Question 1

When evaluating a special order,management should:

Accepted Answer

A) Only accept the order if the incremental revenue exceeds all product costs. 
B) Only accept the order if the incremental revenue exceeds fixed product costs. 
C) Only accept the order if the incremental revenue exceeds total variable product costs. 
D) Only accept the order if the incremental revenue exceeds full absorption product costs. 
E) Only accept the order if the incremental revenue exceeds regular sales revenue. 
A) Only accept the order if the incremental revenue exceeds all product costs. 
B) Only accept the order if the incremental revenue exceeds fixed product costs. 
C) Only accept the order if the incremental revenue exceeds total variable product costs. 
D) Only accept the order if the incremental revenue exceeds full absorption product costs. 
E) Only accept the order if the incremental revenue exceeds regular sales revenue.

Question 2

________ is the amount remaining from manufacturing margin after all variable selling,general and administrative expenses have been deducted.

Accepted Answer

The answer of ________ is the amount remaining from manufacturing...

Question 3

Assume a company sells a given product for $33.28 per unit.How many units must the company sell to break-even if variable selling costs are $1.40 per unit,variable production costs are $23.56 per unit,and total fixed costs are $2,080,000?

Accepted Answer

$2,080,000/($33.28 -

Question 4

Assume a company had the following production costs:
   Under absorption costing,the total product cost per unit when 4,000 units are produced would be $22.50.

Accepted Answer

A) True 
 B)False

Question 5

Sea Company reports the following information regarding its production cost.  Compute the product cost per unit under variable costing.

Accepted Answer

A) $28.00 
B) $82.50 
C) $80.00 
D) $63.00 
E) $35.00 
A) $28.00 
B) $82.50 
C) $80.00 
D) $63.00 
E) $35.00

Question 6

How will net income under variable costing compare to net income under absorption costing in the following three situations? Explain briefly the cause of any differences.
(a)Units produced equal units sold
(b)Units produced exceed units sold
(c)Units produced are less than units sold

Accepted Answer

(a)Income is identical under variable co

Question 7

A company reports the following information for its first year of operations:   If the company's cost per unit of finished goods using variable costing is $2.02,what is the amount of total fixed overhead?

Accepted Answer

A) $26,660 
B) $35,690 
C) $24,510 
D) $60,200 
E) Cannot be determined from the given data. 
A) $26,660 
B) $35,690 
C) $24,510 
D) $60,200 
E) Cannot be determined from the given data.

Question 8

Heather,Incorporated reports the following annual cost data for its single product:
   This product is normally sold for $56 per unit.If Heather increases its production to 80,000 units while sales remain at the current 60,000 unit level,by how much would the company's gross margin increase or decrease under absorption costing? Assume the company has idle capacity to increase current production.

Accepted Answer

$720,000/60,000 units = $12 FOH per unit

Question 9

To convert variable costing income to absorption costing income,management will need to add fixed overhead cost deferred in ending inventory and subtract fixed overhead cost recognized from beginning inventory.

Accepted Answer

A) True 
 B)False

Question 10

Digby Company manufactured and sold 37,000 units of its product at a price of $93 per unit.Total variable cost per unit is $60,consisting of $58 in variable production cost and $2 in variable selling and administrative cost.Fixed costs of manufacturing are $350,000.
a.Compute the manufacturing margin for the company under variable costing.
b.Compute the contribution margin based on this data.
c.Compute the gross margin under absorption costing.

Accepted Answer

a.($93 - $58)× 37,000 units =

Question 11

What costs are treated as product costs under the variable costing method?

Accepted Answer

Under variable costing,direct

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

Fields Cutlery,a manufacturer of gourmet knife sets,produced 20,000 sets and sold 23,000 units during the current year.Beginning inventory under absorption costing consisted of 3,000 units valued at $66,000 (Direct materials $12 per unit; Direct labor,$3 per unit; Variable Overhead,$2 per unit,and Fixed overhead,$5 per unit.)All manufacturing costs have remained constant over the 2-year period.At year-end,the company reported the following income statement using absorption costing:   60% of total selling and administrative expenses are variable.Compute net income under variable costing.

Accepted Answer

A) $414,000 
B) $399,000 
C) $529,000 
D) $429,000 
E) $644,000 
A) $414,000 
B) $399,000 
C) $529,000 
D) $429,000 
E) $644,000

Question 14

Hayes Inc.provided the following information for the current year:  
-What is the unit product cost for the year using variable costing?

Accepted Answer

A) $98 
B) $66 
C) $74 
D) $96 
E) $95 
A) $98 
B) $66 
C) $74 
D) $96 
E) $95

Question 15

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 consists...

Question 16

Match between columns
                        Premises: Cost a manager can determine or greatly affect the amount.
An income statement format that focuses on cost behavior.
Direct labor, direct materials, and manufacturing overhead.
Fixed costs divided by contribution margin per unit.
A costing method that includes all manufacturing costs.
Sales less variable production costs.
Sales less variable expenses.
A costing method that includes only variable manufacturing costs.
Costs that are expensed in the period they are incurred.
Sales less cost of goods sold.

Accepted Answer

The Answer of Product costs and Break-even in units and is...

Question 17

A company is currently operating at 65% capacity producing 12,000 units.Cost information relating to this current production is shown in the following table:
   The company has been approached by a customer with a request for a special order for 2,000 units.What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

Accepted Answer

12,000/.65 - 12,000 = 6,461 un

Question 18

For short-term pricing decisions,absorption costing is an appropriate costing method to use.

Accepted Answer

A) True 
 B)False

Question 19

Pact Company had net income of $972,000 based on variable costing.Beginning and ending inventories were 7,800 units and 5,200 units,respectively.Assume the fixed overhead per unit was $3.61 for both the beginning and ending inventory.What is net income under absorption costing?

Accepted Answer

A) $962,614 
B) $1,018,923 
C) $925,077 
D) $969,400 
E) $981,379 
A) $962,614 
B) $1,018,923 
C) $925,077 
D) $969,400 
E) $981,379

Question 20

Reliance Corporation sold 4,000 units of its product at a price of $15 per unit.Total variable cost per unit is $8.50,consisting of $7.75 in variable production cost and $0.75 in variable selling and administrative cost.Compute the contribution margin for the company.

Accepted Answer

A) $26,000 
B) $34,000 
C) $60,000 
D) $31,000 
E) $36,900 
A) $26,000 
B) $34,000 
C) $60,000 
D) $31,000 
E) $36,900

Exam 19: Variable Costing and Analysis

When evaluating a special order,management should:

________ is the amount remaining from manufacturing margin after all variable selling,general and administrative expenses have been deducted.

Assume a company sells a given product for $33.28 per unit.How many units must the company sell to break-even if variable selling costs are $1.40 per unit,variable production costs are $23.56 per unit,and total fixed costs are $2,080,000?

Assume a company had the following production costs: Under absorption costing,the total product cost per unit when 4,000 units are produced would be $22.50.

Sea Company reports the following information regarding its production cost. Compute the product cost per unit under variable costing.

How will net income under variable costing compare to net income under absorption costing in the following three situations? Explain briefly the cause of any differences. (a)Units produced equal units sold (b)Units produced exceed units sold (c)Units produced are less than units sold

A company reports the following information for its first year of operations: If the company's cost per unit of finished goods using variable costing is $2.02,what is the amount of total fixed overhead?

To convert variable costing income to absorption costing income,management will need to add fixed overhead cost deferred in ending inventory and subtract fixed overhead cost recognized from beginning inventory.

What costs are treated as product costs under the variable costing method?

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

Hayes Inc.provided the following information for the current year: -What is the unit product cost for the year using variable costing?

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

For short-term pricing decisions,absorption costing is an appropriate costing method to use.

Pact Company had net income of $972,000 based on variable costing.Beginning and ending inventories were 7,800 units and 5,200 units,respectively.Assume the fixed overhead per unit was $3.61 for both the beginning and ending inventory.What is net income under absorption costing?

Reliance Corporation sold 4,000 units of its product at a price of $15 per unit.Total variable cost per unit is $8.50,consisting of $7.75 in variable production cost and $0.75 in variable selling and administrative cost.Compute the contribution margin for the company.

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

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 Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

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