An allocated portion of fixed manufacturing overhead is included in product costs under which of the following? $\begin{array}{|l|l|} \hline \text { Absorption Costing } & \text { Variable Costing } \\ \hline \text { A) No } & \text { No } \\ \hline \text { B) No } & \text { Yes } \\ \hline \text { C) Yes } & \text { No } \\ \hline \text { D) Yes } & \text { Yes } \\ \hline \end{array}$

A) Option A B) Option B C) Option C D) Option D A) Option A B) Option B C) Option C D) Option D

Erie Company manufactures a single product. Assume the following data for the year just completed: $\begin{array}{|l|r|} \hline \text { Variable costs per unit: } & \\ \hline \text { Manufacturing } & \$ 5 \\ \hline \text { Selling and administrative } & \$ 8 \\ \hline \text { Fixed costs in total } & \\ \hline \text { Manufacturing } & \$ 60,000\\ \hline \text { Selling and administrative } & \$ 82,500 \\\hline \end{array}$ There were no units in inventory at the beginning of the year. During the year, 30,000 units were produced and 25,000 units were sold. Each unit sells for $\$ 35$. -Under absorption costing,what was the unit product cost? Do not round intermediate calculations.

A) $8.00. B) $10.75. C) $13.00 D) $17.75. A) $8.00. B) $10.75. C) $13.00 D) $17.75.

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 variable costing?

A) $78. B) $89. C) $97. D) $107. A) $78. B) $89. C) $97. D) $107.

Last year, Walsh Company manufactured 25,000 units and sold 22,000 units. Production costs were as follows: $\begin{array}{|l|r|} \hline \text { Direct materials } & \$ 100,000 \\ \hline \text { Direct labour } & 75,000 \\ \hline \text { Variable manufacturing overhead } & 50,000 \\ \hline \text { Fixed manufacturing overhead } & 75,000 \\ \hline \end{array}$Total sales were $440,000, total variable selling and administrative expenses were $110,000, and total fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labour is a variable cost. -Under absorption costing,what was the total amount of fixed manufacturing cost in the ending inventory?

A) $0. B) $9,000. C) $14,400. D) $27,000. A) $0. B) $9,000. C) $14,400. D) $27,000.

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 absorption costing approach?

A) $61,200. B) $88,400. C) $95,600. D) $182,000 A) $61,200. B) $88,400. C) $95,600. D) $182,000

Khanam Company, which has only one product, has provided the following data concerning its most recent month of operations: $\begin{array}{|l|r|} \hline \text { Selling price } & \$ 97 \\ \hline \text { Units in beginning inventory } & 500 \\ \hline \text { Units produced } & 8,400 \\ \hline \text { Units in ending inventory } & 400 \\ \hline \text { Variable costs per unit: } & \\\hline \text { Direct materials } & \$ 20 \\ \hline \text { Direct labour } & \$ 37 \\ \hline \text { Variable manufacturing overhead } & \$ 1 \\ \hline \text { Variable selling and administrative } & \$ 11 \\\hline \text { Fixed costs: } & \\ \hline \text { Fixed manufacturing overhead } & \$ 67,200 \\ \hline \text { Fixed selling and administrative } & \$ 161,500 \\ \hline \end{array}$The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. -What is the amount of fixed overhead deferred under absorption costing?

A) $0 B) $3,200 C) $4,000 D) $67,200 A) $0 B) $3,200 C) $4,000 D) $67,200

Jarvix Company, which has only one product, has provided the following data concerning its most recent month of operations: $\begin{array}{l|r|} \hline \text { Selling price } & \$ 111 \\ \hline \text { Units in beginning inventory } & 0 \\ \hline \text { Units produced } & 8,800 \\ \hline \text { Units sold } & 8,900 \\ \hline \text { Variable costs per unit: } & \\ \hline \text { Direct materials } & \$ 34 \\\hline \text { Direct labour } & \$ 37 \\ \hline \text { Variable manufacturing overhead } & \$ 3 \\ \hline \text { Variable selling and administrative } & \$ 9 \\ \hline \text { Fixed costs: } &\\ \hline \text { Fixed manufacturing overhead } & \$ 61,600 \\ \hline \text { Fixed selling and administrative } & \$ 169,100 \\ \hline \end{array}$The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. -What was the operating income for the month under absorption costing?

A) $2,100. B) $17,800. C) $18,500. D) $25,900. A) $2,100. B) $17,800. C) $18,500. D) $25,900.

Last year, Walsh Company manufactured 25,000 units and sold 22,000 units. Production costs were as follows: $\begin{array}{|l|r|} \hline \text { Direct materials } & \$ 100,000 \\ \hline \text { Direct labour } & 75,000 \\ \hline \text { Variable manufacturing overhead } & 50,000 \\ \hline \text { Fixed manufacturing overhead } & 75,000 \\ \hline \end{array}$Total sales were $440,000, total variable selling and administrative expenses were $110,000, and total fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labour is a variable cost. -Under absorption costing,what was the gross margin?

A) $21,000. B) $66,000. C) $176,000. D) $242,000. A) $21,000. B) $66,000. C) $176,000. D) $242,000.

Harper Company,which has only one product,has provided the following data concerning its most recent month of operations: $\begin{array}{|l|r|} \hline \text { Selling price } & \$ 111 \\ \hline \text { Units in beginning inventory } & 400 \\ \hline \text { Units produced } & 8,800 \\ \hline \text { Units sold } & 8,900 \\ \hline \text { Variable costs per unit: } & \\\hline \text { Direct materials } & \$ 34 \\ \hline \text { Direct labour } & \$ 37 \\ \hline \text { Variable manufacturing overhead } & \$ 3 \\ \hline \text { Variable selling and administrative } & \$ 9 \\\hline \text { Fixed costs: } & \\ \hline \text { Fixed manufacturing overhead } & \$ 61,600 \\ \hline \text { Fixed selling and administrative } & \$ 169,100\\ \hline \end{array}$ The company produces the same number of units every month,although the sales in units vary from month to month.The company's variable costs per unit and total fixed costs have been constant from month to month. Required: a.Compute the total Contribution Margin. b.Compute the Operating Income under Variable Costing. c.Prepare a reconciliation from your Variable Costing Operating Income to compute Operating Income under absorption costing.

a.8,900 units * (111 - 34 - 37 - 3 - 9)=

Gordon Company produces a single product that sells for $10 per unit. Last year, there were no beginning inventories, 100,000 units were produced, and 80,000 units were sold. The company has the following cost structure: $\begin{array} { | l | r | r | } \hline & \text { Fixed Costs } & \text { Variable Costs } \\ \hline \text { Raw materials } & - - & \$ 2.00 \text { per unit produced } \\ \hline \text { Direct labour } & - - & 1.25 \text { per unit produced } \\ \hline \text { Factory overhead } & \$ 120,000 & 0.75 \text { per unit produced } \\ \hline \text { Selling and administrative } & 70,000 & 1.00 \text { per unit sold } \\ \hline \end{array}$ -Under absorption costing,what was the carrying value on the balance sheet of the ending finished goods inventory? Do not round intermediate calculations.

A) $80,000. B) $104,000. C) $110,000. D) $200,000. A) $80,000. B) $104,000. C) $110,000. D) $200,000.

O'Briens Company, which has only one product, has provided the following data concerning its most recent month of operations: $\begin{array} { | l | r | } \hline \text { Selling price } & \$ 165 \\ \hline \text { Units in beginning inventory } & 0 \\ \hline \text { Units produced } & 4,300 \\ \hline \text { Units sold } & 3,800 \\ \hline \text { Units in ending inventory } & 500 \\ \hline \text { Variable costs per unit: } & \\ \hline \text { Direct materials } & \$ 31 \\ \hline \text { Direct labour } & \$ 43 \\ \hline \text { Variable manufacturing overhead } & \$ 5 \\ \hline \text { Variable selling and administrative } & \$ 8 \\ \hline \text { Fixed costs: } & \\ \hline \text { Fixed manufacturing overhead } &\$ 165,400 \\ \hline \text { Fixed selling and administrative } & \$ 80,200 \\ \hline \end{array}$ -What was the operating income (loss)for the month under variable costing?

A) ($7,200). B) $41,100. C) $50,800. D) $47,300. A) ($7,200). B) $41,100. C) $50,800. D) $47,300.

Jarvix Company, which has only one product, has provided the following data concerning its most recent month of operations: $\begin{array}{l|r|} \hline \text { Selling price } & \$ 111 \\ \hline \text { Units in beginning inventory } & 0 \\ \hline \text { Units produced } & 8,800 \\ \hline \text { Units sold } & 8,900 \\ \hline \text { Variable costs per unit: } & \\ \hline \text { Direct materials } & \$ 34 \\\hline \text { Direct labour } & \$ 37 \\ \hline \text { Variable manufacturing overhead } & \$ 3 \\ \hline \text { Variable selling and administrative } & \$ 9 \\ \hline \text { Fixed costs: } &\\ \hline \text { Fixed manufacturing overhead } & \$ 61,600 \\ \hline \text { Fixed selling and administrative } & \$ 169,100 \\ \hline \end{array}$The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. -What was the total period cost for the month under variable costing?

A) $0. B) $61,600. C) $230,700. D) $310,800. A) $0. B) $61,600. C) $230,700. D) $310,800.

Last year, Walsh Company manufactured 25,000 units and sold 22,000 units. Production costs were as follows: $\begin{array}{|l|r|} \hline \text { Direct materials } & \$ 100,000 \\ \hline \text { Direct labour } & 75,000 \\ \hline \text { Variable manufacturing overhead } & 50,000 \\ \hline \text { Fixed manufacturing overhead } & 75,000 \\ \hline \end{array}$Total sales were $440,000, total variable selling and administrative expenses were $110,000, and total fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labour is a variable cost. -Under absorption costing,what was the unit product cost?

A) $9.00. B) $12.00. C) $13.40. D) $14.00. A) $9.00. B) $12.00. C) $13.40. D) $14.00.

Last year, Walsh Company manufactured 25,000 units and sold 22,000 units. Production costs were as follows: $\begin{array}{|l|r|} \hline \text { Direct materials } & \$ 100,000 \\ \hline \text { Direct labour } & 75,000 \\ \hline \text { Variable manufacturing overhead } & 50,000 \\ \hline \text { Fixed manufacturing overhead } & 75,000 \\ \hline \end{array}$Total sales were $440,000, total variable selling and administrative expenses were $110,000, and total fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labour is a variable cost. -What was the operating income under variable costing?

A) $2,000. B) $9,000. C) $12,000. D) $21,000. A) $2,000. B) $9,000. C) $12,000. D) $21,000.

Exam 8: Variable Costing: A Tool for Management

An allocated portion of fixed manufacturing overhead is included in product costs under which of the following? Absorption Costing Variable Costing A) No No B) No Yes C) Yes No D) Yes Yes

(Multiple Choice)

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Question 61

Erie Company manufactures a single product. Assume the following data for the year just completed: Variable costs per unit: Manufacturing \ 5 Selling and administrative \ 8 Fixed costs in total Manufacturing \ 60,000 Selling and administrative \ 82,500 There were no units in inventory at the beginning of the year. During the year, 30,000 units were produced and 25,000 units were sold. Each unit sells for $\$ 35$ . -Under absorption costing,what was the unit product cost? Do not round intermediate calculations.

(Multiple Choice)

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Question 62

Operating income reported under absorption costing will generally exceed operating income reported under variable costing for a given period in which of the following cases?

(Multiple Choice)

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Question 63

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 variable costing?

(Multiple Choice)

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Question 64

Last year, Walsh Company manufactured 25,000 units and sold 22,000 units. Production costs were as follows: Direct materials \ 100,000 Direct labour 75,000 Variable manufacturing overhead 50,000 Fixed manufacturing overhead 75,000 Total sales were $440,000, total variable selling and administrative expenses were $110,000, and total fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labour is a variable cost. -Under absorption costing,what was the total amount of fixed manufacturing cost in the ending inventory?

(Multiple Choice)

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Question 65

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 absorption costing approach?

(Multiple Choice)

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Question 66

Oakes Company,which has only one product,has provided the following data concerning its most recent month of operations: Selling price \ 108 Units in beginning inventory 0 Units produced 1,100 Units sold 900 Units in ending inventory 200 Variable costs per unit: Direct materials \ 28 Direct labour \ 30 Variable manufacturing overhead \ 7 Variable selling and administrative \ 11 Fixed costs: Fixed manufacturing overhead \ 14,300 Fixed selling and administrative \ 1,800 Required: a)Prepare an income statement for the month using the contribution format and the variable costing method. b)Prepare an income statement for the month using the absorption costing method.

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Question 67

Khanam Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price \ 97 Units in beginning inventory 500 Units produced 8,400 Units in ending inventory 400 Variable costs per unit: Direct materials \ 20 Direct labour \ 37 Variable manufacturing overhead \ 1 Variable selling and administrative \ 11 Fixed costs: Fixed manufacturing overhead \ 67,200 Fixed selling and administrative \ 161,500 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. -What is the amount of fixed overhead deferred under absorption costing?

(Multiple Choice)

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Question 68

Last year,Stephen Company had 20,000 units in its ending inventory.During the year,Stephen Company's variable production costs were $12 per unit.The fixed manufacturing overhead cost was $8 per unit in the beginning inventory.The company's operating income for the year was $9,600 higher under variable costing than it was under absorption costing.Given these facts,what must have been the number of units of product in the beginning inventory last year?

(Multiple Choice)

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Question 69

Jarvix Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price \ 111 Units in beginning inventory 0 Units produced 8,800 Units sold 8,900 Variable costs per unit: Direct materials \ 34 Direct labour \ 37 Variable manufacturing overhead \ 3 Variable selling and administrative \ 9 Fixed costs: Fixed manufacturing overhead \ 61,600 Fixed selling and administrative \ 169,100 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. -What was the operating income for the month under absorption costing?

(Multiple Choice)

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Question 70

Last year, Walsh Company manufactured 25,000 units and sold 22,000 units. Production costs were as follows: Direct materials \ 100,000 Direct labour 75,000 Variable manufacturing overhead 50,000 Fixed manufacturing overhead 75,000 Total sales were $440,000, total variable selling and administrative expenses were $110,000, and total fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labour is a variable cost. -Under absorption costing,what was the gross margin?

(Multiple Choice)

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Question 71

Harper Company,which has only one product,has provided the following data concerning its most recent month of operations: Selling price \ 111 Units in beginning inventory 400 Units produced 8,800 Units sold 8,900 Variable costs per unit: Direct materials \ 34 Direct labour \ 37 Variable manufacturing overhead \ 3 Variable selling and administrative \ 9 Fixed costs: Fixed manufacturing overhead \ 61,600 Fixed selling and administrative \ 169,100 The company produces the same number of units every month,although the sales in units vary from month to month.The company's variable costs per unit and total fixed costs have been constant from month to month. Required: a.Compute the total Contribution Margin. b.Compute the Operating Income under Variable Costing. c.Prepare a reconciliation from your Variable Costing Operating Income to compute Operating Income under absorption costing.

(Essay)

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Question 72

Last year, Harris Company manufactured 17,000 units and sold 13,000 units. Production costs for the year were as follows: Direct materials \ 153,000 Direct labour 110,500 Variable manufacturing overhead 204,000 Fixed manufacturing overhead 255,000 Sales were $780,000 for the year, variable selling and administrative expenses were $88,400, and fixed selling and administrative expenses were $170,000. There was no beginning inventory. Assume that direct labour is a variable cost. -Under absorption costing,what was the carrying value on the balance sheet of the ending inventory for the year? Do not round intermediate calculations.

(Multiple Choice)

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Question 73

Gordon Company produces a single product that sells for $10 per unit. Last year, there were no beginning inventories, 100,000 units were produced, and 80,000 units were sold. The company has the following cost structure: Fixed Costs Variable Costs Raw materials -- \ 2.00 per unit produced Direct labour -- 1.25 per unit produced Factory overhead \ 120,000 0.75 per unit produced Selling and administrative 70,000 1.00 per unit sold -Under absorption costing,what was the carrying value on the balance sheet of the ending finished goods inventory? Do not round intermediate calculations.

(Multiple Choice)

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Question 74

When sales exceeds production for a period,absorption costing operating income will generally be greater than variable costing operating income.

(True/False)

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Question 75

O'Briens Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price \ 165 Units in beginning inventory 0 Units produced 4,300 Units sold 3,800 Units in ending inventory 500 Variable costs per unit: Direct materials \ 31 Direct labour \ 43 Variable manufacturing overhead \ 5 Variable selling and administrative \ 8 Fixed costs: Fixed manufacturing overhead \ 165,400 Fixed selling and administrative \ 80,200 -What was the operating income (loss)for the month under variable costing?

(Multiple Choice)

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Question 76

Jarvix Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price \ 111 Units in beginning inventory 0 Units produced 8,800 Units sold 8,900 Variable costs per unit: Direct materials \ 34 Direct labour \ 37 Variable manufacturing overhead \ 3 Variable selling and administrative \ 9 Fixed costs: Fixed manufacturing overhead \ 61,600 Fixed selling and administrative \ 169,100 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. -What was the total period cost for the month under variable costing?

(Multiple Choice)

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Question 77

Last year, Walsh Company manufactured 25,000 units and sold 22,000 units. Production costs were as follows: Direct materials \ 100,000 Direct labour 75,000 Variable manufacturing overhead 50,000 Fixed manufacturing overhead 75,000 Total sales were $440,000, total variable selling and administrative expenses were $110,000, and total fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labour is a variable cost. -Under absorption costing,what was the unit product cost?

(Multiple Choice)

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Question 78

Data concerning Sonderegger Company's operations last year appear below: Selling price \ 110 Units in beginning inventory 0 Units produced 70,000 Units sold 60,000 Selling price per unit \ 12.00 Variable costs per unit: Direct materials \ 2.00 Direct labour \ 1.00 Variable manufacturing overhead \ 1.00 Variable selling and administrative \ 1.50 Fixed costs: Fixed manufacturing overhead \ 140,000 Fixed selling and administrative \ 150,000 Required: a)Prepare an income statement for the year using absorption costing. b)Prepare an income statement for the year using variable costing. c)Prepare a report reconciling the difference in operating income between absorption and variable costing for the year.

(Essay)

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Question 79

Last year, Walsh Company manufactured 25,000 units and sold 22,000 units. Production costs were as follows: Direct materials \ 100,000 Direct labour 75,000 Variable manufacturing overhead 50,000 Fixed manufacturing overhead 75,000 Total sales were $440,000, total variable selling and administrative expenses were $110,000, and total fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labour is a variable cost. -What was the operating income under variable costing?

(Multiple Choice)

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Question 80

An allocated portion of fixed manufacturing overhead is included in product costs under which of the following? Absorption Costing Variable Costing A) No No B) No Yes C) Yes No D) Yes Yes

Operating income reported under absorption costing will generally exceed operating income reported under variable costing for a given period in which of the following cases?

When sales exceeds production for a period,absorption costing operating income will generally be greater than variable costing operating income.

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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