Exam 2: Different Costs for Different Purposes

Given a constant contribution margin per unit and constant fixed costs,the period-to-period change in operating profit under variable costing is driven solely by:

The cost of inventory reported on the balance sheet may include all of the following EXCEPT:

Costing systems record the cost of resources acquired,such as materials,labour and equipment,and track how those resources are used to produce and sell products or services.

If each furnace requires a hose that costs $30 and 3000 furnaces are produced for the month,the total cost for hoses is:

Werribee Manufacturing Co.wants to classify costs for the product produced at its facility.The company produces only one product at the facility and operates continually.The cost categories are: Product cost Prime cost Conversion cost Period cost The following costs are found in the accounting records: a.Quality control inspection wages b.Raw material purchases c.Sales commissions d.Factory depreciation e.Assembly wages Required: Assign each of the above costs to the most appropriate cost categories. _____________________________________________________________________________________________ _____________________________________________________________________________________________

________ costs are all costs of a product that are considered as assets in the balance sheet when they are incurred and that become cost of goods sold only when the product is sold.

Xi'an Manufacturing produces a unique terracotta warrior,and has the capacity to produce 50 000 warriors annually.Currently Xi'an produces 40 000 warriors and is thinking about increasing production to 45 000 warriors next year.What is the most likely behaviour of total manufacturing costs and unit manufacturing costs given this change?

For manufacturing firms,inventoriable costs include:

What is the practice of switching production to products that absorb the highest amount of fixed manufacturing costs called?

Answer the following questions using the information below: Hewitt Corporation incurred fixed manufacturing costs of $6000 during 2018.Other information for 2018 includes: The budgeted denominator level is 1000 units. Units produced total 750 units. Units sold total 600 units. Beginning inventory was zero. The company uses VARIABLE COSTING and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold. -Fixed manufacturing costs expensed on the income statement (excluding adjustments for variances)total:

Which statement is TRUE?

During 2018,Laker & Lock Corporation incurred manufacturing expenses of $20 000 000 to produce 400,000 finished units.At year-end,it was determined that 370 000 units were sold while 30 000 units remained in ending inventory. Required: a.What is the cost of producing one unit? b.What is the amount that will be reported on the income statement for cost of goods sold? c.What is the amount that will be reported on the balance sheet for ending inventory? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Variable costing is a method of inventory costing in which all variable manufacturing costs (direct and indirect)are included as:

Fixed costs:

________ is a method of inventory costing in which all variable and fixed manufacturing costs are included as inventoriable costs.

When 10 000 units are produced,fixed costs are $15 per unit.Therefore,when 30 000 units are produced,fixed costs will:

Absorption costing is a method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as period 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 operating profit when using absorption costing?

Product costs are treated as expenses of the accounting period in which they are incurred because they are expected to benefit revenues in that period and are not expected to benefit revenues in future periods (because there is not sufficient evidence to conclude that such future benefit exists).

Answer the following questions using the information below: Wangaratta Corporation incurred fixed manufacturing costs of $6000 during 2018.Other information for 2018 includes: The budgeted denominator level is 1000 units. Units produced total 750 units. Units sold total 600 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold. -The production-volume variance is: