Exam 2: Different Costs for Different Purposes

What are the differences between direct costs and indirect costs? Give an example of each. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Answer the following questions using the information below: Leongatha Motors produces and sells an auto part for $30.00 per unit.In 2018,100 000 parts were produced and 75 000 units were sold.Other information for the year includes: Direct materials \ 12.00 per unit Direct manufacturing labour \ 2.25 per unit Variable manufacturing costs \ 0.75 per urit Sales commissions \ 3.00 per part Fixed manufacturing costs \ 375000 per year Administrative expenses, all fixed \ 135000 per year -What is the inventoriable cost per unit using variable costing?

The term 'cost allocation' is used to describe the assignment of indirect costs to a particular cost object.

Under absorption costing,managers can increase operating profit by holding more inventories at the end of the period.

Dandenong Tyre Company currently produces 1000 tyres per month.The following per unit data apply for sales to regular customers: Direct materials \ 20 Direct manufacturing labour 3 Variable manufacturing overhead 6 Fixed manufacturing overhead Total manufacturing costs \ 39 The plant has capacity for 3000 tyres and is considering expanding production to 2000 tyres.What is the total cost of producing 2000 tyres?

For which of the following reasons explains why companies have recently been able to reduce inventory levels?

Differences between absorption costing and variable costing are much smaller when a:

The gross-margin format of the income statement:

Retail sector firms normally report:

Period costs are all costs in the income statement other than cost of goods sold.

Some costs have both fixed and variable elements and are called mixed or ________ costs.

Answer the following questions using the information below: Healesville Animates produces and sells a luxury animal pillow for $40.00 per unit.In the first month of operation,3000 units were produced and 2250 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes: Variable manufacturing costs \ 19 per unit Variable marketing costs \ 1 per unit Fixed manufacturing costs \ 30000 per month Administrative expenses, all fixed \ 6000 per month Ending inventories: text Directmaterials -0- WIP -0- Finished goods 750 units -What is gross margin when using absorption costing?

When making strategic decisions about which products to produce,managers do not need to know how revenues and costs vary with changes in output level.

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

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

Answer the following questions using the information below: Queanbeyan Company incurred fixed manufacturing costs of $7200 during 2018.Other information for 2018 includes: The budgeted denominator level is 800 units. Units produced total 1000 units. Units sold total 950 units. Beginning inventory was zero. 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:

Generally,the decision maker should think in terms of unit costs rather than total costs.

Which of the following do manufacturing companies report?

Retail sector companies purchase materials and components and convert them into various finished goods.

Costs that are fixed in the short run have no cost driver in the short run but may have a cost driver in the _______ run.