Under absorption costing,a company had the following unit costs when 8,000 units were produced. $\begin{array}{ll} \text { Direct labor } & \$ 8.50 \text { per unit } \\ \text { Direct material } & \$ 9.00 \text { per unit } \\ \text { Variable overhead } & \$ 6.75 \text { per unit } \\ \text { Fixed overhead }(\$ 60,000 / 8,000 \text { units) } &\underline{ \$ 7.50 \text { per unit} } \\ \quad \text { Total production cost } &\underline{ \$ 31.75 \text { per unit }} \end{array}$ Compute the total production cost per unit under variable costing if 20,000 units had been produced.

A) $31.75 B) $27.25 C) $26.25 D) $24.25 E) $17.50 A) $31.75 B) $27.25 C) $26.25 D) $24.25 E) $17.50

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

A) $20.00 B) $34.17 C) $25.32 D) $23.00 E) $28.50 A) $20.00 B) $34.17 C) $25.32 D) $23.00 E) $28.50

A company is currently operating at 75% capacity and producing 3,000 units.Current cost information relating to this production is shown in the table below: \[\begin{array} { | l | c | } \hline & \text { Per Unit } \\ \hline \text { Sales price } & \$ 43 \\ \hline \text { Direct material } & \$ 7 \\ \hline \text { Direct labor } & \$ 6 \\ \hline \begin{array} { l } \text { Variable } \\ \text { overhead } \end{array} & \$ 4 \\ \hline \text { Fixed overhead } & \$ 4 \\ \hline \end{array}\] The company has been approached by a customer with a request for a 200-unit special.What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

A) Any amount over $43 per unit. B) Any amount over $17 per unit. C) Any amount over $21 per unit. D) Any amount over $13 per unit. E) Any amount over $22 per unit. A) Any amount over $43 per unit. B) Any amount over $17 per unit. C) Any amount over $21 per unit. D) Any amount over $13 per unit. E) Any amount over $22 per unit.

Given the following data,calculate product cost per unit under absorption costing. $\begin{array}{|l|c|} \hline \text { Direct labor } & \$ 7 \text { per unit } \\ \hline \text { Direct materials } & \$ 1 \text { per unit } \\ \hline \text { Overhead } & \\ \hline \text { Total variable overhead } & \$ 20,000 \\ \hline \text { Total fixed overhead } & \$ 90,000 \\ \hline & \\ \hline \text { Expected units to be produced } & 40,000 \text { units } \\ \hline \end{array}$

A) $8 per unit B) $8.50 per unit C) $10.25 per unit D) $10.75 per unit E) $12 per unit A) $8 per unit B) $8.50 per unit C) $10.25 per unit D) $10.75 per unit E) $12 per unit

Aces,Inc.,a manufacturer of tennis rackets,began operations this year.The company produced 6,000 rackets and sold 4,900.At year-end,the company reported the following income statement using absorption costing. $\begin{array}{lr} \text { Sales }(4,900 \times \$ 90) & \$ 441,000 \\ \text { Cost of goods sold }(4,900 \times \$ 38) & \underline{ 186,200} \\ \text { Gross margin } & \$ 254,800 \\ \text { Selling and administrative expenses } & \underline{7 5 , 0 0 0} \\ \text { Net Income } & \underline{\$ 179,800} \end{array}$ Production costs per tennis racket total $38,which consists of $25 in variable production costs and $13 in fixed production costs (based on the 6,000 units produced).Ten percent of total selling and administrative expenses are variable.Compute net income under variable costing.

A) $194,100 B) $165,500 C) $311,000 D) $240,500 E) $233,000 A) $194,100 B) $165,500 C) $311,000 D) $240,500 E) $233,000

Home Base,Inc.reports the following production cost information: \[\begin{array} { l l } \text { Units produced } & 97,000 \text { units } \\ \text { Units sold } & 92,000 \text { units } \\ \text { Direct labor } & \$ 17 \text { per unit } \\ \text { Direct materials } & \$ 34 \text { per unit } \\ \text { Variable overhead } & \$ 2,522,000 \text { in total } \\ \text { Fixed overhead } & \$ 1,940,000 \text { in total } \end{array}\] 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.

a.$17 DL + $34 DM + ($2,522,000/97,000)V

Clear Company reports the following information for its first year of operations: $\begin{array}{ll} \text { Units produced this year } & 50,000 \text { units } \\ \text { Units sold this year } & 49,000 \text { units } \\ \text { Direct materials } & \$ 7 \text { per unit } \\ \text { Direct labor } & \$ 3 \text { per unit } \\ \text { Variable overhead } & \$ 210,000 \text { in total } \\ \text { Fixed orerhead } & ? \text { in total } \end{array}$ If the company's cost per unit of finished goods using absorption costing is $19.30,what is total fixed overhead?

A) $350,000 B) $255,000 C) $150,000 D) $249,900 E) $147,000 A) $350,000 B) $255,000 C) $150,000 D) $249,900 E) $147,000

Exam 19: Variable Costing and Performance Reporting

To convert variable costing net income to absorption costing net income, the fixed production cost in ending inventory and ___ the fixed production cost in beginning inventory.

(Short Answer)

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Question 101

When units produced equal units sold,reported income is identical under absorption costing and variable costing.

(True/False)

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Question 102

Using a traditional costing approach,which of the following manufacturing costs are assigned to products?

(Multiple Choice)

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Question 103

Under absorption costing,a company had the following unit costs when 8,000 units were produced. Direct labor \ 8.50 per unit Direct material \ 9.00 per unit Variable overhead \ 6.75 per unit Fixed overhead (\ 60,000/8,000 units) Total production cost Compute the total production cost per unit under variable costing if 20,000 units had been produced.

(Multiple Choice)

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Question 104

Absorption costing is useful because it reflects the full costs that sales must exceed for the company to be profitable.

(True/False)

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Question 105

What costs are treated as product costs under the variable costing method?

(Essay)

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Question 106

What is a contribution margin report?

(Essay)

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Question 107

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 per unit of finished goods under absorption costing.

(Multiple Choice)

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Question 108

When excess capacity exists,what is the minimum special order price a manager should accept to increase net income?

(Essay)

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Question 109

Fixed costs change in the short run depending upon management's decision to accept or reject special orders.

(True/False)

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Question 110

A company is currently operating at 75% capacity and producing 3,000 units.Current cost information relating to this production is shown in the table below: Per Unit Sales price \ 43 Direct material \ 7 Direct labor \ 6 Variable overhead \ 4 Fixed overhead \ 4 The company has been approached by a customer with a request for a 200-unit special.What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

(Multiple Choice)

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Question 111

Contribution margin is the excess of sales over total variable costs.

(True/False)

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Question 112

What is the general procedure for converting variable costing net income to absorption costing net income?

(Essay)

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Question 113

Given the following data,calculate product cost per unit under absorption costing. Direct labor \ 7 per unit Direct materials \ 1 per unit Overhead Total variable overhead \ 20,000 Total fixed overhead \ 90,000 Expected units to be produced 40,000 units

(Multiple Choice)

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Question 114

During a given year,if a company sells more units than it produces,then ending inventory units will be less than beginning inventory units.

(True/False)

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Question 115

Aces,Inc.,a manufacturer of tennis rackets,began operations this year.The company produced 6,000 rackets and sold 4,900.At year-end,the company reported the following income statement using absorption costing. Sales (4,900\times\ 90) \ 441,000 Cost of goods sold (4,900\times\ 38) Gross margin \ 254,800 Selling and administrative expenses Net Income Production costs per tennis racket total $38,which consists of $25 in variable production costs and $13 in fixed production costs (based on the 6,000 units produced).Ten percent of total selling and administrative expenses are variable.Compute net income under variable costing.

(Multiple Choice)

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Question 116

Home Base,Inc.reports the following production cost information: Units produced 97,000 units Units sold 92,000 units Direct labor \ 17 per unit Direct materials \ 34 per unit Variable overhead \ 2,522,000 in total Fixed overhead \ 1,940,000 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.

(Essay)

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Question 117

Given the following data,total product cost per unit under absorption costing will be greater than total product cost per unit under variable costing. Direct labor \ 9 per unit Direct materials \ 7 per unit Overhead Total variable overhead \ 45,000 Total fixed overhead \ 27,000 Expected units to be produced 9,000 units

(True/False)

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Question 118

Clear Company reports the following information for its first year of operations: Units produced this year 50,000 units Units sold this year 49,000 units Direct materials \ 7 per unit Direct labor \ 3 per unit Variable overhead \ 210,000 in total Fixed orerhead ? in total If the company's cost per unit of finished goods using absorption costing is $19.30,what is total fixed overhead?

(Multiple Choice)

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Question 119

Information presented in a variable costing format can assist management when making short-term pricing decisions.

(True/False)

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Question 120

Exam 19: Variable Costing and Performance Reporting

To convert variable costing net income to absorption costing net income,____________________ the fixed production cost in ending inventory and _______________________ the fixed production cost in beginning inventory.

When units produced equal units sold,reported income is identical under absorption costing and variable costing.

Using a traditional costing approach,which of the following manufacturing costs are assigned to products?

Absorption costing is useful because it reflects the full costs that sales must exceed for the company to be profitable.

What costs are treated as product costs under the variable costing method?

What is a contribution margin report?

When excess capacity exists,what is the minimum special order price a manager should accept to increase net income?

Fixed costs change in the short run depending upon management's decision to accept or reject special orders.

Contribution margin is the excess of sales over total variable costs.

What is the general procedure for converting variable costing net income to absorption costing net income?

Given the following data,calculate product cost per unit under absorption costing. Direct labor \ 7 per unit Direct materials \ 1 per unit Overhead Total variable overhead \ 20,000 Total fixed overhead \ 90,000 Expected units to be produced 40,000 units

During a given year,if a company sells more units than it produces,then ending inventory units will be less than beginning inventory units.

Information presented in a variable costing format can assist management when making short-term pricing decisions.

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

To convert variable costing net income to absorption costing net income, the fixed production cost in ending inventory and ___ the fixed production cost in beginning inventory.