OakWoods Corporation, which uses throughput costing, began operations at the start of the 2012 fiscal year. Planned and actual production equaled 50,000 units, and sales totalled 45,000 units at $80 per unit. Cost data for 2012 were as follows: $\begin{array}{lr} \text { Direct materials (per unit) }&\$25\\ \text { Conversion cost: }\\ \text { Direct labour } & 220,000 \\ \text { Variable manufacturing overhead } & 340,000 \\ \text { Fixed manufacturing overhead } & 525,000 \\ \text { Selling and administrative costs: } & \\ \text { Variable (per unit) } &10 \\ \text { Fixed }& 230,000 \end{array}$ The company classifies direct materials as a throughput cost. Required: A. What is meant by the term "throughput costing"? B. Compute the cost of the company's year-end inventory. C. Prepare OakWoods' income statement for the year in good form using throughput costing.

A. Throughput costing is a technique tha

Bowmanville Manufacturing Company is studying the profitability of a change in operation and has gathered the following information: $\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Current } \\ \text { Operation } \end{array} & \begin{array} { c } \text { Anticipated } \\ \text { Operation } \end{array} \\ \hline \text { Fixed costs } & \text { S38,000 } & \$ 48,000 \\ \hline \text { Selling price } & \text { S16 } & \$ 22 \\ \hline \text { Variable cost } & \text { S10 } & \$ 12 \\ \hline \text { Sales (units) } & 9,000 & 6,000 \\ \hline \end{array}$ Should Bowmanville make the change?

A) Yes, the company will be better off by $6,000. B) No, because sales will drop by 3,000 units. C) No, because the company will be worse off by $4,000. D) No, because the company will be worse off by $22,000. E) It is impossible to judge because additional information is needed. A) Yes, the company will be better off by $6,000. B) No, because sales will drop by 3,000 units. C) No, because the company will be worse off by $4,000. D) No, because the company will be worse off by $22,000. E) It is impossible to judge because additional information is needed.

Bonsai Company incurred the following costs during the past year when planned production and actual production each totaled 20,000 units: $\begin{array} { l r } \text { Direct materials used } & \$ 400,000 \\ \text { Direct labour } & 320,000 \\ \text { Variable manufacturing overhead } & 260,000 \\ \text { Fixed manufacturing overhead } & 200,000 \\ \text { Variable selling and administrative costs } & 80,000 \\ \text { Fixed selling and administrative costs } & 70,000 \end{array}$ If Bonsai uses variable costing, the total inventoriable costs for the year would be:

A) $720,000. B) $800,000. C) $980,000. D) $1,060,000. E) $1,330,000. A) $720,000. B) $800,000. C) $980,000. D) $1,060,000. E) $1,330,000.

WenWen Company makes and sells two types of peanut butter, Smooth and Chunky. Data concerning these products are as follows: $\begin{array} { l c c } & \text { Smooth } & \text { Chunky } \\ \text { Unit selling price } & \$ 40.00 & \$ 55.00 \\ \text { Variable cost per unit } & 16.00 & 24.50 \end{array}$ Forty percent of the unit sales are Chunky, and annual fixed expenses are $159,600. Assuming that the sales mix remains constant, the total number of units that the company must sell to break even is:

A) 2,928. B) 5,233. C) 5,720. D) 6,000. E) 6,650. A) 2,928. B) 5,233. C) 5,720. D) 6,000. E) 6,650.

WenWen Company makes and sells two types of peanut butter, Smooth and Chunky. Data concerning these products are as follows: $\begin{array} { l c c } & \text { Smooth } & \text { Chunky } \\ \text { Unit selling price } & \$ 40.00 & \$ 55.00 \\ \text { Variable cost per unit } & 16.00 & 24.50 \end{array}$ Forty percent of the unit sales are Chunky, and annual fixed expenses are $159,600. The weighted-average unit contribution margin is:

A) $24.00. B) $26.60. C) $27.90. D) $30.50. E) $54.50. A) $24.00. B) $26.60. C) $27.90. D) $30.50. E) $54.50.

The following information relates to Paterno Company: $\begin{array} { | l | r | } \hline \text { Sales revenue } & \$ 10,000,000 \\ \hline \text { Contribution margin } & 4,000,000 \\ \hline \text { Net income } & 1,000,000 \\ \hline \end{array}$ If a manager at Paterno desired to determine the percentage impact on net income of a given percentage change in sales, the manager would multiply the percentage increase/decrease in sales revenue by:

A) 0.25. B) 0.40. C) 2.50. D) 4.00. E) 10.00. A) 0.25. B) 0.40. C) 2.50. D) 4.00. E) 10.00.

Exam 7: Cost-Volume-Profit Analysis, Absorption and Variable Costing

Contemporary Corp. sells a single product for $80. Variable costs are 40%% of the selling price, and the company has fixed costs that amount to $500,000. Current sales total 18,000 units. In order to produce a target profit of $22,000, Contemporary's dollar sales must total:

(Multiple Choice)

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Question 21

Many firms are moving toward flexible manufacturing systems and adopting the just-in-time (JIT) philosophy. Required: A. How is cost behaviour altered in the typical flexible manufacturing environment as compared to a traditional manufacturing system? What is the impact on the break-even point? Explain. B. One of the assumptions underlying cost-volume profit analysis is that sales volume and production volume are equal. Stated another way, inventories are assumed to remain constant. Is this assumption likely to be violated under an ongoing JIT philosophy? Explain.

(Essay)

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Question 22

OakWoods Corporation, which uses throughput costing, began operations at the start of the 2012 fiscal year. Planned and actual production equaled 50,000 units, and sales totalled 45,000 units at $80 per unit. Cost data for 2012 were as follows: Direct materials (per unit) \2 5 Conversion cost: Direct labour 220,000 Variable manufacturing overhead 340,000 Fixed manufacturing overhead 525,000 Selling and administrative costs: Variable (per unit) 10 Fixed 230,000 The company classifies direct materials as a throughput cost. Required: A. What is meant by the term "throughput costing"? B. Compute the cost of the company's year-end inventory. C. Prepare OakWoods' income statement for the year in good form using throughput costing.

(Essay)

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Question 23

The contribution-margin ratio is defined as:

(Multiple Choice)

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Question 24

All other things being equal, a company that sells multiple products should attempt to structure its sales mix so the greatest portion of the mix is composed of those products with the highest:

(Multiple Choice)

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Question 25

The computation of absorption costing gross profit always involves subtracting:

(Multiple Choice)

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Question 26

Bowmanville Manufacturing Company is studying the profitability of a change in operation and has gathered the following information: Current Operation Anticipated Operation Fixed costs S38,000 \ 48,000 Selling price S16 \ 22 Variable cost S10 \ 12 Sales (units) 9,000 6,000 Should Bowmanville make the change?

(Multiple Choice)

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Question 27

Bonsai Company incurred the following costs during the past year when planned production and actual production each totaled 20,000 units: Direct materials used \ 400,000 Direct labour 320,000 Variable manufacturing overhead 260,000 Fixed manufacturing overhead 200,000 Variable selling and administrative costs 80,000 Fixed selling and administrative costs 70,000 If Bonsai uses variable costing, the total inventoriable costs for the year would be:

(Multiple Choice)

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Question 28

Skinner Manufacturing reported sales revenue of $3,800,000, variable costs of $800,000, and fixed costs of $300,000. If these data are based on the sale of 20,000 units, the break-even point in units would be:

(Multiple Choice)

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Question 29

Which of the following methods defines product cost as the unit-level cost incurred each time a unit is manufactured?

(Multiple Choice)

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Question 30

A recent income statement of Toronto Corporation reported the following data: units sold 10,000; sales revenue $9,500,000; variable costs $4,000,000; fixed costs $1,600,000. If Dagwood wanted to earn a target net profit of $1,150,000, it would have to sell:

(Multiple Choice)

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Question 31

The budget of Nightingale Company for the upcoming year revealed the following figures: sales revenue $900,000; contribution margin $604,000; net income $58,000. If the company's break-even sales total $800,000, Nightingale's safety margin would be:

(Multiple Choice)

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Question 32

WenWen Company makes and sells two types of peanut butter, Smooth and Chunky. Data concerning these products are as follows: Smooth Chunky Unit selling price \ 40.00 \ 55.00 Variable cost per unit 16.00 24.50 Forty percent of the unit sales are Chunky, and annual fixed expenses are $159,600. Assuming that the sales mix remains constant, the total number of units that the company must sell to break even is:

(Multiple Choice)

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Question 33

WenWen Company makes and sells two types of peanut butter, Smooth and Chunky. Data concerning these products are as follows: Smooth Chunky Unit selling price \ 40.00 \ 55.00 Variable cost per unit 16.00 24.50 Forty percent of the unit sales are Chunky, and annual fixed expenses are $159,600. The weighted-average unit contribution margin is:

(Multiple Choice)

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Question 34

Robertson Company, which began business at the start of 2012, had the following data: Planned and actual production: 40,000 units Sales: 37,000 units at $15 per unit Production costs: Variable, $4 per unit; Fixed, $260,000 Selling and administrative costs: Variable $1 per unit; Fixed $32,000 The gross margin that Robertson would disclose on its 2012 absorption-costing income statement is:

(Multiple Choice)

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Question 35

Discuss a company's choice to use either absorption or variable costing is as their costing system for internal decision making. Why do many firms maintain accounting records under both systems?

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Question 36

Beach Craft Corporation has fixed manufacturing cost of $12 per unit. Consider the three independent cases that follow. Case A: Absorption- and variable costing net income each totalled $240,000 in a period when the firm produced 18,000 units. Case B: Absorption-costing net income totalled $320,000 in a period when finished-goods inventory levels rose by 7,000 units. Case C: Absorption-costing net income and variable-costing net income respectively totalled $220,000 and $250,000 in a period when the beginning finished-goods inventory was 14,000 units. Required: A. In Case A, how many units were sold during the period? B. In Case B, how much income would Beach Craft report under variable costing? C. In Case C, how many units were in the ending finished-goods inventory?

(Essay)

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Question 37

Which of the following statements pertain to variable costing?

(Multiple Choice)

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Question 38

All of the following are inventoried under variable costing except:

(Multiple Choice)

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Question 39

The following information relates to Paterno Company: Sales revenue \ 10,000,000 Contribution margin 4,000,000 Net income 1,000,000 If a manager at Paterno desired to determine the percentage impact on net income of a given percentage change in sales, the manager would multiply the percentage increase/decrease in sales revenue by:

(Multiple Choice)

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Question 40

Showing 21 - 40 of 114

Contemporary Corp. sells a single product for $80. Variable costs are 40%% of the selling price, and the company has fixed costs that amount to $500,000. Current sales total 18,000 units. In order to produce a target profit of $22,000, Contemporary's dollar sales must total:

The contribution-margin ratio is defined as:

All other things being equal, a company that sells multiple products should attempt to structure its sales mix so the greatest portion of the mix is composed of those products with the highest:

The computation of absorption costing gross profit always involves subtracting:

Skinner Manufacturing reported sales revenue of $3,800,000, variable costs of $800,000, and fixed costs of $300,000. If these data are based on the sale of 20,000 units, the break-even point in units would be:

Which of the following methods defines product cost as the unit-level cost incurred each time a unit is manufactured?

A recent income statement of Toronto Corporation reported the following data: units sold 10,000; sales revenue $9,500,000; variable costs $4,000,000; fixed costs $1,600,000. If Dagwood wanted to earn a target net profit of $1,150,000, it would have to sell:

The budget of Nightingale Company for the upcoming year revealed the following figures: sales revenue $900,000; contribution margin $604,000; net income $58,000. If the company's break-even sales total $800,000, Nightingale's safety margin would be:

Discuss a company's choice to use either absorption or variable costing is as their costing system for internal decision making. Why do many firms maintain accounting records under both systems?

Which of the following statements pertain to variable costing?

All of the following are inventoried under variable costing except:

The Changing Role of Managerial Accounting

Basic Cost Management Concepts

Product Costing and Cost Accumulation

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behaviour, and Cost Estimation

Profit Planning and Activity-Based Budgeting

Standard Costing and Flexible Budgeting

Cost Management Tools

Responsibility Accounting, Investment Centres, and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

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