Question 1

What was the operating income (loss)for the month under absorption costing?

Accepted Answer

A)  ($17,000). 
B)  $6,000. 
C)  $10,600. 
D)  $16,600. 
A)  ($17,000). 
B)  $6,000. 
C)  $10,600. 
D)  $16,600. D

Question 2

For the month noted,what was the relationship between the operating income under variable costing as opposed to under absorption costing?

Accepted Answer

A)  Higher than operating income under absorption costing. 
B)  Lower than operating income under absorption costing. 
C)  The same as operating income under absorption costing. 
D)  The relationship between variable costing and absorption costing operating income cannot be determined with the data provideD. 
A)  Higher than operating income under absorption costing. 
B)  Lower than operating income under absorption costing. 
C)  The same as operating income under absorption costing. 
D)  The relationship between variable costing and absorption costing operating income cannot be determined with the data provideD. B

Question 3

Last year,Silver Company's total variable production costs were $7,500,and its total fixed manufacturing overhead costs were $4,500.The company produced 3,000 units during the year and sold 2,400 units.There were no units in the beginning inventory.Which of the following statements is true?

Accepted Answer

A)  Under variable costing,the average cost of the units in the ending inventory will be $4 each. 
B)  The operating income under absorption costing for the year will be $900 lower than the operating income under variable costing. 
C)  The ending inventory under variable costing will be $900 lower than the ending inventory under absorption costing. 
D)  Under absorption costing,the average cost of the units in ending inventory will be $2.50 each. 
A)  Under variable costing,the average cost of the units in the ending inventory will be $4 each. 
B)  The operating income under absorption costing for the year will be $900 lower than the operating income under variable costing. 
C)  The ending inventory under variable costing will be $900 lower than the ending inventory under absorption costing. 
D)  Under absorption costing,the average cost of the units in ending inventory will be $2.50 each. C

Question 4

Operating data for Fowler Company and its absorption costing income statements for the last two years are presented below:   
Variable manufacturing costs are $6 per unit.Fixed manufacturing overhead totals $72,000 in each year.This overhead is applied at the rate of $4 per unit.Variable selling and administrative expenses were $2 per unit sold.
Required:
a)What was the unit product cost in each year under variable costing?
b)Prepare new income statements for each year using variable costing.
c)Reconcile the absorption costing and variable costing operating income for each year.

Accepted Answer

a)The manufacturing cost of $6

Question 5

What was the total period cost for the month under variable costing?

Accepted Answer

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

Question 6

At the end of last year,Lee Company had 30,000 units in its ending inventory.Every year,Lee Company's variable production costs are $10 per unit,and its fixed manufacturing overhead costs are $5 per unit.The company's operating income for the year was $12,000 higher under variable costing than under absorption costing.Given these facts,what must have been the number of units of product in inventory at the beginning of the year?

Accepted Answer

A)  27,600 units. 
B)  28,800 units. 
C)  32,400 units. 
D)  42,000 units. 
A)  27,600 units. 
B)  28,800 units. 
C)  32,400 units. 
D)  42,000 units.

Question 7

Under absorption costing,what was the total amount of fixed manufacturing cost in the ending inventory?

Accepted Answer

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

Question 8

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

Accepted Answer

A)  Cost of goods sold,excluding fixed manufacturing overhead. 
B)  All variable costs,including variable selling and administrative expenses. 
C)  Cost of goods sold,including fixed manufacturing overhead. 
D)  Variable costs,excluding variable selling and administrative expenses. 
A)  Cost of goods sold,excluding fixed manufacturing overhead. 
B)  All variable costs,including variable selling and administrative expenses. 
C)  Cost of goods sold,including fixed manufacturing overhead. 
D)  Variable costs,excluding variable selling and administrative expenses.

Question 9

What was the amount of fixed manufacturing overhead deferred under absorption costing?

Accepted Answer

A)  $0. 
B)  $2,100. 
C)  $2,800. 
D)  $61,600.Cost deferred = 300 * 61,600/8,800 = $2,100. 
A)  $0. 
B)  $2,100. 
C)  $2,800. 
D)  $61,600.Cost deferred = 300 * 61,600/8,800 = $2,100.

Question 10

Under absorption costing,what was the carrying value on the balance sheet of the ending inventory for the year? Do not round intermediate calculations.

Accepted Answer

A)  $0. 
B)  $170,000. 
C)  $190,800. 
D)  $230,800. 
A)  $0. 
B)  $170,000. 
C)  $190,800. 
D)  $230,800.

Question 11

Variable costing is sometimes referred to as direct costing or marginal costing.

Accepted Answer

A) True 
 B)False

Question 12

What was the contribution margin per unit? Do not round intermediate calculations.

Accepted Answer

A)  $17.50. 
B)  $25.70. 
C)  $27.50. 
D)  $32.50.CM/unit = [780,000 (13,000 * 27.50)- 88,400]/13,000 = $25.70. 
A)  $17.50. 
B)  $25.70. 
C)  $27.50. 
D)  $32.50.CM/unit = [780,000 (13,000 * 27.50)- 88,400]/13,000 = $25.70.

Question 13

What is the operating income (loss)for the month under variable costing?

Accepted Answer

A)  ($14,100). 
B)  $3,900. 
C)  $8,100. 
D)  $12,000. 
A)  ($14,100). 
B)  $3,900. 
C)  $8,100. 
D)  $12,000.

Question 14

Under absorption costing,what was the carrying value on the balance sheet of the ending finished goods inventory? Do not round intermediate calculations.

Accepted Answer

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

Question 15

What was the total period cost for the month under the variable costing approach?

Accepted Answer

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

Question 16

What was the operating income (loss)for the month under variable costing?

Accepted Answer

A)  ($17,200). 
B)  $5,600. 
C)  $6,600. 
D)  $12,200. 
A)  ($17,200). 
B)  $5,600. 
C)  $6,600. 
D)  $12,200.

Question 17

Operating income determined using absorption costing can be reconciled to operating income determined using variable costing by computing the difference between which of the following?

Accepted Answer

A)  Fixed manufacturing overhead costs deferred in or released from inventories. 
B)  Discretionary costs included in the beginning and ending inventories. 
C)  Gross margin (absorption costing method)and contribution margin (variable costing method). 
D)  Sales as recorded under the variable costing method and sales as recorded under the absorption costing methoD. 
A)  Fixed manufacturing overhead costs deferred in or released from inventories. 
B)  Discretionary costs included in the beginning and ending inventories. 
C)  Gross margin (absorption costing method)and contribution margin (variable costing method). 
D)  Sales as recorded under the variable costing method and sales as recorded under the absorption costing methoD.

Question 18

When lean production methods are introduced,the difference in operating income calculated using the absorption and variable costing methods is reduced.

Accepted Answer

A) True 
 B)False

Question 19

What was the operating income under variable costing?

Accepted Answer

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

Question 20

What was the contribution margin per unit?

Accepted Answer

A)  $12.10. 
B)  $16.60. 
C)  $17.70. 
D)  $22.10.CM = [850,000 (20,000 * 20.40)- 110,000]/20,000 = $16.60. 
A)  $12.10. 
B)  $16.60. 
C)  $17.70. 
D)  $22.10.CM = [850,000 (20,000 * 20.40)- 110,000]/20,000 = $16.60.

What was the operating income (loss)for the month under absorption costing?

For the month noted,what was the relationship between the operating income under variable costing as opposed to under absorption costing?

Last year,Silver Company's total variable production costs were $7,500,and its total fixed manufacturing overhead costs were $4,500.The company produced 3,000 units during the year and sold 2,400 units.There were no units in the beginning inventory.Which of the following statements is true?

What was the total period cost for the month under variable costing?

Under absorption costing,what was the total amount of fixed manufacturing cost in the ending inventory?

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

What was the amount of fixed manufacturing overhead deferred under absorption costing?

Under absorption costing,what was the carrying value on the balance sheet of the ending inventory for the year? Do not round intermediate calculations.

Variable costing is sometimes referred to as direct costing or marginal costing.

What was the contribution margin per unit? Do not round intermediate calculations.

What is the operating income (loss)for the month under variable costing?

Under absorption costing,what was the carrying value on the balance sheet of the ending finished goods inventory? Do not round intermediate calculations.

What was the total period cost for the month under the variable costing approach?

What was the operating income (loss)for the month under variable costing?

Operating income determined using absorption costing can be reconciled to operating income determined using variable costing by computing the difference between which of the following?

When lean production methods are introduced,the difference in operating income calculated using the absorption and variable costing methods is reduced.

What was the operating income under variable costing?

What was the contribution margin per unit?

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

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Exam 8: Variable Costing: a Tool for Management

What was the operating income (loss)for the month under absorption costing?

For the month noted,what was the relationship between the operating income under variable costing as opposed to under absorption costing?

Last year,Silver Company's total variable production costs were $7,500,and its total fixed manufacturing overhead costs were $4,500.The company produced 3,000 units during the year and sold 2,400 units.There were no units in the beginning inventory.Which of the following statements is true?

What was the total period cost for the month under variable costing?

Under absorption costing,what was the total amount of fixed manufacturing cost in the ending inventory?

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

What was the amount of fixed manufacturing overhead deferred under absorption costing?

Under absorption costing,what was the carrying value on the balance sheet of the ending inventory for the year? Do not round intermediate calculations.

Variable costing is sometimes referred to as direct costing or marginal costing.

What was the contribution margin per unit? Do not round intermediate calculations.

What is the operating income (loss)for the month under variable costing?

Under absorption costing,what was the carrying value on the balance sheet of the ending finished goods inventory? Do not round intermediate calculations.

What was the total period cost for the month under the variable costing approach?

What was the operating income (loss)for the month under variable costing?

Operating income determined using absorption costing can be reconciled to operating income determined using variable costing by computing the difference between which of the following?

When lean production methods are introduced,the difference in operating income calculated using the absorption and variable costing methods is reduced.

What was the operating income under variable costing?

What was the contribution margin per unit?

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 Online

Filters