Exam 3: Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Ryan Corporation is relocating its facilities.The company estimates that it will take three trucks to move office contents.If the per truck rental charge is $1,000 plus 25 cents per mile,what is the expected cost to move 800 miles?

In the formula y = a + bX,y represents

A firm has fixed costs of $200,000 and variable costs per unit of $6.It plans on selling 40,000 units in the coming year.To realize a profit of $20,000,the firm must have a sales price per unit of at least

Variable costing is commonly used for external reporting.

Terrell Corporation has the following data relating to its power usage for the first six months of the current year.

Month	Usage	(Kw)Cost
Jan.	500	$450
Feb.	550	455
Mar.	475	395
Apr.	425	310
May	450	380
June	725	484

Assume usage is within the relevant range of activity. Required: a.Using the high-low inethod, compute the cost formula. b.Terrell Corporation estimates its power usage for July at 660 watts. Compute the total power cost for July

The costing system that classifies costs by both functional group and behavior is

If a firm uses absorption costing,fixed manufacturing overhead will be included

Another name for absorption costing is

A performance measure that assumes all production factors are operating perfectly is referred to as ____________________ capacity.

Wyatt Corporation Wyatt Corporation has the following standard costs associated with the manufacture and sale of one of its products:

Direct material	$3.00 per unit
Direct labor	2.50 per unit
Variable manufacturing overhead	1.80 per unit
Fixed manufacturing overhead	4.00 per unit (based on an estimate of 50,000 units per year)
Variable selling expenses	.25 per unit
Fixed SG&A expense	$75,000 per year

During its first year of operations Wyatt manufactured 51,000 units and sold 48,000. The selling price per unit was $25. All costs were equal to standard. Refer to Wyatt Corporation.Based on variable costing,the income before income taxes for the year was

In the application of "variable costing" as a cost-allocation process in manufacturing,

The high-low method excludes outliers from the calculation of the slope of a regression line.

Cost allocation is the assignment of ____ costs to one or more products using a reasonable basis. direct                 indirect

Phoenix Corporation The records of Phoenix Corporation revealed the following data for the current year.

Work in Process	$ 73,150
Finished Goods	115,000
Cost of Goods Sold	133,650
Direct Labor	111,600
Direct Material	84,200

Refer to Phoenix Corporation.Assume that Phoenix has underapplied overhead of $10,000 and that this amount is immaterial.What is the balance in Cost of Goods Sold after the underapplied overhead is closed?

If a firm produces more units than it sells,absorption costing,relative to variable costing,will result in

If underapplied overhead is considered to be immaterial,it is closed to which of the following accounts? Work in Process       Finished Goods       Cost of Goods Sold

Dynamic Designs,Inc.has developed a new design to produce track shoes that are used in cross-country races.The company's shoe design is innovative in that the insole is made od a product that provides a greater cushion and adapts more easily to a runner's foot.Management estimates expected annual capacity to be 80,000 units;overhead is applied using expected annual capacity.The company's cost accountant predicts the following current year activities and related costs:

Standard unit variable manufacturing costs	$140
Variable unit selling expense	$6
Fixed manufacturing overhead	$2,400,000
Fixed selling and administrative expenses	$164,000
Selling price per unit	$225
Units of sales	70,000
Units of production	81,000
Units in beginning inventory	15,000

Other than any possible under- or overapplied fixed overhead,management expects no variances from the previous manufacturing costs.Under- or overapplied fixed overhead is to be written off to Cost of Goods Sold. Required: 1. Determine the amount of under- or overapplied fixed overhead using (a) variable costing and (b) absorption costing. 2. Prepare projected income statements using (a) variable costing and (b) absorption costing. 3. Reconcile the incomes derived in part 2.

Why is variable costing not used extensively in external reporting?

A credit to the Factory Overhead account represents applied overhead costs.

The dollar amount of overhead assigned to work-in-process inventory using a predetermined rate is known as ____________________ overhead.