Exam 19: Variable Costing and Performance Reporting

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,and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000,compute the net income under variable costing.

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

________________ is the amount remaining from sales revenues after cost of goods sold has been deducted.

A company reports the following information for its first year of operations: Units produced this year ? units Units sold this year 1,500 Direct materials \ 9 per unit Direct labor \ 5 per unit Variable overhead \ 7 per unit Fixed overhead \ 24,000 total If the company's cost per unit of finished goods using absorption costing is $27,how many units were produced?

Home Base,Inc.reports the following production cost information: Beginning inventory 10,000 units 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 Operating costs \ 2,000,000 in total Assume that productions costs have remained the same since the previous period and all units are sold for $137.00 per unit. a.Compute production cost per unit under variable costing. b.Compute production cost per unit under absorption costing. c.Determine net income using variable costing. d.Determine net income using absorption costing.

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

Gage Company reports the following information for its first year of operations: Units produced this year 7,000 units Units sold this year 6,500 units Direct materials \ 22 per unit Direct labor \ 30 per unit Variable overhead ? in total Fixed overhead \ 56,000 in tota If the company's cost per unit of finished goods using variable costing is $63,what is total variable overhead?

Assume that the following information was available for Guy Brown Company.How would Maria Teresa Vazquez and the other owners evaluate this information based on contribution margin ratio? Recycled Toner Office Cartridges Supplies Furniture Sales \ 500,000 \ 100,000 \ 900,000 Variable expenses Variable production \ 50,000 \ 140,000 \ 270,000 Variable advertising \ 5,000 \ 14,000 \ 36,000 Variable shipping \ 10,000 \ 28,000 \ 72,000

Pact Company had net income of $972,000 based on variable costing.Beginning and ending inventories were 7,800 units and 5,200 units,respectively.Assume the fixed overhead per unit was $3.61 for both the beginning and ending inventory.What is net income under absorption costing?

The variable costing income statement classifies costs based on cost behavior rather than function.

When units produced are less than units sold,income under absorption costing is higher than income under variable costing.

A company is currently operating at 70% capacity producing 8,000 units.Cost information relating to this current production is shown in the following table: Per Unit Sales price \ 15 Direct material \ 3.20 Direct labor \ 7.10 Variable overhead \ 0.05 Fixed overhead \ 0.60 The company has been approached by a customer with a request for a special order for 1,500 units.The sales price per unit for this special order is $10.Should the company accept the special order?

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 absorption costing?

Income under absorption costing will always be different than income under variable costing.

A company is currently operating at 80% capacity producing 5,000 units.Current cost information relating to this production is shown in the table below: Per Unit Sales price \ 34 Direct material \ 2 Direct labor \ 3 Variable overhead \ 4 Fixed overhead \ 5 The company has been approached by a customer with a request for a 100-unit special order.What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

Lukin Corporation reports the following first year production cost information. Units produced 62,000 units Units sold 59,000 units Direct labor \ 41 per unit Direct materials \ 15 per unit Variable overhead \ 9,300,000 in total Fixed overhead \ 4,340,000 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.

Swola Company reports the following annual cost data for its single product. Normal production level 75,000 units Direct materials \ 1.25 per unit Direct labor \ 2.50 per unit Variable overhead \ 3.75 per unit Fixed overhead \ 300,000 in total 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 absorption costing?

A company reports the following information for its first year of operations: Units produced this year 650 units Units sold this year 500 units Direct materials \ 750 per unit Direct labor \ 1,000 per unit Variable overhead ? in total Fixed overhead \ 308,750 in total If the company's cost per unit of finished goods using variable costing is $2,375,what is total variable overhead?

Manufacturing overhead costs are those that can be traced directly to the product.

Assume a company sells a given product for $12 per unit.How many units must be sold to break even if variable selling costs are $0.50 per unit,variable production costs are $3.50 per unit,and total fixed costs are $4,500,000?