Exam 6: Absorption and Variable Costing

During the current period, 20,000 units were produced and 17,000 units were sold. Fixed manufacturing costs incurred amounted to $40,000. - If variable production costs totaled $100,000, what is the cost per unit using absorption costing?

Commissions paid to sales persons are considered a variable product cost under variable costing.

Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows: Hi-Tech started March with 1,000 cell phones that had variable costs of $28 per phone and fixed manufacturing costs of $2 per phone. Hi-Tech uses a FIFO cost flow. - If the company pays bonuses to the production manager for keeping production cost per unit under $34.00 per cell phone, under which costing method will the manager earn a bonus for April?

During the current period, 20,000 units were produced and 17,000 units were sold. Fixed manufacturing costs incurred amounted to $40,000. - If variable production costs were $100,000, a variable costing income statement would report the variable manufacturing costs as a:

Roberta's Hot Stuff began making hot and sour soup in August, 2012. The soup sells for $2 for a large package. Variable production costs are $0.70 per package. Roberta's Hot Stuff incurs monthly fixed manufacturing overhead costs of $40,000 and fixed selling and administrative cost of $8,000. On August 31, 2012 ending inventory was 10,000 soup packages. Assume Roberta's Hot Stuff produced 400,000 soup packages in September. -Roberta's Hot Stuff sold 406,000 of the soup packages in September. If employees receive a 3% salary bonus for keeping production costs per unit under $0.70, which method would result in the larger bonus?

A company sold everything it produced in the month; therefore, variable and absorption costing will always yield the same result.

Mega-Thirst produces an energy drink called Mega-Caffeine. The drinks sell to grocery stores and other retailers for $10 a case. During September, the first month of production, the company used $65,000 of aluminum cans and $35,000 of syrup, soda and caffeine. September manufacturing wages were $60,000 and variable manufacturing overhead incurred was $20,000. September's fixed manufacturing overhead costs were $70,000 and fixed selling and administrative costs were $12,000. Selling commissions were $0.25 per case. Mega-Thirst sold 46, 000 of the 50,000 cases that were produced in September for $10 per case. - Calculate the September ending inventory value income using variable costing.

Burrito-Blast makes bean and cheese burritos that it sells to grocery stores. The burritos sell for $1 each. Burrito-Blast had beginning inventory of $20,000 on June 1 for 80,000 burritos. During June the company produced 500,000 burritos. June production costs are as follows: -The company's June 30 ending inventory consists of 20,000 burritos. The employees receive a 5% salary bonus if they can keep per unit production cost under $.30 per burrito. Under which method would the employees receive a bonus?

Seattle Enterprises produces packaged fresh meals which it sells for $10 each. During the current month, Seattle produced 2,800 meals, but only sold 2,700 meals. The variable cost per meal was $6 and the sales commissions per meal were $1. Total fixed manufacturing costs were $1,400 and total fixed marketing and administrative costs were $1,200. -Net income under variable costing would be:

Burrito-Blast makes bean and cheese burritos that it sells to grocery stores. The burritos sell for $1 each. Burrito-Blast had beginning inventory of $20,000 on June 1 for 80,000 burritos. During June the company produced 500,000 burritos. June production costs are as follows: -The company's June 30 ending inventory consists of 20,000 burritos. The sales manager receives a 5% bonus based on monthly operating income. Which method would result in the larger bonus?

Roberta's Hot Stuff began making hot and sour soup in August, 2012. The soup sells for $2 for a large package. Variable production costs are $0.70 per package. Roberta's Hot Stuff incurs monthly fixed manufacturing overhead costs of $40,000 and fixed selling and administrative cost of $8,000. On August 31, 2012 ending inventory was 10,000 soup packages. Assume Roberta's Hot Stuff produced 400,000 soup packages in September. -Roberta's Hot Stuff sold 406,000 of the soup packages in September. Which method would result in the larger operating income and why?

Hats produces sun visors. Production data for the first month follow: -If employees receive a 3% salary bonus for keeping production costs per unit under $3.00, which method would result in a bonus?

Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows: Hi-Tech started March with 1,000 cell phones that had variable costs of $28.00 per phone and fixed manufacturing costs of $2.00 per phone. Hi-Tech uses a FIFO cost flow. - What is the Cost of Goods Sold for April, 2012 using variable costing?

Harold's produces windmills that store power for residential use. Production data for the first month follow: - What is the cost per unit for May using absorption costing?

Harold's produces windmills that store power for residential use. Production data for the first month follow: - What is the cost per unit for May using variable costing?

Roberta's Hot Stuff began making hot and sour soup in August, 2012. The soup sells for $2 for a large package. Variable production costs are $0.70 per package. Roberta's Hot Stuff incurs monthly fixed manufacturing overhead costs of $40,000 and fixed selling and administrative cost of $8,000. On August 31, 2012 ending inventory was 10,000 soup packages. Assume Roberta's Hot Stuff produced 400,000 soup packages in September. Roberta's Hot Stuff sold 406,000 of the soup packages in September. - Calculate the total variable cost per hot and sour soup package.

A production foreman who receives a bonus based on operating income would have no incentive to increase production and stock pile inventories if the company reports under the variable costing method.

Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows: Hi-Tech started March with 1,000 cell phones that had variable costs of $28.00 per phone and fixed manufacturing costs of $2.00 per phone. Hi-Tech uses a FIFO cost flow. - What is the value of the ending inventory on April 30, 2012 using variable costing?

Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows: Hi-Tech started March with 1,000 cell phones that had variable costs of $28 per phone and fixed manufacturing costs of $2 per phone. Hi-Tech uses a FIFO cost flow. - What is the Cost of Goods Sold for March, 2012 using absorption costing?

Mega-Thirst produces an energy drink called Mega-Caffeine. The drinks sell to grocery stores and other retailers for $10 a case. During September, the first month of production, the company used $65,000 of aluminum cans and $35,000 of syrup, soda and caffeine. September manufacturing wages were $60,000 and variable manufacturing overhead incurred was $20,000. September's fixed manufacturing overhead costs were $70,000 and fixed selling and administrative costs were $12,000. Selling commissions were $0.25 per case. Mega-Thirst sold 46, 000 of the 50,000 cases that were produced in September for $10 per case. - Calculate the September operating income using absorption costing.