Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Given the following data,total product cost per unit under variable costing is $7.09.

Accepted Answer

A) True 
 B)False

Question 3

Contribution margin is also known as gross margin.

Accepted Answer

A) True 
 B)False

Question 4

________ is the amount remaining from sales revenues after cost of goods sold has been deducted.

Accepted Answer

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

Question 5

Toth,Inc.had net income of $950,000 based on variable costing.Beginning and ending inventories were 60,000 units and 56,000 units,respectively.Assume the fixed overhead cost per unit was $.85 for both the beginning and ending inventory.What is net income under absorption costing?

Accepted Answer

Income under variable costing

Question 6

Variable costing treats fixed overhead cost as a period cost.

Accepted Answer

A) True 
 B)False

Question 7

Stonehenge Inc.,a manufacturer of landscaping blocks,began operations on April 1 of the current year.During this time,the company produced 750,000 units and sold 720,000 units at a sales price of $9 per unit.Cost information for this period is shown in the following table:
   a.Prepare Stonehenge's December 31st income statement for the current year under absorption costing.
b.Prepare Stonehenge's December 31st income statement for the current year under variable costing.

Accepted Answer

The answer of Stonehenge Inc.,a manufacturer of landscaping blocks,began operations...

Question 8

________ 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 9

Which of the following costing methods charges all manufacturing costs to its products?

Accepted Answer

A) Direct costing 
B) ABC costing 
C) Variable costing 
D) Absorption costing 
E) Period costing 
A) Direct costing 
B) ABC costing 
C) Variable costing 
D) Absorption costing 
E) Period costing

Question 10

Wrap-It Company,a manufacturer of wrapping paper,began operations on June 1 of the current year.During this time,the company produced 370,000 units and sold 310,000 units at a sales price of $50 per unit.Cost information for this period is shown in the following table:
  a.Prepare Wrap-It's December 31st income statement for the current year under absorption costing.
b.Prepare Wrap-It's December 31st income statement for the current year under variable costing.

Accepted Answer

The answer of Wrap-It Company,a manufacturer of wrapping paper,began operations...

Question 11

When setting long-term sales prices for products,the sales price must cover all costs,including fixed costs.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

The answer of Reported income is identical under absorption costing...

Question 13

Swola Company reports the following annual cost data for its single product.   This product is normally sold for $25 per unit.If Swola increases its production to 200,000 units,while sales remain at the current 75,000 unit level,by how much would the company's income increase or decrease under variable costing?

Accepted Answer

A) $187,500 increase. 
B) $112,500 increase. 
C) There will be no change in income. 
D) $112,500 decrease. 
E) $187,500 decrease. 
A) $187,500 increase. 
B) $112,500 increase. 
C) There will be no change in income. 
D) $112,500 decrease. 
E) $187,500 decrease.

Question 14

Castaway Company reports the following first year production cost information:
   a.Determine the net income using variable costing.
b.Determine the net income using absorption costing.

Accepted Answer

a.Product cost: $8 DL + $4 DM + $41 VOH

Question 15

Given the following data,total product cost per unit under variable costing is $10.75.

Accepted Answer

A) True 
 B)False

Question 16

Given Advanced Company's data,compute cost of finished goods in inventory under absorption 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

The data needed for cost-volume-profit analysis is readily available if the income statement is prepared under absorption costing.

Accepted Answer

A) True 
 B)False

Question 18

Under absorption costing,a company had the following unit costs when 10,000 units were produced:
   The total product cost per unit under absorption costing if 25,000 units had been produced would be $11.

Accepted Answer

A) True 
 B)False

Question 19

Decko Industries reported the following monthly data:  What is the company's contribution margin for this month if 50,000 units were sold?

Accepted Answer

A) $1,326,000 
B) $1,716,000 
C) $1,275,000 
D) $1,650,000 
E) $1,450,000 
A) $1,326,000 
B) $1,716,000 
C) $1,275,000 
D) $1,650,000 
E) $1,450,000

Question 20

Given the following data,calculate product cost per unit under variable costing.

Accepted Answer

A) $7 per unit 
B) $13.30 per unit 
C) $11.00 per unit 
D) $11.60 per unit 
E) $16.50 per unit 
A) $7 per unit 
B) $13.30 per unit 
C) $11.00 per unit 
D) $11.60 per unit 
E) $16.50 per unit

Exam 19: Variable Costing and Analysis

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

Given the following data,total product cost per unit under variable costing is $7.09.

Contribution margin is also known as gross margin.

________ is the amount remaining from sales revenues after cost of goods sold has been deducted.

Toth,Inc.had net income of $950,000 based on variable costing.Beginning and ending inventories were 60,000 units and 56,000 units,respectively.Assume the fixed overhead cost per unit was $.85 for both the beginning and ending inventory.What is net income under absorption costing?

Variable costing treats fixed overhead cost as a period cost.

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

Which of the following costing methods charges all manufacturing costs to its products?

When setting long-term sales prices for products,the sales price must cover all costs,including fixed costs.

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

Castaway Company reports the following first year production cost information: a.Determine the net income using variable costing. b.Determine the net income using absorption costing.

Given the following data,total product cost per unit under variable costing is $10.75.

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

The data needed for cost-volume-profit analysis is readily available if the income statement is prepared under absorption costing.

Under absorption costing,a company had the following unit costs when 10,000 units were produced: The total product cost per unit under absorption costing if 25,000 units had been produced would be $11.

Decko Industries reported the following monthly data: What is the company's contribution margin for this month if 50,000 units were sold?

Given the following data,calculate product cost per unit under variable 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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