Question 1

What was the unit product cost for the month under variable costing?

Accepted Answer

A)  $74. 
B)  $81. 
C)  $83. 
D)  $90. 
A)  $74. 
B)  $81. 
C)  $83. 
D)  $90.

Question 2

What was the amount of fixed overhead cost in ending inventory under absorption costing?

Accepted Answer

A)  $33,600. 
B)  $27,000. 
C)  $6,000. 
D)  $0 
A)  $33,600. 
B)  $27,000. 
C)  $6,000. 
D)  $0

Question 3

What is the total contribution margin for the month under the variable costing approach?

Accepted Answer

A)  $27,900. 
B)  $72,000. 
C)  $198,000. 
D)  $234,000. 
A)  $27,900. 
B)  $72,000. 
C)  $198,000. 
D)  $234,000.

Question 4

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?

Accepted Answer

A)  8,000 units. 
B)  8,400 units. 
C)  9,600 units. 
D)  10,000 units. 
A)  8,000 units. 
B)  8,400 units. 
C)  9,600 units. 
D)  10,000 units.

Question 5

The Miller Company had the following results for its first two years of operation:   
In Year 1,the company produced and sold 40,000 units of its only product;in Year 2,the company again sold 40,000 units,but increased production to 50,000 units.The company's variable production cost is $5 per unit,and its fixed manufacturing overhead cost is $600,000 a year.Fixed manufacturing overhead costs are applied to the product on the basis of each year's unit production (i.e. ,a new fixed overhead rate is computed each year).Variable selling and administrative expenses are $2 per unit sold.
Required:
a)Compute the unit product cost for each year under absorption costing and under variable costing.
b)Prepare an income statement for each year,using the contribution format with variable costing.
c)Reconcile the variable costing and absorption costing income figures for each year.
d)Explain why the operating income for Year 2 under absorption costing was higher than the operating income for Year 1,although the same number of units were sold in each year.

Accepted Answer

@#IMG-DLM& 
 @#IMG-DLM& 
 @#IMG-DLM& d.The increase in production in Y

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

In the preparation of financial statements using variable costing,fixed manufacturing overhead is treated as a period cost.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)  ($7,200). 
B)  $11,100. 
C)  $16,200. 
D)  $27,300. 
A)  ($7,200). 
B)  $11,100. 
C)  $16,200. 
D)  $27,300.

Question 9

Under absorption costing,what was the unit product cost?

Accepted Answer

A)  $9. 
B)  $12. 
C)  $13. 
D)  $16. 
A)  $9. 
B)  $12. 
C)  $13. 
D)  $16.

Question 10

What was the total gross margin for the month under the absorption costing approach?

Accepted Answer

A)  $90,000. 
B)  $95,200. 
C)  $125,800. 
D)  $156,400. 
A)  $90,000. 
B)  $95,200. 
C)  $125,800. 
D)  $156,400.

Question 11

What was the contribution margin per unit?

Accepted Answer

A)  $6.00. 
B)  $8.00. 
C)  $11.00. 
D)  $15.00.CM = (440,000 - 22,000 * 9 - 110,000)/22,000 = $6.00. 
A)  $6.00. 
B)  $8.00. 
C)  $11.00. 
D)  $15.00.CM = (440,000 - 22,000 * 9 - 110,000)/22,000 = $6.00.

Question 12

Under variable costing,what was the company's operating income for the year,as compared with under absorption costing?

Accepted Answer

A)  $60,000 higher than under absorption costing. 
B)  $108,000 higher than under absorption costing. 
C)  $108,000 lower than under absorption costing. 
D)  $60,000 lower than under absorption costing. 
A)  $60,000 higher than under absorption costing. 
B)  $108,000 higher than under absorption costing. 
C)  $108,000 lower than under absorption costing. 
D)  $60,000 lower than under absorption costing.

Question 13

What was the unit product cost for the month under absorption costing?

Accepted Answer

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

Question 14

During the last year,Hansen Company had operating income under absorption costing that was $5,500 lower than its operating income under variable costing.The company sold 9,000 units during the year,and its variable costs were $10 per unit,of which $6 was variable selling expense.If fixed production cost is $5 per unit under absorption costing every year,how many units did the company produce during the year?

Accepted Answer

A)  7,625 units. 
B)  7,900 units. 
C)  8,450 units. 
D)  10,100 units. 
A)  7,625 units. 
B)  7,900 units. 
C)  8,450 units. 
D)  10,100 units.

Question 15

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

Accepted Answer

A)  $60,000. 
B)  $170,000. 
C)  $194,100. 
D)  $230,100. 
A)  $60,000. 
B)  $170,000. 
C)  $194,100. 
D)  $230,100.

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would best describe the relationship between the carrying value of the finished goods inventory at the end of the year under variable costing as opposed to under absorption costing?

Accepted Answer

A)  $8,800 less than under absorption costing. 
B)  The same as absorption costing. 
C)  $5,800 less than under absorption costing. 
D)  $5,800 more than under absorption costing 
A)  $8,800 less than under absorption costing. 
B)  The same as absorption costing. 
C)  $5,800 less than under absorption costing. 
D)  $5,800 more than under absorption costing

Question 18

What is the amount of fixed overhead released under absorption costing?

Accepted Answer

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

Question 19

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

Accepted Answer

A)  $61,200. 
B)  $88,400. 
C)  $93,600. 
D)  $182,000 
A)  $61,200. 
B)  $88,400. 
C)  $93,600. 
D)  $182,000

Question 20

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

Accepted Answer

A)  Supervisory salaries. 
B)  Office equipment depreciation. 
C)  Variable manufacturing costs. 
D)  Variable selling expenses. 
A)  Supervisory salaries. 
B)  Office equipment depreciation. 
C)  Variable manufacturing costs. 
D)  Variable selling expenses.

What was the unit product cost for the month under variable costing?

What was the amount of fixed overhead cost in ending inventory under absorption costing?

What is the total contribution margin for the month under the variable costing approach?

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

In the preparation of financial statements using variable costing,fixed manufacturing overhead is treated as a period cost.

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

Under absorption costing,what was the unit product cost?

What was the total gross margin for the month under the absorption costing approach?

What was the contribution margin per unit?

Under variable costing,what was the company's operating income for the year,as compared with under absorption costing?

What was the unit product cost for the month under absorption costing?

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

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.

Which of the following would best describe the relationship between the carrying value of the finished goods inventory at the end of the year under variable costing as opposed to under absorption costing?

What is the amount of fixed overhead released under absorption costing?

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

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

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

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Exam 8: Variable Costing: a Tool for Management

What was the unit product cost for the month under variable costing?

What was the amount of fixed overhead cost in ending inventory under absorption costing?

What is the total contribution margin for the month under the variable costing approach?

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

In the preparation of financial statements using variable costing,fixed manufacturing overhead is treated as a period cost.

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

Under absorption costing,what was the unit product cost?

What was the total gross margin for the month under the absorption costing approach?

What was the contribution margin per unit?

Under variable costing,what was the company's operating income for the year,as compared with under absorption costing?

What was the unit product cost for the month under absorption costing?

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

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.

Which of the following would best describe the relationship between the carrying value of the finished goods inventory at the end of the year under variable costing as opposed to under absorption costing?

What is the amount of fixed overhead released under absorption costing?

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

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

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