Pathways Careers,Inc.has two products-Resume Reader and Cover Letter Cure.Financial data for both the products follow: \[\begin{array} { | l | r | r | } \hline & \begin{array} { r } \text { Resume } \\ \text { Reader } \end{array} & \begin{array} { r } \text { Cover Letter } \\ \text { Cure } \end{array} \\ \hline \text { Units sold } & 2000 \text { units } & 600 \text { units } \\ \hline \text { Sales price per unit } & \$ 700 & \$ 1200 \\ \hline \text { Variable manufacturing cost per unit } & 310 & 650 \\ \hline \text { Sales commission (\% of sales) } & 5 \% & 3 \% \\ \hline \end{array}\] Pathways has two sales representatives-Curtis Muller and Willow Brown.Each sales representative sold a total of 1300 units during the month of March.Curtis had a sales mix of 80% Resume Reader and 20% Cover Letter Cure.Willow had a sales mix of 60% Resume Reader and 40% Cover Letter Cure.Based on the above information,calculate Willow's total contribution to company profits.

A) $544,180 B) $590,200 C) $276,900 D) $267,280 A) $544,180 B) $590,200 C) $276,900 D) $267,280

For decisions that affect setting sales prices,consider the following decision focuses.State the appropriate costing method and the reason for your answer. $\begin{array} { | l | c | l | } \hline \begin{array} { c } \textbf { Decision } \\ \textbf { Focus } \end{array} & \begin{array} { c } \textbf { Appropriate Costing } \\ \textbf { Method } \end{array} & \textbf { Reason } \\ \hline \textbf { Short run } & & \\ \hline \textbf { Long run } & & \\ \hline \end{array}$

\[\begin{array} { | l | l | l | } \hlin

Docherty,Inc.reports the following information for the year ended December 31: \[\begin{array} { | l | r | l | } \hline \text { Units sold } & 600 & \text { units } \\ \hline \text { Sales price } & \$ 120 & \text { per unit } \\ \hline \text { Direct materials } & \$ 29 & \text { per unit } \\ \hline \text { Direct labor } & \$ 8 & \text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$ 13 & \text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 25 & \text { per unit } \\ \hline \text { Variable selling and administrative costs } & \$ 5 & \text { per unit } \\ \hline \text { Fixed selling and administrative costs } & \$ 14,500 & \text { per year } \\ \hline \end{array}\] The operating income calculated using variable costing and absorption costing amounted to $9800 and $11,000,respectively.There were no beginning inventories.Determine the total number of units produced during the year.

A) 600 units B) 648 units C) 10 units D) 48 units A) 600 units B) 648 units C) 10 units D) 48 units

Happy Home,Inc.provides housekeeping services.The following financial data have been provided. \[\begin{array} { | l | r | } \hline \text { Service Revenue } & \$ 80,000 \\ \hline \text { Cleaning Supplies Used } & 21,500 \\ \hline \text { Wages Expense } & 18,350 \\ \hline \text { Office Rent Expense } & 5350 \\ \hline \text { Depreciation Expense- } & \\ \text { Machinery } & 750 \\ \hline \end{array}\] Calculate the operating income for the company.

A) $40,150 B) $34,800 C) $34,050 D) $52,400 A) $40,150 B) $34,800 C) $34,050 D) $52,400

Alltech Inc.has collected the following data.(There are no beginning inventories.) $\begin{array}{|l|r|l|} \hline \text { Units produced } & 510 &\text { units } \\ \hline \text { Sales price } & \$ 120& \text { per unit } \\ \hline \text { Direct materials } & \$ 19& \text { per unit } \\ \hline \text { Direct labor } & \$15 &\text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$ 9 &\text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 16,000& \text { per year } \\ \hline \text { Variable selling and administrative costs } & \$ 10& \text { per unit } \\ \hline \text { Fixed selling and administrative costs } & \$ 12,100& \text { per year } \\ \hline \end{array}$ What is the operating income using absorption costing if 500 units are sold? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

A) $6600 B) $5715 C) $11,171 D) $19,015 A) $6600 B) $5715 C) $11,171 D) $19,015

Sequoyah,Inc.reports the following information: $\begin{array}{|l|r|l|} \hline \text { Units produced } & 540 &\text { units } \\ \hline \text { Units sold } & 540 &\text { units } \\ \hline \text { Sales price } & \$ 160 &\text { per unit } \\ \hline \text { Direct materials } & \$30&\text { per unit } \\ \hline \text { Direct labor } & \$ 15 &\text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$10&\text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 20,000 &\text { per year } \\ \hline \text { Variable selling and administrative costs } & \$ 5 &\text { per unit } \\ \hline \text { Fixed selling and administrative costs } & \$ 10,000 & \text { per year }\\ \hline \end{array}$ What is the unit product cost using variable costing?

A) $60 B) $82 C) $55 D) $105 A) $60 B) $82 C) $55 D) $105

Emerald Pools,Inc.has provided the following information for the year. \[\begin{array} { | l | r | l | } \hline \text { Units produced } & 14,000 & \text { units } \\ \hline \text { Sales price } & \$ 700 & \text { per unit } \\ \hline \text { Direct materials } & \$ 25 & \text { per unit } \\ \hline \text { Direct labor } & \$ 45 & \text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$ 50 & \text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 470,000 & \text { per year } \\ \hline \text { Variable selling and administration costs } & \$ 90 & \text { per unit } \\ \hline \text { Fixed selling and administration costs } & \$ 260,000 & \text { per year } \\ \hline \end{array}\] What is the unit product cost using absorption costing? (Round any intermediate calculations and your final answer to the nearest dollar.)

A) $70 B) $154 C) $160 D) $120 A) $70 B) $154 C) $160 D) $120

Petra,Inc.has collected the following data.(There are no beginning inventories.): $\begin{array}{|l|r|l|} \hline \text { Units produced } & 480 &\text { units } \\ \hline \text { Units sold } & 480 &\text { units } \\ \hline \text { Sales price } & \$ 210 &\text { per unit } \\ \hline \text { Direct materials } & \$ 40 &\text { per unit } \\ \hline \text { Direct labor } & \$ 35 &\text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$30& \text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 11,000 &\text { per year } \\ \hline \text { Variable selling and administrative costs } & \$10&\text { per unit } \\ \hline \text { Fixed selling and administrative costs } & \$ 10,000&\text { per year }\\ \hline \end{array}$ What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

A) $39,400 B) $34,600 C) $24,600 D) $29,400 A) $39,400 B) $34,600 C) $24,600 D) $29,400

Exam 21: Variable Costing

Pathways Careers,Inc.has two products-Resume Reader and Cover Letter Cure.Financial data for both the products follow: Resume Reader Cover Letter Cure Units sold 2000 units 600 units Sales price per unit \ 700 \ 1200 Variable manufacturing cost per unit 310 650 Sales commission (\% of sales) 5\% 3\% Pathways has two sales representatives-Curtis Muller and Willow Brown.Each sales representative sold a total of 1300 units during the month of March.Curtis had a sales mix of 80% Resume Reader and 20% Cover Letter Cure.Willow had a sales mix of 60% Resume Reader and 40% Cover Letter Cure.Based on the above information,calculate Willow's total contribution to company profits.

(Multiple Choice)

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Question 121

When more units are sold than produced,operating income is higher under absorption costing than variable costing.

(True/False)

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Question 122

For decisions that affect setting sales prices,consider the following decision focuses.State the appropriate costing method and the reason for your answer. Decision Focus Appropriate Costing Method Reason Short run Long run

(Essay)

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Question 123

Absorption costing considers direct materials,direct labor,variable manufacturing overhead,and fixed manufacturing overhead as product costs.

(True/False)

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Question 124

Intricate Computer Solutions provides services to corporate and individual customers.During the month of June,the corporate business segment provided services to 300 customers and earned $70,000 in revenue.The individual business segment provided services to 300 customers and earned $40,000 in revenue.The variable costs for the corporate and individual business segments amounted to $33,000 and $25,100,respectively.In addition,the fixed costs of the company amounted to $8000.Calculate the contribution margin from each corporate customer.(Round your answer to the nearest cent.)

(Multiple Choice)

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Question 125

Docherty,Inc.reports the following information for the year ended December 31: Units sold 600 units Sales price \ 120 per unit Direct materials \ 29 per unit Direct labor \ 8 per unit Variable manufacturing overhead \ 13 per unit Fixed manufacturing overhead \ 25 per unit Variable selling and administrative costs \ 5 per unit Fixed selling and administrative costs \ 14,500 per year The operating income calculated using variable costing and absorption costing amounted to $9800 and $11,000,respectively.There were no beginning inventories.Determine the total number of units produced during the year.

(Multiple Choice)

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Question 126

In variable costing,all fixed manufacturing overhead costs are expensed in the period incurred.

(True/False)

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Question 127

Happy Home,Inc.provides housekeeping services.The following financial data have been provided. Service Revenue \ 80,000 Cleaning Supplies Used 21,500 Wages Expense 18,350 Office Rent Expense 5350 Depreciation Expense- Machinery 750 Calculate the operating income for the company.

(Multiple Choice)

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Question 128

Alltech Inc.has collected the following data.(There are no beginning inventories.) Units produced 510 units Sales price \ 120 per unit Direct materials \ 19 per unit Direct labor \1 5 per unit Variable manufacturing overhead \ 9 per unit Fixed manufacturing overhead \ 16,000 per year Variable selling and administrative costs \ 10 per unit Fixed selling and administrative costs \ 12,100 per year What is the operating income using absorption costing if 500 units are sold? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

(Multiple Choice)

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Question 129

Sequoyah,Inc.reports the following information: Units produced 540 units Units sold 540 units Sales price \ 160 per unit Direct materials \3 0 per unit Direct labor \ 15 per unit Variable manufacturing overhead \1 0 per unit Fixed manufacturing overhead \ 20,000 per year Variable selling and administrative costs \ 5 per unit Fixed selling and administrative costs \ 10,000 per year What is the unit product cost using variable costing?

(Multiple Choice)

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Question 130

Absorption costing is used to analyze contribution margin.

(True/False)

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Question 131

Under absorption costing,all product costs are first recorded as assets in inventory accounts,and later transferred to the Cost of Goods Sold account when sold.

(True/False)

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Question 132

Luis Perez,a production supervisor at Serum Medical,Inc.,uses variable costing for any cost control decisions that he has to make.Which of the following is the reason for his choice?

(Multiple Choice)

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Question 133

Emerald Pools,Inc.has provided the following information for the year. Units produced 14,000 units Sales price \ 700 per unit Direct materials \ 25 per unit Direct labor \ 45 per unit Variable manufacturing overhead \ 50 per unit Fixed manufacturing overhead \ 470,000 per year Variable selling and administration costs \ 90 per unit Fixed selling and administration costs \ 260,000 per year What is the unit product cost using absorption costing? (Round any intermediate calculations and your final answer to the nearest dollar.)

(Multiple Choice)

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Question 134

The traditional income statement format is prepared under absorption costing.

(True/False)

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Question 135

Petra,Inc.has collected the following data.(There are no beginning inventories.): Units produced 480 units Units sold 480 units Sales price \ 210 per unit Direct materials \ 40 per unit Direct labor \ 35 per unit Variable manufacturing overhead \3 0 per unit Fixed manufacturing overhead \ 11,000 per year Variable selling and administrative costs \1 0 per unit Fixed selling and administrative costs \ 10,000 per year What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

(Multiple Choice)

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Question 136

Absorption costing is more appropriate when determining the product costs for long-term production planning.

(True/False)

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Question 137

Louie's Music produces harmonicas that it sells for $12 each.The company computes a new monthly fixed manufacturing overhead allocation rate based on the planned number of harmonicas to be produced that month.Assume all costs and production levels are exactly as planned.The following data are from Louie's Music's first month in business: January 2019 Sales in unoduced and sold: Production in units 1200 Variable manufacturing cost per harmonica 1400 Sales commission cost per harmonica \ 4 Total fixed manufacturing overhead \ 1 Total fixed selling and administrative costs \ 2,800 Requirements 1.Compute the product cost per harmonica produced under variable costing. 2.Prepare an income statement for January,2019

(Essay)

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Question 138

Under absorption costing,the more fixed manufacturing overhead in ending Finished Goods Inventory,the larger the Cost of Goods Sold.

(True/False)

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Question 139

Unit product cost calculations using absorption costing do NOT include ________.

(Multiple Choice)

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Question 140

When more units are sold than produced,operating income is higher under absorption costing than variable costing.

For decisions that affect setting sales prices,consider the following decision focuses.State the appropriate costing method and the reason for your answer. Decision Focus Appropriate Costing Method Reason Short run Long run

Absorption costing considers direct materials,direct labor,variable manufacturing overhead,and fixed manufacturing overhead as product costs.

In variable costing,all fixed manufacturing overhead costs are expensed in the period incurred.

Happy Home,Inc.provides housekeeping services.The following financial data have been provided. Service Revenue \ 80,000 Cleaning Supplies Used 21,500 Wages Expense 18,350 Office Rent Expense 5350 Depreciation Expense- Machinery 750 Calculate the operating income for the company.

Absorption costing is used to analyze contribution margin.

Under absorption costing,all product costs are first recorded as assets in inventory accounts,and later transferred to the Cost of Goods Sold account when sold.

Luis Perez,a production supervisor at Serum Medical,Inc.,uses variable costing for any cost control decisions that he has to make.Which of the following is the reason for his choice?

The traditional income statement format is prepared under absorption costing.

Absorption costing is more appropriate when determining the product costs for long-term production planning.

Under absorption costing,the more fixed manufacturing overhead in ending Finished Goods Inventory,the larger the Cost of Goods Sold.

Unit product cost calculations using absorption costing do NOT include ________.

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