Question 1

Mentor Corp.has provided the following information for the current year:  
-Calculate the unit product cost using absorption costing.

Accepted Answer

A) $245 
B) $275 
C) $55 
D) $145 
E) $125 
A) $245 
B) $275 
C) $55 
D) $145 
E) $125

Question 2

Under variable costing,product costs consist of direct labor,direct materials,and fixed overhead.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following best describes costs assigned to the product under the variable costing method? 
Direct labor (DL)
Direct materials (DM)
Variable selling and administrative (VSA)
Variable manufacturing overhead (VOH)
Fixed selling and administrative (FSA)
Fixed manufacturing overhead (FOH)

Accepted Answer

A) DL,DM,VSA,and VOH. 
B) DL,DM,and VOH. 
C) DL,DM,VOH,and FOH. 
D) DL and DM. 
E) DL,DM,FSA,and FOH. 
A) DL,DM,VSA,and VOH. 
B) DL,DM,and VOH. 
C) DL,DM,VOH,and FOH. 
D) DL and DM. 
E) DL,DM,FSA,and FOH.

Question 4

When units produced exceed the units sold,income under absorption costing is higher than income under variable costing.

Accepted Answer

A) True 
 B)False

Question 5

Given the following data,total product cost per unit under variable costing will be greater than total product cost under absorption costing.

Accepted Answer

A) True 
 B)False

Question 6

A company normally sells a product for $20 per unit.Variable per unit costs for this product are: $2 direct materials,$4 direct labor,and $1.50 variable overhead.The company is currently operating at 70% of capacity producing 14,000 units per year.Total fixed costs are $42,000 per year.The company should not accept a special order for 2,000 units which would be sold for $10 per unit because there would be an incremental loss on the order.

Accepted Answer

A) True 
 B)False

Question 7

Assume a company sells a given product for $18 per unit.Variable selling costs are $0.70 per unit and variable production costs are $5.30 per unit.If the company breaks even when selling 4,000,000 units,what are total fixed costs?

Accepted Answer

$18 - $0.70 - $5.30 = $12 cont

Question 8

When the number of units sold exceed the number of units produced,income reported under absorption costing will be lower than variable costing.Which of the following gives the best justification of the above statement?

Accepted Answer

A) Income under absorption costing is always less than income reported using variable costing,regardless of the number of units produced. 
B) Income under absorption costing is always more than income reported using variable costing,regardless of the number of units produced. 
C) The fixed overhead cost deferred in ending inventory is greater than the fixed overhead cost recognized from beginning inventory. 
D) The fixed overhead cost deferred in ending inventory is less than the fixed overhead cost recognized from beginning inventory. 
E) Fixed overhead is treated as a period cost under absorption costing. 
A) Income under absorption costing is always less than income reported using variable costing,regardless of the number of units produced. 
B) Income under absorption costing is always more than income reported using variable costing,regardless of the number of units produced. 
C) The fixed overhead cost deferred in ending inventory is greater than the fixed overhead cost recognized from beginning inventory. 
D) The fixed overhead cost deferred in ending inventory is less than the fixed overhead cost recognized from beginning inventory. 
E) Fixed overhead is treated as a period cost under absorption costing.

Question 9

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

Accepted Answer

The answer of ________ costing is the only acceptable basis...

Question 10

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

Accepted Answer

total vari

Question 11

Aces,Inc.,a manufacturer of tennis rackets,began operations this year.The company produced 6,000 rackets and sold 4,900.At year-end,the company reported the following income statement using absorption costing.   Production costs per tennis racket total $38,which consists of $25 in variable production costs and $13 in fixed production costs (based on the 6,000 units produced).Ten percent of total selling and administrative expenses are variable.Compute net income under variable costing.

Accepted Answer

A) $194,100 
B) $165,500 
C) $311,000 
D) $240,500 
E) $233,000 
A) $194,100 
B) $165,500 
C) $311,000 
D) $240,500 
E) $233,000

Question 12

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 total contribution margin.

Accepted Answer

$67.00 - $54.94 = $1

Question 13

What is the general procedure for converting variable costing net income to absorption costing net income?

Accepted Answer

The general formula is variabl

Question 14

Given the following data,total product cost per unit under absorption costing will be $400 greater than total product cost per unit under variable costing.

Accepted Answer

A) True 
 B)False

Question 15

A company normally sells a product for $25 per unit.Variable per unit costs for this product are: $3 direct materials,$5 direct labor,and $2 variable overhead.The company is currently operating at 100% of capacity producing 30,000 units per year.Total fixed costs are $75,000 per year.The company should accept a special order for 1,000 units which would be sold for $13 per unit because the special order price exceeds variable costs.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) $285,000 
B) $712,500 
C) $427,500 
D) $230,000 
E) $345,000 
A) $285,000 
B) $712,500 
C) $427,500 
D) $230,000 
E) $345,000

Question 17

Alexis Co.reported the following information for May:  
-What is the manufacturing margin for Part A?

Accepted Answer

A) $1,000,000 
B) $1,400,000 
C) $3,600,000 
D) $2,600,000 
E) $2,400,000 
A) $1,000,000 
B) $1,400,000 
C) $3,600,000 
D) $2,600,000 
E) $2,400,000

Question 18

The product costing approach required by GAAP is referred to as ________.

Accepted Answer

The answer of The product costing approach required by GAAP...

Question 19

Under absorption costing,fixed manufacturing overhead is expensed at the time the units are produced.Under variable costing,fixed manufacturing overhead is expensed at the time the units are sold.

Accepted Answer

A) True 
 B)False

Question 20

Brush Industries reports the following information for May:   Calculate the operating income for May under absorption costing.

Accepted Answer

A) $650,000 
B) $325,000 
C) $525,000 
D) $550,000 
E) $350,000 
A) $650,000 
B) $325,000 
C) $525,000 
D) $550,000 
E) $350,000

Exam 19: Variable Costing and Analysis

Mentor Corp.has provided the following information for the current year: -Calculate the unit product cost using absorption costing.

Under variable costing,product costs consist of direct labor,direct materials,and fixed overhead.

Which of the following best describes costs assigned to the product under the variable costing method? Direct labor (DL) Direct materials (DM) Variable selling and administrative (VSA) Variable manufacturing overhead (VOH) Fixed selling and administrative (FSA) Fixed manufacturing overhead (FOH)

When units produced exceed the units sold,income under absorption costing is higher than income under variable costing.

Given the following data,total product cost per unit under variable costing will be greater than total product cost under absorption costing.

Assume a company sells a given product for $18 per unit.Variable selling costs are $0.70 per unit and variable production costs are $5.30 per unit.If the company breaks even when selling 4,000,000 units,what are total fixed costs?

When the number of units sold exceed the number of units produced,income reported under absorption costing will be lower than variable costing.Which of the following gives the best justification of the above statement?

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

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

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 total contribution margin.

What is the general procedure for converting variable costing net income to absorption costing net income?

Given the following data,total product cost per unit under absorption costing will be $400 greater than total product cost per unit under variable costing.

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

Alexis Co.reported the following information for May: -What is the manufacturing margin for Part A?

The product costing approach required by GAAP is referred to as ________.

Under absorption costing,fixed manufacturing overhead is expensed at the time the units are produced.Under variable costing,fixed manufacturing overhead is expensed at the time the units are sold.

Brush Industries reports the following information for May: Calculate the operating income for May under absorption costing.

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

Investments

Lean Principles and Accounting

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