Exam 19: Variable Costing and Performance Reporting

Under absorption costing,a company had the following unit costs when 10,000 units were produced: Direct labor \ 2 per unit Direct material \ 3 per unit Variable overhead \ 4 per unit \cline 2-2 Total variable \ 9 per unit Fixed overhead (\ 50,000/10,000 units) \ 5 per unit Total production cost \ 14 per unit The total production cost per unit under absorption costing if 25,000 units had been produced would be $11.

Cloudy Company reports the following information for the current year: Units produced this year 51,000 units Units sold this year 53,000 units Direct materials \ 6 per unit Direct labor \ 3 per unit Variable overhead \ 255,000 in total Fixed orerhead ? in total If the company's cost per unit of finished goods using absorption costing is $18,what is total fixed overhead?

Sea Company reports the following information regarding its production cost. Units produced 42,000 units Direct labor \ 35 per unit Direct materials \ 28 per unit Variable overhead \ 17 per unit Fixed overhead \ 105,000 in total Compute production cost per unit under variable costing.

Reference: 19_04 Cool Pools, a manufacturer of above ground pools, began operations on January 1 of the current year. During this time, the company produced 45,000 units and sold 44,000 units at a sales price of $60 per unit. Cost information for this year is shown in the following table: Production costs Direct materials \ 11.25 per unit Direct labor \ 3.20 per unit Variable overhead \ 315,000 in total Fixed overhead \ 39,600 in total Nonproduction costs Variable selling and administrative \ 2,000 in total Fixed selling and administrative \ 6,000 in total -Given the Cool Pools Company data,what is net income using variable costing?

When evaluating a special order,management should:

Which of the following best describes costs assigned to the product under the absorption costing method? Direct labor (DL) Direct materials (DM) Variable selling and administrative Variable manufacturing overhead Fixed selling and administrative Fixed manufacturing overhead

Castaway Company reports the following first year production cost information: Units produced 53,000 units Units sold 51,000 units Direct labor \ 8 per unit Direct materials \ 4 per unit Variable overhead \ 2,173,000 in total Fixed overhead \ 3,339,000 in total a.Compute production cost per unit under variable costing. b.Compute production cost per unit under absorption costing. c.Determine the cost of ending inventory using variable costing. d.Determine the cost of ending inventory using absorption costing.

Sales less variable costs equals manufacturing margin.

Given the following data,total product cost per unit under variable costing will be greater than total product cost under absorption costing. Direct labor \ 2 per unit Direct materials \ 8 per unit Overhead Total variable overhead \ 37,500 Total fixed overhead \ 249,000 Expected units to be produced 15,000 units

Reference: 19_03 Scavenger Company, a manufacturer of recycling bins, began operations on January 1 of the current year. During this time, the company produced 60,000 units and sold 55,000 units at a sales price of $15 per unit. Cost information for this year is shown in the following table: Production costs Direct materials \ 2.50 per unit Direct labor \ 3.00 per unit Variable overhead \ 45,000 in total Fixed overhead \ 240,000 in total Nonproduction costs Variable selling and administrative \ 10,000 in total Fixed selling and administrative \ 50,000 in total -Given the Star Services Inc.data,what is net income using variable costing?

Managers should accept special orders provided the special order price exceeds full cost.

Castaway Company reports the following first year production cost information: Units produced 53,000 Units sold 51,000 Sales price \ 150 unit Direct labor \ 8 unit Direct materials \ 4 per unit Variable overhead \ 2,173,000 in total Fixed overhead \ 3,339,000 in total Operating expenses \ 1,000,000 in total a.Determine the net income using variable costing. b.Determine the net income using absorption costing.

_______________________ is the amount remaining from sales revenues after all variable expenses have been deducted.

Front Company had net income of $72,500 based on variable costing.Beginning and ending inventories were 800 units and 1,200 units,respectively.Assume the fixed overhead per unit was $7.90 for both the beginning and ending inventory.What is net income under absorption costing?

The biggest problems with producing too much are lost sales and customer dissatisfaction.

The traditional income statement format used for financial reporting is called the contribution margin format.

Assume a company sells a given product for $90 per unit.How many units must be sold to break even if variable selling costs are $2 per unit,variable production costs are $31 per unit,and total fixed costs are $1,799,946?

Assume that the following information was available for Daylight Enterprises,Inc.Which of the following statements is(are)true with regard to contribution margin ratio? Ceiling Lights Tabletop Lights Stand-Alone Lights Sales \ 350,000 \ 175,000 \ 440,000 Variable expenses Variable production \ 70,000 \ 19,250 \ 90,000 Variable advertising \ 10,500 \ 3,500 \ 22,000 Variable shipping \ 12,000 \ 14,000 \ 28,000

Reference: 19_01 Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year. Units produced this year 25,000 units Units sold this year 15,000 units Direct materials \ 9 per unit Direct labor \ 11 per unit Variable overhead \ 75,000 total Fixed overhead \ 137,500 total -Given Advanced Company's data,compute cost of finished goods in inventory under absorption costing.

Product costs consist of direct labor,direct materials,and _________________.