UHF Antennas,Inc.,produces and sells a unique television antenna.The company has just opened a new plant to manufacture the antenna,and the following cost and revenue data have been reported for the first month of the new plant's operation: $\begin{array}{|l|r|} \hline \text { Selling price } & \$ 108 \\ \hline \text { Beginning inventory } & 0 \\ \hline \text { Units produced } & 35,000 \\ \hline \text { Units sold } & 30,000 \\ \hline \text { Selling price per unit } & \$ 50\\ \hline\text { Selling and administrative expenses: } & \\ \hline \text { Variable per unit } &\$2 \\ \hline \text { Fixed (total) } &\$ 360,000 \\ \hline \text { Manufacturing costs: }\\ \hline \text { Manufacturing costs: } &\$ 9 \\ \hline \text { Direct material cost per unit } & \$ 8 \\ \hline \text { Direct labour cost per unit } & \$ 3\\ \hline \text { Variable overhead cost per unit } & \$ 350,000 \\ \hline \end{array}$ Management is anxious to see how profitable the new antenna will be and has asked that an income statement be prepared for the month.Assume that direct labour is a variable cost. Required: a)Assuming that the company uses absorption costing,compute the unit product cost and prepare an income statement. b)Assuming that the company uses variable costing,compute the unit product cost and prepare an income statement. c)Explain the reason for any difference in the ending inventories under the two costing methods and the impact of this difference on reported operating income.

a)Unit product cost under absorption cos

New Look Company, which has only one product, has provided the following data concerning its most recent month of operations: $\begin{array}{|l|r|} \hline \text { Selling price } & \$ 95 \\ \hline \text { Units in beginning inventory } & 0 \\ \hline \text { Units produced } & 3,800 \\ \hline \text { Units sold } & 3,600 \\ \hline \text { Units in ending inventory } & 200 \\ \hline \text { Variable costs per unit: } & \\\hline \text { Direct materials } & \$ 22 \\ \hline \text { Direct labour } & \$ 11 \\ \hline \text { Variable manufacturing overhead } & \$ 2 \\ \hline \text { Variable selling and administrative } & \$ 9 \\\hline \text { Fixed costs: } & \\ \hline \text { Fixed manufacturing overhead } & \$ 102,600 \\ \hline \text { Fixed selling and administrative } & \$ 63,200 \\ \hline \end{array}$ -What was the total period cost for the month under the variable costing approach?

A) $88,400. B) $93,600. C) $154,800. D) $200,000. A) $88,400. B) $93,600. C) $154,800. D) $200,000.

Elliot Company, which has only one product, has provided the following data concerning its most recent month of operations: $\begin{array}{l|r|} \hline \text { Selling price } & \$ 112 \\ \hline \text { Units in beginning inventory } & 0 \\ \hline \text { Units produced } & 4,900 \\ \hline \text { Units sold } & 4,500 \\ \hline \text { Units in ending inventory } & 400 \\ \hline \text { Variable costs per unit: } & \\\hline \text { Direct materials } & \$ 19 \\ \hline \text { Direct labour } & \$ 45 \\ \hline \text { Variable manufacturing overhead } & \$ 6 \\ \hline \text { Variable selling and administrative } & \$ 9 \\\hline \text { Fixed costs: } & \\ \hline \text { Fixed manufacturing overhead } & \$ 117,600 \\ \hline \text { Fixed selling and administrative } & \$ 22,500 \\ \hline \end{array}$ -What was the operating income (loss)for the month under absorption costing?

A) ($19,600). B) $8,400. C) $9,600. D) $18,000. A) ($19,600). B) $8,400. C) $9,600. D) $18,000.

Gabbert Company, which has only one product, has provided the following data concerning its most recent month of operations: $\begin{array}{|l|r|} \hline \text { Selling price } & \$ 90 \\ \hline \text { Units in beginning inventory } & 0 \\ \hline \text { Units produced } & 3,600 \\ \hline \text { Units sold } & 3,400 \\ \hline \text { Units in ending inventory } & 200 \\ \hline \text { Variable costs per unit: } & \\\hline \text { Direct materials } & \$ 23 \\ \hline \text { Direct labour } & \$ 11 \\ \hline \text { Variable manufacturing overhead } & \$ 2 \\ \hline \text { Variable selling and administrative } & \$ 8 \\ \hline \text { Fixed costs: } & \\ \hline \text { Fixed manufacturing overhead } & \$ 93,600 \\ \hline \text { Fixed selling and administrative } & \$ 61,200 \\ \hline \end{array}$ -What was the total period cost for the month under the variable costing approach?

A) $88,400. B) $93,600. C) $154,800. D) $182,000. A) $88,400. B) $93,600. C) $154,800. D) $182,000.

Chown Company, which has only one product, has provided the following data concerning its most recent month of operations: $\begin{array}{l|r|} \hline \text { Selling price } & \$ 110 \\ \hline \text { Units in beginning inventory } & 0 \\ \hline \text { Units produced } & 8,000 \\ \hline \text { Units sold } & 7,800 \\ \hline \text { Units in ending inventory } & 200 \\ \hline \text { Variable costs per unit: } & \\\hline \text { Direct materials } & \$ 22 \\ \hline \text { Direct labour } & \$ 31 \\ \hline \text { Variable manufacturing overhead } & \$ 3 \\ \hline \text { Variable selling and administrative } & \$ 4 \\\hline \text { Fixed costs: } & \\ \hline \text { Fixed manufacturing overhead } & \$ 248,000 \\ \hline \text { Fixed selling and administrative } & \$ 140,400 \\ \hline \end{array}$ -What was the total gross margin for the month under the absorption costing approach?

A) $7,800. B) $179,400. C) $196,800. D) $390,000. A) $7,800. B) $179,400. C) $196,800. D) $390,000.

Bateman Company, which has only one product, has provided the following data concerning its most recent month of operations: $\begin{array}{|l|r|} \hline \text { Selling price } & \$ 117 \\ \hline \text { Units in beginning inventory } & 0 \\ \hline \text { Units produced } & 4,700 \\ \hline \text { Units sold } & 4,400 \\ \hline \text { Units in ending inventory } & 300 \\ \hline \text { Variable costs per unit: } & \\\hline \text { Direct materials } & \$ 36 \\ \hline \text { Direct labour } & \$ 38 \\ \hline \text { Variable manufacturing overhead } & \$ 4 \\ \hline \text { Variable selling and administrative } & \$ 11 \\\hline \text { Fixed costs: } & \\ \hline \text { Fixed manufacturing overhead } & \$ 89,300 \\ \hline \text { Fixed selling and administrative } & \$ 26,400 \\ \hline \end{array}$ -What was the unit product cost for the month under absorption costing?

A) $78. B) $89. C) $97. D) $108. A) $78. B) $89. C) $97. D) $108.

Iancu Company, which has only one product, has provided the following data concerning its most recent month of operations: $\begin{array} { | l | r | } \hline \text { Selling price } & \$ 149 \\ \hline \text { Units in beginning inventory } & 0 \\ \hline \text { Units produced } & 4,200 \\ \hline \text { Units sold } & 3,900 \\ \hline \text { Units in ending inventory } & 300 \\ \hline \text { Variable costs per unit: } & \\ \hline \text { Direct materials } & \$ 27 \\ \hline \text { Direct labour } & \$ 46 \\ \hline \text { Variable manufacturing overhead } & \$ 5 \\ \hline \text { Variable selling and administrative } & \$ 9 \\ \hline \text { Fixed costs: } & \\ \hline \text { Fixed manufacturing overhead } & \$ 155,400 \\ \hline \text { Fixed selling and administrative } &\$ 70,200 \\ \hline \end{array}$ -What was the unit product cost for the month under variable costing?

A) $78. B) $87. C) $115. D) $124. A) $78. B) $87. C) $115. D) $124.

The following data were provided by Green Enterprises for the most recent period: $\begin{array} { | l | r | } \hline \text { Units in beginning inventory } & 0 \\ \hline \text { Units produced } & 8,000 \\ \hline \text { Units sold } & 6,000 \\ \hline \text { Variable costs per unit: } & \\ \hline \text { Manufacturing } & \$ 15 \\ \hline \text { Selling and administrative } &\$ 5 \\ \hline \text { Fixed costs in total } & \\ \hline \text { Manufacturing } & \$ 24,000\\ \hline \text { Selling and administrative } & \$ 16,000\\ \hline \end{array}$ -What was the unit product cost under absorption costing?

A) $15. B) $18. C) $20. D) $25. A) $15. B) $18. C) $20. D) $25.

The following data were provided by Green Enterprises for the most recent period: $\begin{array} { | l | r | } \hline \text { Units in beginning inventory } & 0 \\ \hline \text { Units produced } & 8,000 \\ \hline \text { Units sold } & 6,000 \\ \hline \text { Variable costs per unit: } & \\ \hline \text { Manufacturing } & \$ 15 \\ \hline \text { Selling and administrative } &\$ 5 \\ \hline \text { Fixed costs in total } & \\ \hline \text { Manufacturing } & \$ 24,000\\ \hline \text { Selling and administrative } & \$ 16,000\\ \hline \end{array}$ -What was the unit product cost under variable costing?

A) $15. B) $18. C) $20. D) $22. A) $15. B) $18. C) $20. D) $22.

Exam 8: Variable Costing: A Tool for Management

UHF Antennas,Inc.,produces and sells a unique television antenna.The company has just opened a new plant to manufacture the antenna,and the following cost and revenue data have been reported for the first month of the new plant's operation: Selling price \ 108 Beginning inventory 0 Units produced 35,000 Units sold 30,000 Selling price per unit \ 50 Selling and administrative expenses: Variable per unit \2 Fixed (total) \ 360,000 Manufacturing costs: Manufacturing costs: \ 9 Direct material cost per unit \ 8 Direct labour cost per unit \ 3 Variable overhead cost per unit \ 350,000 Management is anxious to see how profitable the new antenna will be and has asked that an income statement be prepared for the month.Assume that direct labour is a variable cost. Required: a)Assuming that the company uses absorption costing,compute the unit product cost and prepare an income statement. b)Assuming that the company uses variable costing,compute the unit product cost and prepare an income statement. c)Explain the reason for any difference in the ending inventories under the two costing methods and the impact of this difference on reported operating income.

(Essay)

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Question 41

New Look Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price \ 95 Units in beginning inventory 0 Units produced 3,800 Units sold 3,600 Units in ending inventory 200 Variable costs per unit: Direct materials \ 22 Direct labour \ 11 Variable manufacturing overhead \ 2 Variable selling and administrative \ 9 Fixed costs: Fixed manufacturing overhead \ 102,600 Fixed selling and administrative \ 63,200 -What was the total period cost for the month under the variable costing approach?

(Multiple Choice)

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Question 42

Elliot Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price \ 112 Units in beginning inventory 0 Units produced 4,900 Units sold 4,500 Units in ending inventory 400 Variable costs per unit: Direct materials \ 19 Direct labour \ 45 Variable manufacturing overhead \ 6 Variable selling and administrative \ 9 Fixed costs: Fixed manufacturing overhead \ 117,600 Fixed selling and administrative \ 22,500 -What was the operating income (loss)for the month under absorption costing?

(Multiple Choice)

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Question 43

Gabbert Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price \ 90 Units in beginning inventory 0 Units produced 3,600 Units sold 3,400 Units in ending inventory 200 Variable costs per unit: Direct materials \ 23 Direct labour \ 11 Variable manufacturing overhead \ 2 Variable selling and administrative \ 8 Fixed costs: Fixed manufacturing overhead \ 93,600 Fixed selling and administrative \ 61,200 -What was the total period cost for the month under the variable costing approach?

(Multiple Choice)

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Question 44

Which of the following statements is true for a firm that uses variable costing?

(Multiple Choice)

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Question 45

Mahugh Company,which has only one product,has provided the following data concerning its most recent month of operations: Selling price \ 122 Units in beginning inventory 0,300 Units produced 8,200 Units sold 100 Variable costs per unit: Direct materials \ 27 Direct labour \ 46 Variable manufacturing overhead \ 4 Variable selling and administrative \ 7 Fixed costs: Fixed manufacturing overhead \ 199,200 Fixed selling and administrative \ 106,600 Required: a)What is the unit product cost for the month under variable costing? b)What is the unit product cost for the month under absorption costing? c)Prepare an income statement for the month using the contribution format and the variable costing method. d)Prepare an income statement for the month using the absorption costing method. e)Reconcile the variable costing and absorption costing operating incomes for the month.

(Essay)

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Question 46

What is the costing method that can be used most easily with break-even analysis and other cost-volume-profit techniques?

(Multiple Choice)

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Question 47

Which of the following statements is true about the difference in operating income between variable costing and absorption costing if the number of units in work-in-process and finished goods inventories increase?

(Multiple Choice)

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Question 48

Under variable costing,the unit product cost contains some fixed manufacturing overhead cost.

(True/False)

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Question 49

Chown Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price \ 110 Units in beginning inventory 0 Units produced 8,000 Units sold 7,800 Units in ending inventory 200 Variable costs per unit: Direct materials \ 22 Direct labour \ 31 Variable manufacturing overhead \ 3 Variable selling and administrative \ 4 Fixed costs: Fixed manufacturing overhead \ 248,000 Fixed selling and administrative \ 140,400 -What was the total gross margin for the month under the absorption costing approach?

(Multiple Choice)

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Question 50

During the last year,Moore Company's total variable production costs were $10,000,and its total fixed manufacturing overhead costs were $6,800.The company produced 5,000 units during the year and sold 4,600 units.There were no units in the beginning inventory.Which of the following statements is true?

(Multiple Choice)

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Question 51

Bateman Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price \ 117 Units in beginning inventory 0 Units produced 4,700 Units sold 4,400 Units in ending inventory 300 Variable costs per unit: Direct materials \ 36 Direct labour \ 38 Variable manufacturing overhead \ 4 Variable selling and administrative \ 11 Fixed costs: Fixed manufacturing overhead \ 89,300 Fixed selling and administrative \ 26,400 -What was the unit product cost for the month under absorption costing?

(Multiple Choice)

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Question 52

Although variable costing is NOT permitted for income tax purposes in Canada,it is widely accepted for external financial reports.

(True/False)

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Question 53

During the year just ended,Roberts Company's operating income under absorption costing was $3,000 lower than its operating income under variable costing.The company sold 9,000 units during the year,and its variable costs were $9 per unit,of which $3 was variable selling expense.If production cost is $11 per unit under absorption costing every year,how many units did the company produce during the year?

(Multiple Choice)

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Question 54

Iancu Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price \ 149 Units in beginning inventory 0 Units produced 4,200 Units sold 3,900 Units in ending inventory 300 Variable costs per unit: Direct materials \ 27 Direct labour \ 46 Variable manufacturing overhead \ 5 Variable selling and administrative \ 9 Fixed costs: Fixed manufacturing overhead \ 155,400 Fixed selling and administrative \ 70,200 -What was the unit product cost for the month under variable costing?

(Multiple Choice)

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Question 55

The following data were provided by Green Enterprises for the most recent period: Units in beginning inventory 0 Units produced 8,000 Units sold 6,000 Variable costs per unit: Manufacturing \ 15 Selling and administrative \ 5 Fixed costs in total Manufacturing \ 24,000 Selling and administrative \ 16,000 -What was the unit product cost under absorption costing?

(Multiple Choice)

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Question 56

The following data were provided by Green Enterprises for the most recent period: Units in beginning inventory 0 Units produced 8,000 Units sold 6,000 Variable costs per unit: Manufacturing \ 15 Selling and administrative \ 5 Fixed costs in total Manufacturing \ 24,000 Selling and administrative \ 16,000 -What was the unit product cost under variable costing?

(Multiple Choice)

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Question 57

Which of the following costs/expenses is included in product costs under both absorption costing and variable costing?

(Multiple Choice)

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Question 58

Under variable costing,the impact of both fixed manufacturing and non-manufacturing cost is emphasized because the total amount of such cost for the period appears in the income statement.

(True/False)

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Question 59

The term "gross margin" for a manufacturing company refers to the excess of sales over which of the following?

(Multiple Choice)

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Question 60

Which of the following statements is true for a firm that uses variable costing?

What is the costing method that can be used most easily with break-even analysis and other cost-volume-profit techniques?

Which of the following statements is true about the difference in operating income between variable costing and absorption costing if the number of units in work-in-process and finished goods inventories increase?

Under variable costing,the unit product cost contains some fixed manufacturing overhead cost.

Although variable costing is NOT permitted for income tax purposes in Canada,it is widely accepted for external financial reports.

Which of the following costs/expenses is included in product costs under both absorption costing and variable costing?

Under variable costing,the impact of both fixed manufacturing and non-manufacturing cost is emphasized because the total amount of such cost for the period appears in the income statement.

The term "gross margin" for a manufacturing company refers to the excess of sales over which of the following?

Managerial Accounting and the Business Environment

Cost Terms,concepts,and Classifications

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

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