Exam 21: Variable Costing

Greenlam Inc.started the year with 200 units in the Finished Goods Inventory account.It produced 600 units during the year and sold 800 units.If Greenlam uses variable costing:

When there is no beginning inventory and all the goods that are produced are sold,the operating income ________.

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

Variable costing considers only ________ costs when determining product costs.

Jupiter Inc.reports the following information for August: Calculate the contribution margin for the month of August.

Which of the following is considered a period cost under variable costing but not under absorption costing?

Variable costing prepares the income statement using the traditional format.

When production is more than sales,the operating income will be higher under absorption costing than variable costing.Assume zero beginning inventories.Which of the following gives the correct reason for the above statement?

Perfect Clean Inc.provides housekeeping services.The following financial data has been provided. - Calculate the contribution margin and the contribution margin ratio.

In its first year of business,Greenlam Inc.produced and sold 600 units.If Greenlam uses variable costing,________.

Peter Newton,a production supervisor at BeThink Inc.,uses variable costing for any cost control decisions that he has to take.Which of the following is the reason for his choice?

High-Tech Computer Services provide services to corporate and individual customers.During the month of June,the corporate business segment provided services to 500 customers and earned $60,000 in revenue.The individual business segment provided services to 400 customers and earned $35,000 in revenue.The variable costs for the corporate and individual business segment amounted $32,500 and $25,300,respectively.Additionally,the fixed costs of the company amounted to $8,500.Calculate the contribution margin from each corporate customer.

High-Tech Computer Services provide services to corporate and individual customers.During the month of June,the corporate business segment provided services to 500 customers and earned $60,000 in revenue.The individual business segment provided services to 400 customers and earned $35,000 in revenue.The variable costs for the corporate and individual business segment amounted $32,500 and $25,300,respectively.Additionally,the fixed costs of the company amounted to $8,500.The contribution margin ratios of the corporate segment and individual segment are ________,respectively.

Which of the following statements is true of variable costing?

Absorption costing is required by the Generally Accepted Accounting Principles (GAAP)for financial statements issued to investors,creditors,and other external users.

Groovelex Inc.reports the following information for the year ended December 31,2014: -The operating profit calculated using variable costing and absorption costing amounted to $9,270 and $11,250,respectively.There were no beginning inventories.Determine the total fixed manufacturing overhead that will be expensed under variable costing for the year 2014.

When all the units produced are sold,the profit calculated under absorption costing is higher when compared to the profit calculated under variable costing.

E-trax Inc.has provided the following financial information for the year 2015: What is the unit product cost for 2015 using variable costing?

Volplex Inc.produces paper and office supplies and uses the just-in-time inventory system.Currently,the company is using variable costing.Which of the following is true of the effect of costing systems on the financial results of Volplex?

Gross profit is calculated by deducting ________ from sales revenue.