Exam 8: Absorption and Variable Costing, and Inventory Management

MATCHING Match the type of income statement to the costs it includes. a. Variable costing income statement b. Absorption costing income statement c. Both types of income statements -Direct materials for units sold

Figure 8-7. Ramon Company reported the following units of production and sales for June and July: Income under absorption costing for June was $40,000; income under variable costing for July was $50,000. Fixed costs were $600,000 for each month. -Refer to Figure 8-7. How much was income for June using variable costing?

Figure 8-11. Tyler Company has the following information pertaining to its two product lines for last year: Common expenses are $105,000 for the year. -Refer to Figure 8-11. What is the income for Tyler Company?

When monthly production volume is constant and sales volume is less than production, income determined with variable costing procedures will

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 absorption costing?

The formula for total carrying cost is

Simon Company sells 900 units of its deluxe product each year. The cost of setting up for one production run is $150; the cost of carrying one unit in inventory for a year is $3. Simon currently produces 100 deluxe units in one production run.

The inventory cost that can include lost sales, cost of expediting, and cost of interrupted production is called

Figure 8-3. Martin Company uses 625 units of a part each year. The cost of placing one order is $8; the cost of carrying one unit in inventory for a year is $4. -Refer to Figure 8-3. What is the EOQ for Martin?

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. What is operating income for last year under variable costing?

Which of the following statements is true?

The _______________________ is the number of units in the optimal size order quantity.

Variable costing and absorption costing income statements may differ because of their treatment of fixed factory overhead.

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

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?

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?

Figure 8-8. Steele Corporation has the following information for January, February, and March: Production costs per unit (based on 10,000 units) are as follows: There were no beginning inventories for January, and all units were sold for $50. Costs are stable over the three months. -Refer to Figure 8-8. What is the March ending inventory for Steele Corporation using the variable costing method?

The ______________ approach maintains that goods should be pulled through the system by present demand rather than being pushed through on a fixed schedule based on anticipated demand.

Product cost includes all costs of the company.

When a company needs to place a new order for goods, they have reached the ___________.