Exam 5: Variable Costing

When the number of units produced exceeds the number of units sold, variable costing yields a lower net income than if full costing had been used.

If a company employs JIT inventory techniques, which statement is true?

A company with fixed manufacturing costs of $500,000 produces 100,000 units in 2017 and 125,000 units in 2015.The company sells 90,000 units each in both years.Other costs and selling price are unchanged for 2017 and 2018.Assume that there was no beginning inventory in 2017.Which of the following is true?

Anders Supply experienced the following costs in May: Direct materials \ 6.50 per unit Direct labor \ 2.20 per unit Manufacturing overhead costs Variable \ 3.10 per unit Fixed \ 44,000 Selling \& administrative costs Variable selling costs \ 1.50 per unit Fixed selling costs \ 21,000 Fixed administrative costs \ 16,000 During May, the company manufactured 22,000 units and sold 24,000 units.Beginning inventory totaled 3,400 units.If the average selling price per unit was $28, how much is the company's contribution margin?

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 variable costing during March?

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 \ $\text { Production and sales in units for the first three months of } 2017 \text { are as follows: }$ Year Production Sales January 50,000 44,000 February 40,000 45,000 March 44,000 46,000 Inventory at January 1, 2017 consisted of 1,000 mugs.During which months will ending inventory be the same if variable costing is used?

When the number of units sold is equal to the number of units produced, the net income using absorption costing will be

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.What is the value of ending inventory using full costing?