Mackenzie, Inc. has collected the following data. (There are no beginning inventories.) \[\begin{array} { | l | r | l | } \hline \text { Units produced } & 700 & \text { units } \\ \hline \text { Sales price } & \$ 130 & \text { per unit } \\ \hline \text { Direct materials } & \$ 30 & \text { per unit } \\ \hline \text { Direct labor } & \$ 12 & \text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$ 10 & \text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 17,400 & \text { per year } \\ \hline \text { Variable selling and administrative costs } & \$ 5 & \text { per unit } \\ \hline \text { Fixed selling and administrative costs } & \$ 19,700 & \text { per year } \\ \hline \end{array}\] What is the ending balance in Finished Goods Inventory using absorption costing if 400 units are sold? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

A) $7457 B) $15,600 C) $33,001 D) $23,058 A) $7457 B) $15,600 C) $33,001 D) $23,058

Healthy Environs Company provides cleaning services for residential and commercial customers. Following are data for the month of June: \[\begin{array} { | l | r | r | r | } \hline & { \text { Residential } } & { \text { Commercial } } & { \text { Total } } \\ \hline \text { Number of customers } & 600 & 400 & 1,000 \\ \hline \text { Service revenue } & \$ 48,000 & \$ 40,000 & \$ 88,000 \\ \hline \text { Variable costs } & 14,000 & \underline { 22,000 } & \underline { 36,000 } \\ \hline \text { Contribution margin } & 34,000 & 18,000 & 52,000 \\ \hline \text { Fixed costs } & & & \underline { 41,000 } \\ \hline \text { Operating income } & & & \$ 11,000 \\ \hline \end{array}\] For each type of customer, determine both the contribution margin per customer and the contribution margin ratio. Round to two decimal places. Show your computations. What type of service is more profitable?

\[\begin{array} { | l | c | c | } \hlin

Verge, Inc. has two products-Le Cadre and La Bougie. Financial data for both the products follow: \[\begin{array} { | l | r | r | } \hline & \text { Le Cadre } & \text { La Bougie } \\ \hline \text { Units sold } & 2200 \text { units } & 600 \text { units } \\ \hline \text { Sales price per unit } & \$ 500 & \$ 1200 \\ \hline \text { Variable manufacturing cost per unit } & 320 & 750 \\ \hline \text { Sales commission (\% of sales) } & 7 \% & 4 \% \\ \hline \end{array}\] Verge has two sales representatives-Rosemary Wilson and Maria Blanco. Each representative sold a total of 1400 units during the month of March. Rosemary had a sales mix of 60% Le Cadre and 40% La Bougie. Maria had a sales mix of 80% Le Cadre and 20% La Bougie. Based on the above information, calculate Rosemary's total contribution to company profits.

A) $403,200 B) $121,800 C) $346,920 D) $225,120 A) $403,200 B) $121,800 C) $346,920 D) $225,120

Petra, Inc. has collected the following data. (There are no beginning inventories.): \[\begin{array} { | l | r | l | } \hline \text { Units produced } & 480 & \text { units } \\ \hline \text { Units sold } & 480 & \text { units } \\ \hline \text { Sales price } & \$ 210 & \text { per unit } \\ \hline \text { Direct materials } & \$ 40 & \text { per unit } \\ \hline \text { Direct labor } & \$ 35 & \text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$ 30 & \text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 11,000 & \text { per year } \\ \hline \text { Variable selling and administrative costs } & \$ 10 & \text { per unit } \\ \hline \text { Fixed selling and administrative costs } & \$ 10,000 & \text { per year } \\ \hline \end{array}\] What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

A) $39,400 B) $34,600 C) $24,600 D) $29,400 A) $39,400 B) $34,600 C) $24,600 D) $29,400

Sequoyah, Inc. reports the following information: \[\begin{array} { | l | r | l | } \hline \text { Units produced } & 540 & \text { units } \\ \hline \text { Units sold } & 540 & \text { units } \\ \hline \text { Sales price } & \$ 160 & \text { per unit } \\ \hline \text { Direct materials } & \$ 30 & \text { per unit } \\ \hline \text { Direct labor } & \$ 15 & \text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$ 10 & \text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 20,000 & \text { per year } \\ \hline \text { Variable selling and administrative costs } & \$ 5 & \text { per unit } \\ \hline \text { Fixed selling and administrative costs } & \$ 10,000 & \text { per year } \\ \hline \end{array}\] What is the unit product cost using variable costing?

A) $60 B) $82 C) $55 D) $105 A) $60 B) $82 C) $55 D) $105

Ceriweden, Inc. has provided the following financial data for the year: \[\begin{array} { | l | r | l | } \hline \text { Units produced and sold } & 3,500 & \text { units } \\ \hline \text { Sales price } & \$ 220 & \text { per unit } \\ \hline \text { Direct materials } & \$ 25 & \text { per unit } \\ \hline \text { Direct labor } & \$ 45 & \text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$ 30 & \text { per unit } \\ \hline \text { Variable selling and administrative costs } & \$ 20 & \text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 105,000 & \text { per year } \\ \hline \text { Fixed selling and administrative costs } & \$ 140,000 & \text { per year } \\ \hline \end{array}\] There are no beginning inventories. Prepare an income statement for the year using the traditional format.

Ceriweden, Inc. Income Statement Year En

For decisions that affect setting sales prices, consider the following decision focuses. State the appropriate costing method and the reason for your answer. \[\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Decision } \\ \text { Focus } \end{array} & \begin{array} { c } \text { Appropriate Costing } \\ \text { Method } \end{array} & \text { Reason } \\ \hline \text { Short run } & & \\ \hline \text { Long run } & & \\ \hline \end{array}\]

\[\begin{array} { | c | l | l | } \hlin

Last year, Adara Company produced 11,000 units and sold 9000 units. The company had no beginning inventory. They incurred the following costs: \[\begin{array} { | l | r | } \hline \text { Direct materials per unit } & \$ 18 \\ \hline \text { Direct labor per unit } & \$ 15 \\ \hline \text { Variable overhead per unit } & \$ 7 \\ \hline \text { Total fixed manufacturing } & \$ 55,000 \\ \text { pverhead } & \\ \hline \text { Total selling and administrative } &\$ 80,000\\ \hline \end{array}\] Adara's product cost per unit under variable costing is

A) $45 B) $40 C) $46 D) $52 A) $45 B) $40 C) $46 D) $52

Yancey, Inc. reports the following information: \[\begin{array} { | l | r | l | } \hline \text { Units produced } & 560 & \text { units } \\ \hline \text { Units sold } & 560 & \text { units } \\ \hline \text { Sales price } & \$ 150 & \text { per unit } \\ \hline \text { Direct materials } & \$ 10 & \text { per unit } \\ \hline \text { Direct labor } & \$ 20 & \text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$ 30 & \text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 22,000 & \text { per year } \\ \hline \text { Variable selling and administrative costs } & \$ 5 & \text { per unit } \\ \hline \text { Fixed selling and administrative costs } & \$ 10,000 & \text { per year } \\ \hline \end{array}\] What is the amount of unit product cost that will be considered for external reporting purposes? (Round any intermediate calculations and your final answer to the nearest cent.)

A) $59.29 B) $69.29 C) $120.00 D) $99.29 A) $59.29 B) $69.29 C) $120.00 D) $99.29

Exam 21: Variable Costing

Mackenzie, Inc. has collected the following data. (There are no beginning inventories.) Units produced 700 units Sales price \ 130 per unit Direct materials \ 30 per unit Direct labor \ 12 per unit Variable manufacturing overhead \ 10 per unit Fixed manufacturing overhead \ 17,400 per year Variable selling and administrative costs \ 5 per unit Fixed selling and administrative costs \ 19,700 per year What is the ending balance in Finished Goods Inventory using absorption costing if 400 units are sold? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

(Multiple Choice)

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Question 21

Healthy Environs Company provides cleaning services for residential and commercial customers. Following are data for the month of June: Residential Commercial Total Number of customers 600 400 1,000 Service revenue \ 48,000 \ 40,000 \ 88,000 Variable costs 14,000 Contribution margin 34,000 18,000 52,000 Fixed costs Operating income \ 11,000 For each type of customer, determine both the contribution margin per customer and the contribution margin ratio. Round to two decimal places. Show your computations. What type of service is more profitable?

(Essay)

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Question 22

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

(True/False)

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Question 23

Palmer's Plant Food Company sells two products, Quo-Eco and Quo-Pre, with a sales mix of 65% and 35%, respectively. Quo-Eco has a contribution margin per unit of $10, and Quo-Pre has a contribution margin per unit of $15. The company sold 1,000 total units in March. Requirements: a) Calculate the total contribution margin for the company. b) Assume the sales mix shifted to 50% for each product, and calculate the total contribution margin for the company.

(Essay)

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Question 24

Verge, Inc. has two products-Le Cadre and La Bougie. Financial data for both the products follow: Le Cadre La Bougie Units sold 2200 units 600 units Sales price per unit \ 500 \ 1200 Variable manufacturing cost per unit 320 750 Sales commission (\% of sales) 7\% 4\% Verge has two sales representatives-Rosemary Wilson and Maria Blanco. Each representative sold a total of 1400 units during the month of March. Rosemary had a sales mix of 60% Le Cadre and 40% La Bougie. Maria had a sales mix of 80% Le Cadre and 20% La Bougie. Based on the above information, calculate Rosemary's total contribution to company profits.

(Multiple Choice)

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Question 25

Petra, Inc. has collected the following data. (There are no beginning inventories.): Units produced 480 units Units sold 480 units Sales price \ 210 per unit Direct materials \ 40 per unit Direct labor \ 35 per unit Variable manufacturing overhead \ 30 per unit Fixed manufacturing overhead \ 11,000 per year Variable selling and administrative costs \ 10 per unit Fixed selling and administrative costs \ 10,000 per year What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

(Multiple Choice)

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Question 26

Following GAAP, the income statement issued to investors and creditors must ________.

(Multiple Choice)

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Question 27

In the variable costing income statement, variable costs are reported separately from fixed costs.

(True/False)

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Question 28

Sequoyah, Inc. reports the following information: Units produced 540 units Units sold 540 units Sales price \ 160 per unit Direct materials \ 30 per unit Direct labor \ 15 per unit Variable manufacturing overhead \ 10 per unit Fixed manufacturing overhead \ 20,000 per year Variable selling and administrative costs \ 5 per unit Fixed selling and administrative costs \ 10,000 per year What is the unit product cost using variable costing?

(Multiple Choice)

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Question 29

When all the units produced are sold, the operating income calculated under absorption costing is higher when compared to the operating income calculated under variable costing. Assume that there is no beginning Finished Goods Inventory.

(True/False)

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Question 30

In variable costing, fixed manufacturing overhead is considered a period cost because ________.

(Multiple Choice)

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Question 31

Ceriweden, Inc. has provided the following financial data for the year: Units produced and sold 3,500 units Sales price \ 220 per unit Direct materials \ 25 per unit Direct labor \ 45 per unit Variable manufacturing overhead \ 30 per unit Variable selling and administrative costs \ 20 per unit Fixed manufacturing overhead \ 105,000 per year Fixed selling and administrative costs \ 140,000 per year There are no beginning inventories. Prepare an income statement for the year using the traditional format.

(Essay)

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Question 32

For decisions that affect setting sales prices, consider the following decision focuses. State the appropriate costing method and the reason for your answer. Decision Focus Appropriate Costing Method Reason Short run Long run

(Essay)

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Question 33

Last year, Adara Company produced 11,000 units and sold 9000 units. The company had no beginning inventory. They incurred the following costs: Direct materials per unit \ 18 Direct labor per unit \ 15 Variable overhead per unit \ 7 Total fixed manufacturing \ 55,000 pverhead Total selling and administrative \ 80,000 Adara's product cost per unit under variable costing is

(Multiple Choice)

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Question 34

Yancey, Inc. reports the following information: Units produced 560 units Units sold 560 units Sales price \ 150 per unit Direct materials \ 10 per unit Direct labor \ 20 per unit Variable manufacturing overhead \ 30 per unit Fixed manufacturing overhead \ 22,000 per year Variable selling and administrative costs \ 5 per unit Fixed selling and administrative costs \ 10,000 per year What is the amount of unit product cost that will be considered for external reporting purposes? (Round any intermediate calculations and your final answer to the nearest cent.)

(Multiple Choice)

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Question 35

Under absorption costing, the more units added to ending Finished Goods Inventory, the less fixed manufacturing overhead is '"hidden" in ending Finished Goods Inventory at the end of the accounting period.

(True/False)

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Question 36

When more units are sold than produced, operating income is less under absorption costing than variable costing.

(True/False)

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Question 37

In variable costing, the balance of ending Finished Goods Inventory includes fixed manufacturing overhead.

(True/False)

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Question 38

The fixed manufacturing overhead is considered a product cost in variable costing and a period cost in absorption costing.

(True/False)

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Question 39

When units produced exceed units sold, how does operating income differ between variable costing and absorption costing? Assume no beginning Finished Goods Inventory. Explain your answer.

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Question 40

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

Following GAAP, the income statement issued to investors and creditors must ________.

In the variable costing income statement, variable costs are reported separately from fixed costs.

When all the units produced are sold, the operating income calculated under absorption costing is higher when compared to the operating income calculated under variable costing. Assume that there is no beginning Finished Goods Inventory.

In variable costing, fixed manufacturing overhead is considered a period cost because ________.

For decisions that affect setting sales prices, consider the following decision focuses. State the appropriate costing method and the reason for your answer. Decision Focus Appropriate Costing Method Reason Short run Long run

Under absorption costing, the more units added to ending Finished Goods Inventory, the less fixed manufacturing overhead is '"hidden" in ending Finished Goods Inventory at the end of the accounting period.

When more units are sold than produced, operating income is less under absorption costing than variable costing.

In variable costing, the balance of ending Finished Goods Inventory includes fixed manufacturing overhead.

The fixed manufacturing overhead is considered a product cost in variable costing and a period cost in absorption costing.

When units produced exceed units sold, how does operating income differ between variable costing and absorption costing? Assume no beginning Finished Goods Inventory. Explain your answer.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Investments

Current Liabilities and Payroll

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based Just-In-Time

Cost Volume Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Understanding Accounting Information Systems and their Components

Filters