,000 How much fixed manufacturing overhead would be expensed in 2017 using variable costing?

Full costing income is a function of