Exam 21: Variable Costing

When there are no units in the beginning finished goods inventory and the units produced are more than the units sold,the operating income will be higher under absorption costing than variable costing.

Which is the following is the most appropriate reason that sales mix decisions should be made using variable costing?

Managers do not consider sales mix for making decisions as it does not affect the overall profitability of the company.

Fasetech Inc.has collected the following data for November (there are no beginning inventories): What is the ending balance in finished goods inventory using variable costing if 450 units are sold?

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 number of units produced during 2014.

When all of the units produced are sold,the operating income will be the same under both the costing methods.(Assume no beginning inventories.)Which of the following gives the correct reason for the above statement?

The level of inventory on hand at the end of the year does not affect the amount of operating income calculated under variable costing and absorption costing.

For which of the following decisions is absorption costing most appropriate?

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 customer of the individual business segment.

Groovelex Inc.reports the following information: The beginning inventory costs $3,750 under absorption costing and $2,500 under variable costing. What is the operating income using variable costing?

In service companies,variable costing can be used for profitability analysis and contribution margin analysis.

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

Fasetech Inc.has collected the following data for November (there are no beginning inventories): What is the operating income using absorption costing if 450 units are sold?

Under variable costing,the units in the beginning finished goods inventory contain manufacturing fixed costs.

Carbon Inc.reports the following information for April: - What is the contribution margin of Alpha?

In variable costing,the value of ending finished goods inventory includes fixed manufacturing overhead.

Dentofax Inc.reports the following information for August: Calculate the operating income for August using absorption costing.

Silver Rex Inc.has provided the following data for the year 2015: Requirements: a)What is Silver Rex's product cost under absorption costing and variable costing? b)Prepare income statements for Silver Rex using absorption costing and variable costing. c)Calculate the balance in Finished Goods Inventory using absorption costing and variable costing. Assume that the production and prices were the same in the previous year.

Groovelex Inc.reports the following information: -There are no beginning inventories.What is the ending balance in finished goods inventory using absorption costing?

Which of the following will appear as a line item in the income statement prepared under variable costing?