Exam 9: Income Effects of Denominator Level on Inventory Valuation

Use the information below to answer the following question(s). Beauty Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs. There were no beginning or ending inventories of materials or work-in-process. -What is the per unit variable cost?

Use the information below to answer the following question(s). Balloon Arrangements produces balloon bouquets. The following information has been provided by management: -What is the cost per bouquet if throughput costing is used?

Which of the following is TRUE concerning throughput costing?

Answer the following question(s) using the information below. A manufacturing firm is able to produce 2,000 pairs of shoes per hour, at maximum efficiency. There are three eight-hour shifts each day. Production is actually 1,600 pairs of shoes per hour due to unavoidable operating interruptions. The plant is expected to run every day but was only able to operate for 27 days in September. -What is the theoretical capacity for the month of September?

Stamp Bottling Works manufactures glass bottles. January began with 15,000 units carried at $108,750. An additional 35,000 units were produced that month. February had production of 40,000 units. Fixed manufacturing costs totalled $119,000 in January and $132,000 in February. Sales for both months totalled 45,000 units with variable manufacturing costs of $4 per unit. Selling and administrative costs were $0.40 per unit variable and $60,000 fixed. The selling price was $10 per unit. Inventory moves on a first-in, first-out basis. Required: Compute the operating income for both months using absorption costing.

Klein Enterprises produces a specialty statue item. The following information has been provided by management: Required: a. What is the cost per statue if absorption costing is used? b. What is the cost per statue if throughput costing is used? c. What is the total throughput contribution?

Use the information below to answer the following question(s). Balloon Arrangements produces balloon bouquets. The following information has been provided by management: -What is the total cost per bouquet if absorption costing is used?

Use the information below to answer the following question(s). Beauty Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs. There were no beginning or ending inventories of materials or work-in-process. -What would Beauty Supply Company's operating income (loss) be for January and February, respectively, using the variable costing approach?

Answer the following question(s) using the information below. Stober Company produces a specialty item. Management has provided the following information: -What is the cost per statue if throughput costing is used?

SamTech Company has two identical divisions, East and West. Their sales, production volume, and fixed manufacturing costs have been the same for the last five years. The amounts for each division were as follows: East Division uses absorption costing and West Division uses variable costing. Both use FIFO inventory methods. Variable manufacturing costs are $5 per unit. Selling and administrative expenses were identical for each division. There were no inventories at the beginning of Year 1. Required: Which division reports the highest income each year? Explain.

Jamie's Hot Dog Stands sells hot dogs at ballparks across Canada for $1.55. Variable costs are $1.15 per unit with fixed production costs of $80,000 per month at a level of 320,000 units. Fixed administrative costs total $25,000. Sales average 320,000 units per month, with planned production of 320,000 hot dogs. Required: a. What are break-even unit sales under variable costing? b. What are break-even unit sales under absorption costing if she sells everything she prepares? c. What are break-even unit sales under absorption costing if average sales are 399,000 and planned production is changed to 400,000?

Sutton Hot Dog Stands sells hot dogs at ballparks across Canada for $1.35. Variable costs are $1.05 per unit with fixed production costs of $90,000 per month at a level of 400,000 units. Fixed administrative costs total $30,000. Sales average 400,000 units per month, with planned production of 400,000 hot dogs. Required: a. What are break-even unit sales under variable costing? b. What are break-even unit sales under absorption costing if she sells everything she prepares? c. What are break-even unit sales under absorption costing if average sales are 498,000 and planned production is changed to 500,000?