Exam 6: Variable Costing and Performance Reporting

Variable costing treats fixed overhead cost as a period cost.

When units produced equal units sold, reported income is identical under absorption costing and variable costing.

Given the following data, total product cost per unit under absorption costing will be greater than total product cost per unit under variable costing. Direct labor \ 9 per unit Direct rmaterials \ 7 per unit Overhead Total variable overhead \ 45,000 Total fixed overhead \ 27,000 Expected urits to be produced 9,000 units

_______________________ costing is the only acceptable basis for both external reporting and tax reporting.

Scavenger Company, a manufacturer of recycling bins, began operations on January 1 of the current year. During this time, the company produced 60,000 units and sold 55,000 units at a sales price of $15 per unit. Cost information for this year is shown in the following table: Production costs Direct materials \ 2.50 per unit Direct labor \ 3.00 per unit Variable overhead \ 45,000 in total Fixed overhead \ 240,000 in total Nonproduction costs Variable selling and administrative \ 10,000 in total Fixed selling and administrative \ 50,000 in total -Given the Scavenger Company data, what is net income using variable costing?

Chance, Inc.sold 3,000 units of its product at a price of $72 per unit.Total variable cost per unit is $51, consisting of $32 in variable production cost and $19 in variable selling and administrative cost.Compute the manufacturing margin for the company under variable costing.

Given Advanced Company's data, and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under variable costing.

A traditional product costing approach is referred to as ______________.

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

Scavenger Company, a manufacturer of recycling bins, began operations on January 1 of the current year. During this time, the company produced 60,000 units and sold 55,000 units at a sales price of $15 per unit. Cost information for this year is shown in the following table: Production costs Direct materials \ 2.50 per unit Direct labor \ 3.00 per unit Variable overhead \ 45,000 in total Fixed overhead \ 240,000 in total Nonproduction costs Variable selling and administrative \ 10,000 in total Fixed selling and administrative \ 50,000 in total -Given the Scavenger Company data, what is net income using absorption costing?

Reporting contribution margin by market segment is useful in assessing the profitability of each segment.

Reported income is identical under absorption costing and variable costing when the units produced _______________ the units sold.

Absorption costing is not permitted under GAAP.

Planet Corporation sold 21,000 units of its product at a price of $250 per unit.Total variable cost per unit is $187, consisting of $104 in variable production cost and $83 in variable selling and administrative cost.Compute the manufacturing margin for the company under variable costing.

Assume a company had the following production costs: Direect labor \ 20,000 Direct material \ 30,000 Variable overhead \ 40,000 Fixed overhead \ 50,000 Under absorption costing, the total production cost per unit when 4,000 units are produced would be $22.50.

Under absorption costing, which of the following statements is not true?

________________________ costing treats fixed overhead as a period cost.