Exam 8: Absorption and Variable Costing, and Inventory Management

Figure 8-5. Sanders Company has the following information for last year: There were no beginning inventories. -Refer to Figure 8-5. What is the cost of ending inventory for Sanders using the variable costing method?

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 July using absorption costing?

If the number of units produced in a period is larger than the number of units sold in a period, absorption costing income will be higher than variable costing income.

What is the primary difference between variable and absorption costing?

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 absorption costing?

All of the following costs are included in inventory under absorption costing except

________________ is the time required to receive the economic order quantity once an order is placed.

Carter Company orders 250 units at a time, and places 15 orders per year. Total ordering cost is $1,100 and total carrying cost is $1,750. Which of the following statements is true?

Generally accepted accounting principles require ______________ for external reporting.

Carter Company orders 250 units at a time, and places 15 orders per year. Total ordering cost is $1,100 and total carrying cost is $1,100. Which of the following statements is true?

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 labor for units sold

Figure 8-10. Nauman Company has the following information pertaining to its two divisions for last year: Common expenses are $24,000 for the year. -Refer to Figure 8-10. What is the income for Nauman Company?

Segment margin is equal to segment sales revenue minus

Match each statement with the correct item below. a. the costs of not having a product available when demanded by a customer b. the costs of carrying inventory c. approach that maintains goods should be pulled through the system by present demand d. the number of units in the order quantity that minimizes the total cost e. the costs of placing and receiving an order -Stockout costs

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 -Only fixed factory overhead for units sold

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. Martin has decided to begin ordering 40 units at a time. What is the average annual carrying cost of Martin's new policy?

Figure 8-9. The following information pertains to Stark Corporation: -Refer to Figure 8-9. What is the value of ending inventory using the variable costing method?

JIT relies on a push system to control finished good inventory.

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 segment margin for Product B?

On a segmented income statement, fixed costs are broken down into direct fixed costs and common fixed costs.