Question 1

Which of the following statements is true?

Accepted Answer

A) Variable costing treats fixed overhead as a period cost. 
B) Absorption costing treats fixed overhead as a period cost. 
C) Absorption costing treats fixed overhead as an expense in the period it is incurred. 
D) Variable costing excludes all overhead from product costs. 
E) Managers can manipulate earnings more easily under variable costing by varying the production level. 
A) Variable costing treats fixed overhead as a period cost. 
B) Absorption costing treats fixed overhead as a period cost. 
C) Absorption costing treats fixed overhead as an expense in the period it is incurred. 
D) Variable costing excludes all overhead from product costs. 
E) Managers can manipulate earnings more easily under variable costing by varying the production level.

Question 2

Given the following data, calculate product cost per unit under absorption costing. $$\begin{array} { | l | c | } 
\hline \text { Direct labor } & \$ 7 \text { per urit } \
\hline \text { Direct rmaterials } & \$ 1 \text { per urit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 20,000 \
\hline \text { Total fixed overhead } & \$ 90,000 \
\hline & \
\hline \text { Expected urits to be produced } & 40,000 \text { urits } \
\hline
\end{array}$$

Accepted Answer

A) $8 per unit 
B) $8.50 per unit 
C) $10.25 per unit 
D) $10.75 per unit 
E) $12 per unit 
A) $8 per unit 
B) $8.50 per unit 
C) $10.25 per unit 
D) $10.75 per unit 
E) $12 per unit

Question 3

Under absorption costing, a company had the following unit costs when 8,000 units were produced. $\begin{array}{lr}
\text { Direct labor } & \$ 8.50 \text { per unit } \
\text { Direct material } & \$ 9.00 \text { per unit } \
\text { Variable overhead } & \$ 6.75 \text { per unit } \
\text { Fixed overhead }(\$ 60,000 / 8,000 \text { units }) &\underline{ \$ 7.50 \text { per unit }} \
\text { Total production cost } & \underline{\$ 31.75 \text { per unit }}
\end{array}$ Compute the total production cost per unit under variable costing if 25,000 units had been produced.

Accepted Answer

A) $31.75 
B) $27.25 
C) $26.25 
D) $24.25 
E) $17.50 
A) $31.75 
B) $27.25 
C) $26.25 
D) $24.25 
E) $17.50

Question 4

Contribution margin is another way to refer to gross margin.

Accepted Answer

A) True 
 B)False

Question 5

When excess capacity exists, managers should accept a special order if the special order price exceeds the ________________________.

Accepted Answer

total vari

Question 6

Gage Company reports the following information for its first year of operations: $\begin{array}{ll}
\text { Units produced this year } & 7,000 \text { units } \
\text { Units sold this year } & 6,500 \text { units } \
\text { Direct materials } & \$ 22 \text { per unit } \
\text { Direct labor } & \$ 30 \text { per unit } \
\text { Variable overhead } & ? \text { in total } \
\text { Fixed overhead } & \$ 56,000 \text { in total }
\end{array}$ If the company's cost per unit of finished goods using variable costing is $63, what is total variable overhead?

Accepted Answer

A) $21,000 
B) $71,500 
C) $77,000 
D) $19,500 
E) $16,590 
A) $21,000 
B) $71,500 
C) $77,000 
D) $19,500 
E) $16,590

Question 7

Front Company had net income of $72,500 based on variable costing.Beginning and ending inventories were 800 units and 1,200 units, respectively.Assume the fixed overhead per unit was $7.90 for both the beginning and ending inventory.What is net income under absorption costing?

Accepted Answer

A) $69,340 
B) $75,660 
C) $88,300 
D) $56,700 
E) $72,900 
A) $69,340 
B) $75,660 
C) $88,300 
D) $56,700 
E) $72,900

Question 8

Sindler Corporation sold 3,000 units of its product at a price of $13 per unit.Total variable cost per unit is $7.50, consisting of $6.80 in variable production cost and $.70 in variable selling and administrative cost.Compute contribution margin for the company.

Accepted Answer

A) $39,000 
B) $22,500 
C) $16,500 
D) $18,600 
E) $36,900 
A) $39,000 
B) $22,500 
C) $16,500 
D) $18,600 
E) $36,900

Question 9

Home Base, Inc.reports the following production cost information:
 $\begin{array}{ll}
\text { Beginning inventory } & 10,000 \text { units } \
\text { Units produced } & 97,000 \text { units } \
\text { Units sold } & 92,000 \text { units } \
\text { Direct labor } & \$ 17 \text { per unit } \
\text { Direct materials } & \$ 34 \text { per unit } \
\text { Variable overhead } & \$ 2,522,000 \text { in total } \
\text { Fixed overhead } & \$ 1,940,000 \text { in tota } \
\text { Operating costs } & \$ 2,000,000 \text { in total }
\end{array}$ Assume that productions costs have remained the same since the previous period and all units are sold for $137.00 per unit.
a.Compute production cost per unit under variable costing.
b.Compute production cost per unit under absorption costing.
c.Determine net income using variable costing.
d.Determine net income using absorption costing.

Accepted Answer

a.$17 DL + $34 DM + ($2,522,000/97,000)V

Question 10

_______________________ is the amount remaining from sales revenues after all variable expenses have been deducted.

Accepted Answer

The answer of _______________________ is the amount remaining from sales...

Question 11

Absorption costing is useful because it reflects the full costs that sales must exceed for the company to be profitable.

Accepted Answer

A) True 
 B)False

Question 12

Given Advanced Company's data, compute cost per unit of finished goods under absorption costing.

Accepted Answer

A) $20.00 
B) $34.17 
C) $25.32 
D) $23.00 
E) $28.50 
A) $20.00 
B) $34.17 
C) $25.32 
D) $23.00 
E) $28.50

Question 13

Cool Pools, a manufacturer of above ground pools, began operations on January 1 of the current year. During this time, the company produced 45,000 units and sold 44,000 units at a sales price of $60 per unit. Cost information for this year is shown in the following table:
$\begin{array}{l}
\text { Production costs }\
\begin{array}{ll}
\text { Direct materials } & \$ 11.25 \text { per unit } \
\text { Direct labor } & \$ 3.20 \text { per unit } \
\text { Variable overhead } & \$ 315,000 \text { in total } \
\text { Fixed overhead } & \$ 39,600 \text { in total } \
\text { Nonproduction costs } & \
\text { Variable selling and administrative } & \$ 2,000 \text { in total } \
\text { Fixed selling and administrative } & \$ 6,000 \text { in total }
\end{array}
\end{array}$
-Given the Cool Pools Company data, what is net income using absorption costing?

Accepted Answer

A) $1,649,480 
B) $1,648,600 
C) $1,627,150 
D) $1,709,480 
E) $1,708,600 
A) $1,649,480 
B) $1,648,600 
C) $1,627,150 
D) $1,709,480 
E) $1,708,600

Question 14

Under absorption costing, a company had the following unit costs when 10,000 units were produced:
 $\begin{array}{lr}
\text { Direct labor } & \$ 2 \text { per unit } \
\text { Direct material } & \$ 3 \text { per unit } \
\text { Variable overhead } &\underline { \$ 4 \text { per unit }} \
\text { Total variable } & \$ 9 \text { per unit } \
\text { Fixed overhead }(\$ 50,000 / 10,000 \text { units }) & \underline {\$ 5 \text { per unit }} \
\text { Total production cost } & \underline {\$ 14 \text { per unit }}
\end{array}$ The total production cost per unit under absorption costing if 25,000 units had been produced would be $11.

Accepted Answer

A) True 
 B)False

Question 15

Peapod Company, a manufacturer of slippers, began operations on May 1 of the current year.During this time, the company produced 200,000 units and sold 180,000 units at a sales price of $36 per unit.Cost information for this period is shown in the following table:
 $\begin{array}{l}
\text { Production costs }\
\begin{array}{ll}
\text { Direct materials } & \$ 4.00 \text { per unit } \
\text { Direct labor } & \$ 5.75 \text { per unit } \
\text { Variable overhead } & \$ 286,000 \text { in tota. } \
\text { Fixed overhead } & \$ 420,000 \text { in tota. } \
\text { Non-production costs } & \
\text { Variable selling and administrative } & \$ 8,000 \text { in total } \
\text { Fixed selling and administrative } & \$ 30,000 \text { in total }
\end{array}
\end{array}$ a.Prepare Peapod's December 31 income statement for the current year under absorption costing.
b.Prepare Peapod's December 31 income statement for the current year under variable costing.

Accepted Answer

None

Question 16

Under absorption costing, the product unit cost consists of direct labor, direct materials, variable overhead, and _______________________.

Accepted Answer

The answer of Under absorption costing, the product unit cost...

Question 17

Materials Corporation sold 12,000 units of its product at a price of $67 per unit.Total variable cost per unit is $54.94, consisting of $45.05 in variable production cost and $9.89 in variable selling and administrative cost.Compute the contribution margin for the company.

Accepted Answer

$67.00 - $54.94 = $1

Question 18

Manufacturing overhead costs are those that can be traced directly to the product.

Accepted Answer

A) True 
 B)False

Question 19

Given the following data, calculate the total product cost per unit under variable costing. $\begin{array}{|l|c|}
\hline \text { Direct labor } & \$ 3.50 \text { per unit } \
\hline \text { Direct materials } & \$ 1.25 \text { per unit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 41,400 \
\hline \text { Total fixed overhead } & \$ 150,000 \
\hline & \
\hline \text { Expected units to be produced } & 18,000 \text { units } \
\hline
\end{array}$

Accepted Answer

A) $4.75 per unit 
B) $7.05 per unit 
C) $15.38 per unit 
D) $13.08 per unit 
E) $16 per unit 
A) $4.75 per unit 
B) $7.05 per unit 
C) $15.38 per unit 
D) $13.08 per unit 
E) $16 per unit

Question 20

How does contribution margin differ from gross margin?

Accepted Answer

Contribution margin equals sales less va

Which of the following statements is true?

Given the following data, calculate product cost per unit under absorption costing. Direct labor \ 7 per urit Direct rmaterials \ 1 per urit Overhead Total variable overhead \ 20,000 Total fixed overhead \ 90,000 Expected urits to be produced 40,000 urits

Contribution margin is another way to refer to gross margin.

When excess capacity exists, managers should accept a special order if the special order price exceeds the ________________________.

Front Company had net income of $72,500 based on variable costing.Beginning and ending inventories were 800 units and 1,200 units, respectively.Assume the fixed overhead per unit was $7.90 for both the beginning and ending inventory.What is net income under absorption costing?

Sindler Corporation sold 3,000 units of its product at a price of $13 per unit.Total variable cost per unit is $7.50, consisting of $6.80 in variable production cost and $.70 in variable selling and administrative cost.Compute contribution margin for the company.

_______________________ is the amount remaining from sales revenues after all variable expenses have been deducted.

Absorption costing is useful because it reflects the full costs that sales must exceed for the company to be profitable.

Given Advanced Company's data, compute cost per unit of finished goods under absorption costing.

Under absorption costing, the product unit cost consists of direct labor, direct materials, variable overhead, and _______________________.

Materials Corporation sold 12,000 units of its product at a price of $67 per unit.Total variable cost per unit is $54.94, consisting of $45.05 in variable production cost and $9.89 in variable selling and administrative cost.Compute the contribution margin for the company.

Manufacturing overhead costs are those that can be traced directly to the product.

Given the following data, calculate the total product cost per unit under variable costing. Direct labor \ 3.50 per unit Direct materials \ 1.25 per unit Overhead Total variable overhead \ 41,400 Total fixed overhead \ 150,000 Expected units to be produced 18,000 units

How does contribution margin differ from gross margin?

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Time Value of Money

Basic Accounting for Transactions

Accounting for Partnerships

Filters

Exam 6: Variable Costing and Performance Reporting

Which of the following statements is true?

Given the following data, calculate product cost per unit under absorption costing. Direct labor \ 7 per urit Direct rmaterials \ 1 per urit Overhead Total variable overhead \ 20,000 Total fixed overhead \ 90,000 Expected urits to be produced 40,000 urits

Contribution margin is another way to refer to gross margin.

When excess capacity exists, managers should accept a special order if the special order price exceeds the ________________________.

Front Company had net income of $72,500 based on variable costing.Beginning and ending inventories were 800 units and 1,200 units, respectively.Assume the fixed overhead per unit was $7.90 for both the beginning and ending inventory.What is net income under absorption costing?

Sindler Corporation sold 3,000 units of its product at a price of $13 per unit.Total variable cost per unit is $7.50, consisting of $6.80 in variable production cost and $.70 in variable selling and administrative cost.Compute contribution margin for the company.

_______________________ is the amount remaining from sales revenues after all variable expenses have been deducted.

Absorption costing is useful because it reflects the full costs that sales must exceed for the company to be profitable.

Given Advanced Company's data, compute cost per unit of finished goods under absorption costing.

Under absorption costing, the product unit cost consists of direct labor, direct materials, variable overhead, and _______________________.

Materials Corporation sold 12,000 units of its product at a price of $67 per unit.Total variable cost per unit is $54.94, consisting of $45.05 in variable production cost and $9.89 in variable selling and administrative cost.Compute the contribution margin for the company.

Manufacturing overhead costs are those that can be traced directly to the product.

Given the following data, calculate the total product cost per unit under variable costing. Direct labor \ 3.50 per unit Direct materials \ 1.25 per unit Overhead Total variable overhead \ 41,400 Total fixed overhead \ 150,000 Expected units to be produced 18,000 units

How does contribution margin differ from gross margin?

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Time Value of Money

Basic Accounting for Transactions

Accounting for Partnerships

Filters