Exam 21: Variable Costing

Yancey,Inc.reports the following information: Units produced 560 units Units sold 560 units Sales price \1 50 per unit Direct materials \1 0 per unit Direct labor \2 0 per unit Variable mannufacturing overhead \ 30 per unit Fixed manufacturing overhead \ 22,000 per year Variable selling and administrative costs \ 5 per unit Fixed selling and administrative costs \ 10,000 per year What is the amount of unit product cost that will be considered for external reporting purposes? (Round any intermediate calculations and your final answer to the nearest cent.)

The calculation of contribution margin ratio for service companies is significantly different from that of manufacturing companies.

When all units produced are sold,there is no difference in operating income between absorption costing and variable costing.

Spruce-Up Company provides cleaning services to commercial and residential customers.The commercial business segment provided services to 250 customers and the residential business segment provided services to 625 customers. Commercial Residential Total Service Revenue \ 86,000 \ 115,000 \ 201,000 Variable Costs 31,000 56,000 87,000 Fixed Costs Operating Income \ 9000 \ 6000 \ 15,000 Identify the segment with the lower contribution margin ratio and show the amount of its contribution margin ratio.(Round your answer to two decimals.)

When all the units produced are sold,the operating income calculated under absorption costing is higher when compared to the operating income calculated under variable costing.Assume that there is no beginning Finished Goods Inventory.

Habitat Help Company provides cleaning services to commercial and residential customers.The commercial business segment provided services to 310 customers and the residential business segment provided services to 575 customers. Commercial Residential Total Service Revenue \ 91,000 \ 121,000 \ 212,000 Variable Costs 23,000 47,000 70,000 Fixed Costs Operating Income \ 22,000 \ 26,000 \ 48,000 What is the contribution margin ratio for Habitat Help Company? (Round answer to two decimal places.)

For every unit that is produced but not sold,absorption costing "hides" some of the fixed manufacturing overhead in ending Finished Goods Inventory.

Which is the following is the most appropriate reason that sales mix decisions should be made using variable costing?

Last year,Adara Company produced 11,000 units and sold 9000 units.The company had no beginning inventory.They incurred the following costs: Direct materials per unit \ 18 Direct labor per unit \ 15 Variable overhead per unit \ 7 Total fixed manufacturing \ 55,000 overhead Total selling and administrative \ 80,000 Adara's product cost per unit under variable costing is

Which of the following will appear as a line item in the traditional format of an income statement?

Elegant Affairs,Inc.provides catering services.The company has three segments: Standard,Deluxe,and Premium.The company provides the following data for its three segments for the month of July: Standard Deluxe Premium No. of customers 30 20 40 Service revenue \ 9,000 \ 8,200 \ 8,600 Variable costs \ 5,500 \ 3,800 \ 4,200 The total fixed costs for the month amount to $2,500. Requirements: a)Calculate the contribution margin ratio for each business segment. b)Compute the service revenue per customer,variable cost per customer,and contribution margin per customer for each business segment.

Last year,Adara Company produced 5000 units and sold 3000 units.The company had no beginning inventory.They incurred the following costs: Direct materials per unit \ 13 Direct labor per unit \ 7 Variable overhead per unit \ 4 Total fixed manufacturing overhead \ 20,00 Total selling and administrative \ 70,00 Adara's product cost per unit under absorption costing is

In variable costing,the balance of ending Finished Goods Inventory includes fixed manufacturing overhead.

In variable costing,fixed manufacturing overhead is considered a period cost because ________.

A variable costing income statement is used for ________.

Magic Maid Service provides maid service to residential clients.Following are data for a recent week: Service Revenue \ 3,200 Variable Costs 1,900 The contribution margin ratio is 59.38% (rounded to two decimal places).

Circetrax,Inc.has provided the following financial information for the year: Finished Goods Inventory: Beginning balance, in units 600 Units produced 2800 Units sold 2900 Ending balance, in units 500 Production costs: Variable manufacturing costs per unit \ 60 Total fixed manufacturing costs \ 42,000 What is the unit product cost for the year using absorption costing?

Absorption costing is more appropriate than variable costing for making plant production capacity decisions in the long run.

Morwenna,Inc.reports the following information for August: Sales Revenue \ 900,000 Variable Cost of Goods Sold 120,000 Fixed Cost of Goods Sold 60,000 Variable Selling and Administrative Costs 150,000 Fixed Selling and Administrative Costs 50,000 Calculate the operating income for August using absorption costing.

Trillium,Inc.reports the following information for April: Alpha Beta Units sold 4000 units 700 units Sales price per unit \ 300 \ 700 Variable manufacturing cost per unit 200 500 Sales commission per unit: Alpha: 4\% of sales price 12 Beta: 8\% of sales price 56 What is the contribution margin ratio of Beta? (Round your answer to two decimal places.)