Question 1

________________________ costing treats fixed overhead as a period cost.

Accepted Answer

The answer of ________________________ costing treats fixed overhead as a...

Question 2

Lukin Corporation reports the following first year production cost information:
 $$\begin{array} { l l } 
\text { Units produced } & 62,000 \text { units } \
\text { Units sold } & 59,000 \text { units } \
\text { Sales price } & \$ 350 \text { per unit } \
\text { Direct labor } & \$ 41 \text { per unit } \
\text { Direct materials } & \$ 15 \mathrm { per } \text { unit } \
\text { Variable overhead } & \$ 9,300,000 \mathrm { in } \text { total } \
\text { Fixed overhead } & \$ 4,340,000 \text { in total } \
\text { Operating expenses } & \$ 1,000,000
\end{array}$$ 
a.Compute production cost per unit under variable costing.
b.Compute production cost per unit under absorption costing.
c.Determine the net income using variable costing.
d.Determine the net income using absorption costing.

Accepted Answer

a.$41 DL + $15 DM + ($9,300,000/62,000)V

Question 3

Assume a company sells a given product for $75 per unit.How many units must be sold to break-even if variable selling costs are $12 per unit,variable production costs are $23 per unit,and total fixed costs are $700,000?

Accepted Answer

A)  11,112 units. 
B)  13,462 units. 
C)  9,334 units. 
D)  17,500 units. 
E)  6,363 units. 
A)  11,112 units. 
B)  13,462 units. 
C)  9,334 units. 
D)  17,500 units. 
E)  6,363 units.

Question 4

Reference: 19_05
Red and White Company reported the following monthly data:
 $\begin{array}{ll}
\text { Units produced } & 2,000 \text { units } \
\text { Sales price } & \$ 25 \text { per unit } \
\text { Direct materials } & \$ 1 \text { per unit } \
\text { Direct labor } & \$ 2 \text { per unit } \
\text { Variable overhead } & \$ 3 \text { per unit } \
\text { Fixed overhead } & \$ 8,000 \text { in total }
\end{array}$

-What is Red and White's net income under variable costing if 980 units are sold and operating expenses are $12,000?

Accepted Answer

A)  $(1,380) 
B)  $(2,000) 
C)  $ 2,700 
D)  $ 6,620 
E)  $ 10,620 
A)  $(1,380) 
B)  $(2,000) 
C)  $ 2,700 
D)  $ 6,620 
E)  $ 10,620

Question 5

Under absorption costing,the product unit cost consists of direct labor,direct materials,variable overhead,and _______________________.

Accepted Answer

The answer of Under absorption costing,the product unit cost consists...

Question 6

Given the following data,total product cost per unit under absorption costing is $11.40.
 $\begin{array}{|l|c|}
\hline \text { Direct labor } & \$ 5 \text { per unit } \
\hline \text { Direct materials } & \$ 6 \text { per unit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 32,800 \
\hline \text { Total fixed overhead } & \$ 164,000 \
\hline & \
\hline \text { Expected units to be produced } & 82,000 \text { units } \
\hline
\end{array}$

Accepted Answer

A) True 
 B)False

Question 7

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:

$\begin{array}{ll}
\text { Production costs } & \
\quad \text { Direct materials } & \$ 2.50 \text { per unit } \
\text { Direct labor } & \$ 3.00 \text { per unit } \
\text { Variable overhead } & \$ 45,000 \text { in total } \
\quad \text { Fixed overhead } & \$ 240,000 \text { in total } \
\text { Nonproduction costs } & \
\quad \text { Variable selling and administrative } & \$ 10,000 \text { in total } \
\text { Fixed selling and administrative } & \$ 50,000 \text { in total }
\end{array}$

-Given the Scavenger Company data,what is net income using absorption costing?

Accepted Answer

A)  $201,250 
B)  $181,250 
C)  $150,000 
D)  $177,600 
E)  $276,250 
A)  $201,250 
B)  $181,250 
C)  $150,000 
D)  $177,600 
E)  $276,250

Question 8

Reference: 19_05
Red and White Company reported the following monthly data:
 $\begin{array}{ll}
\text { Units produced } & 2,000 \text { units } \
\text { Sales price } & \$ 25 \text { per unit } \
\text { Direct materials } & \$ 1 \text { per unit } \
\text { Direct labor } & \$ 2 \text { per unit } \
\text { Variable overhead } & \$ 3 \text { per unit } \
\text { Fixed overhead } & \$ 8,000 \text { in total }
\end{array}$

-What is the Red and White's contribution margin for this month if 980 units were sold?

Accepted Answer

A)  $38,000 
B)  $18,620 
C)  $24,500 
D)  $50,000 
E)  $21,560 
A)  $38,000 
B)  $18,620 
C)  $24,500 
D)  $50,000 
E)  $21,560

Question 9

Chance,Inc.sold 3,000 units of its product at a price of $72 per unit.Total variable cost per unit is $51,consisting of $32 in variable production cost and $19 in variable selling and administrative cost.Compute the manufacturing margin for the company under variable costing.

Accepted Answer

A)  $96,000 
B)  $63,000 
C)  $120,000 
D)  $216,000 
E)  ($90,000) 
A)  $96,000 
B)  $63,000 
C)  $120,000 
D)  $216,000 
E)  ($90,000)

Question 10

Swola Company reports the following annual cost data for its single product.
$\begin{array}{ll}
\text { Normal production level } & 75,000 \text { units } \
\text { Direct materials } & \$ 1.25 \text { per unit } \
\text { Direct labor } & \$ 2.50 \text { per unit } \
\text { Variable overhead } & \$ 3.75 \text { per unit } \
\text { Fixed overhead } & \$ 300,000 \text { in total }
\end{array}$

This product is normally sold for $25 per unit.If Swola increases its production to 200,000 units,while sales remain at the current 75,000 unit level,by how much would the company's gross margin increase or decrease under variable costing?

Accepted Answer

A)  $187,500 increase. 
B)  $112,500 increase. 
C)  There will be no change in gross margin. 
D)  $112,500 decrease. 
E)  $187,500 decrease. 
A)  $187,500 increase. 
B)  $112,500 increase. 
C)  There will be no change in gross margin. 
D)  $112,500 decrease. 
E)  $187,500 decrease.

Question 11

Romtech Company sold 43,000 units of its product at a price of $300 per unit.Total variable cost per unit is $175,consisting of $168 in variable production cost and $7 in variable selling and administrative cost.Compute the manufacturing margin for the company under variable costing.

Accepted Answer

A)  $5,375,000 
B)  $5,676,000 
C)  $12,599,000 
D)  $12,900,000 
E)  $7,525,000 
A)  $5,375,000 
B)  $5,676,000 
C)  $12,599,000 
D)  $12,900,000 
E)  $7,525,000

Question 12

Dataport Company reports the following annual cost data for its single product:
 $\begin{array}{ll}
\text { Nomal production and sales level } & 89,000 \text { units } \
\text { Direct materials } & \$ 14.00 \text { per unit } \
\text { Direct labor } & \$ 21.00 \text { per unit } \
\text { Variable overhead } & \$ 27.00 \text { per unit } \
\text { Fixed overhead } & \$ 3,738,000 \text { in total }
\end{array}$ 
This product is normally sold for $230 per unit.If Dataport increases its production to 100,000 units,while sales remain at the current 89,000 unit level,by how much would the company's gross margin increase or decrease under absorption costing? Assume the company has idle capacity to double current production.

Accepted Answer

$3,738,000/89,000 units = $42 FOH per un

Question 13

Fomtech,Inc.had net income of $750,000 based on variable costing.Beginning and ending inventories were 50,000 units and 48,000 units,respectively.Assume the fixed overhead per unit was $.75 for both the beginning and ending inventory.What is net income under absorption costing?

Accepted Answer

A)  $751,500 
B)  $676,500 
C)  $823,500 
D)  $748,500 
E)  $750,000 
A)  $751,500 
B)  $676,500 
C)  $823,500 
D)  $748,500 
E)  $750,000

Question 14

Vision Tester,Inc.,a manufacturer of optical glass,began operations on February 1 of the current year.During this time,the company produced 900,000 units and sold 800,000 units at a sales price of $12 per unit.Cost information for this year is shown in the following table:
$\text { Production costs }$
$\begin{array}{ll}
\text { Direct materials } & \$ .80 \text { per unit } \
\text { Direct labor } & \$ .70 \text { per unit } \
\text { Variable overhead } & \$ 500,000 \text { in total } \
\text { Fixed overhead } & \$ 450,000 \text { in total }
\end{array}$

$\text { Non-production costs }$
$\begin{array}{llr}
  \text {  Variable selling and administrative } &\$ 30,000  \text {in total}\
 \text { Fixed selling and administrative } & \$ 490,000   \text {in total}\
\end{array}$

Given this information,which of the following is true?

Accepted Answer

A)  Net income under variable costing will exceed net income under absorption costing by $50,000. 
B)  Net income under absorption costing will exceed net income under variable costing by $50,000. 
C)  Net income will be the same under both absorption and variable costing. 
D)  Net income under variable costing will exceed net income under absorption costing by $60,000. 
E)  Net income under absorption costing will exceed net income under variable costing by $60,000. 
A)  Net income under variable costing will exceed net income under absorption costing by $50,000. 
B)  Net income under absorption costing will exceed net income under variable costing by $50,000. 
C)  Net income will be the same under both absorption and variable costing. 
D)  Net income under variable costing will exceed net income under absorption costing by $60,000. 
E)  Net income under absorption costing will exceed net income under variable costing by $60,000.

Question 15

Variable costing is the only acceptable basis for both external reporting and tax reporting.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  DL, DM, variable selling and administrative costs, and variable manufacturing overhead. 
B)  DL, DM, and variable manufacturing overhead. 
C)  DL, DM, variable manufacturing overhead, and fixed manufacturing overhead. 
D)  DL and DM. 
E)  DL, DM, fixed selling and administrative, and fixed manufacturing overhead. 
A)  DL, DM, variable selling and administrative costs, and variable manufacturing overhead. 
B)  DL, DM, and variable manufacturing overhead. 
C)  DL, DM, variable manufacturing overhead, and fixed manufacturing overhead. 
D)  DL and DM. 
E)  DL, DM, fixed selling and administrative, and fixed manufacturing overhead.

Question 17

Match between columns
                        Premises:  Sales less cost of goods sold.
 A specific number of units sold that produces total income equal to zero.
 Sales less variable production costs.
 A costing method that includes all manufacturing costs.
 Costs that are expensed in the period they are incurred.
 Sales less variable expenses.
 A costing method that includes only variable manufacturing costs.
 Direct labor, direct materials, and manufacturing overhead.
 An income statement format that focuses on cost behavior.
 Contribution margin divided by sales.

Accepted Answer

The Answer of Absorption costing and Variable costing and Contribution is...

Question 18

How does contribution margin differ from gross margin?

Accepted Answer

Contribution margin equals sales less va

Question 19

A per unit cost that is constant at all production levels is a ________________________ cost per unit.

Accepted Answer

The answer of A per unit cost that is constant...

Question 20

Under a traditional income statement format expenses are grouped according to cost behavior.

Accepted Answer

A) True 
 B)False

________________________ costing treats fixed overhead as a period cost.

Assume a company sells a given product for $75 per unit.How many units must be sold to break-even if variable selling costs are $12 per unit,variable production costs are $23 per unit,and total fixed costs are $700,000?

Under absorption costing,the product unit cost consists of direct labor,direct materials,variable overhead,and _______________________.

Given the following data,total product cost per unit under absorption costing is $11.40. Direct labor \ 5 per unit Direct materials \ 6 per unit Overhead Total variable overhead \ 32,800 Total fixed overhead \ 164,000 Expected units to be produced 82,000 units

Chance,Inc.sold 3,000 units of its product at a price of $72 per unit.Total variable cost per unit is $51,consisting of $32 in variable production cost and $19 in variable selling and administrative cost.Compute the manufacturing margin for the company under variable costing.

Romtech Company sold 43,000 units of its product at a price of $300 per unit.Total variable cost per unit is $175,consisting of $168 in variable production cost and $7 in variable selling and administrative cost.Compute the manufacturing margin for the company under variable costing.

Fomtech,Inc.had net income of $750,000 based on variable costing.Beginning and ending inventories were 50,000 units and 48,000 units,respectively.Assume the fixed overhead per unit was $.75 for both the beginning and ending inventory.What is net income under absorption costing?

Variable costing is the only acceptable basis for both external reporting and tax reporting.

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

How does contribution margin differ from gross margin?

A per unit cost that is constant at all production levels is a ________________________ cost per unit.

Under a traditional income statement format expenses are grouped according to cost behavior.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing

Activity-Based Costing and Analysis

Cost-Volume-Profit Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Decentralization and Performance Measurement

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Accounting With Special Journals

Time Value of Money

Investments and International Operations

Accounting for Partnerships

Filters

Exam 19: Variable Costing and Performance Reporting

________________________ costing treats fixed overhead as a period cost.

Assume a company sells a given product for $75 per unit.How many units must be sold to break-even if variable selling costs are $12 per unit,variable production costs are $23 per unit,and total fixed costs are $700,000?

Under absorption costing,the product unit cost consists of direct labor,direct materials,variable overhead,and _______________________.

Given the following data,total product cost per unit under absorption costing is $11.40. Direct labor \ 5 per unit Direct materials \ 6 per unit Overhead Total variable overhead \ 32,800 Total fixed overhead \ 164,000 Expected units to be produced 82,000 units

Chance,Inc.sold 3,000 units of its product at a price of $72 per unit.Total variable cost per unit is $51,consisting of $32 in variable production cost and $19 in variable selling and administrative cost.Compute the manufacturing margin for the company under variable costing.

Romtech Company sold 43,000 units of its product at a price of $300 per unit.Total variable cost per unit is $175,consisting of $168 in variable production cost and $7 in variable selling and administrative cost.Compute the manufacturing margin for the company under variable costing.

Fomtech,Inc.had net income of $750,000 based on variable costing.Beginning and ending inventories were 50,000 units and 48,000 units,respectively.Assume the fixed overhead per unit was $.75 for both the beginning and ending inventory.What is net income under absorption costing?

Variable costing is the only acceptable basis for both external reporting and tax reporting.

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

How does contribution margin differ from gross margin?

A per unit cost that is constant at all production levels is a ________________________ cost per unit.

Under a traditional income statement format expenses are grouped according to cost behavior.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing

Activity-Based Costing and Analysis

Cost-Volume-Profit Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Decentralization and Performance Measurement

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Accounting With Special Journals

Time Value of Money

Investments and International Operations

Accounting for Partnerships

Filters