Exam 9: Inventory Costing and Capacity Analysis

Answer the following questions using the information below: The following information pertains to the Bean Company: -What is the variable costing breakeven point in units?

Critics of absorption costing suggest to evaluate management on their ability to:

Answer the following questions using the information below: Goldfarb Company produces a specialty item. Management has provided the following information: -Which of the following inventory costing methods results in the LEAST amount of costs being inventoried?

Budgeted fixed manufacturing costs of a product using practical capacity:

If 1,000 units are produced and only 700 units are sold, ________ results in the greatest amount of expense reported on the income statement.

The following information pertains to Brian Stone Corporation: What is the difference between operating incomes under absorption costing and variable costing?

Absorption costing "absorbs" only fixed manufacturing costs.

Answer the following questions using the information below: A manufacturing firm is able to produce 2,000 pairs of sneakers per hour, at maximum efficiency. There are three eight-hour shifts each day. Due to unavoidable operating interruptions, production averages 1,600 units per hour. The plant actually operates only 27 days per month. -What is the practical capacity for the month of April?

Variable costing regards fixed manufacturing overhead as a(n):

Answer the following questions using the information below: Greene Manufacturing incurred the following expenses during 2011: -What is the breakeven point in units using absorption costing if the units produced are actually 2,250?

Johnson Realty bought a 2,000-acre island for $10,000,000 and divided it into 200 equal size lots. The average selling price was $160,000 per lot during 20X5 when 50 lots were sold. During 20X6, the company bought another 2,000-acre island and developed it exactly the same way. Lot sales in 20X6 totaled 300 with an average selling price of $160,000. All costs were the same as in 20X5. Required: Prepare income statements for both years using both absorption and variable costing methods.

Which of the following inventory costing methods shown below is most likely to cause undesirable incentives for managers to build up finished goods inventory?

Under absorption costing, if a manager's bonus is tied to operating income, then increasing inventory levels compared to last year would result in:

The higher the denominator level the higher the budgeted fixed manufacturing cost rate per unit.

All of the following are examples of drawbacks of using absorption costing EXCEPT:

Answer the following questions using the information below: Greene Manufacturing incurred the following expenses during 2011: -What will be the breakeven point if variable costing is used?

Practical capacity is the denominator-level concept that:

Customers expect to pay a price that includes:

Answer the following questions using the information below: Tunney Corporation incurred fixed manufacturing costs of $7,200 during 2011. Other information for 2011 includes: The fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. -Under variable costing, the fixed manufacturing costs expensed on the income statement (excluding adjustments for variances)total:

Master-budget capacity utilization can be more reliably estimated than normal capacity utilization.