\[\begin{array} { l r } \text { Beginning inventory } & 1,000 \text { units } \\ \text { Ending inventory } & 6,000 \text { units } \\ \text { Direct labour per unit } & \$ 40 \\ \text { Direct materials per unit } & 20 \\ \text { Variable overhead per unit } & 10 \\ \text { Fixed overhead per unit } & 30 \\ \text { Variable selling and administrative costs per unit } & 6 \\ \text { Fixed selling and administrative costs per unit } & 14 \end{array}\] -Refer to the Figure.What is the value of the ending inventory using the absorption costing method?

A) $240,000 B) $360,000 C) $420,000 D) $600,000 A) $240,000 B) $360,000 C) $420,000 D) $600,000 D

$\begin{array}{lr}\text { Variable costs per unit: }\\ \text { Direct materials } & \$ 4.00 \\ \text { Direct labour } & 3.20 \\ \text { Variable overhead } & 1.00 \\ \text { Variable selling expenses } & 0.40 \end{array}$ -Refer to the Figure.What is the operating income under absorption costing?

A) ($540) B) $3,540 C) $3,740 D) $7,980 A) ($540) B) $3,540 C) $3,740 D) $7,980

$\begin{array}{lr}\text { Variable costs per unit: }\\ \text { Direct materials } & \$ 4.00 \\ \text { Direct labour } & 3.20 \\ \text { Variable overhead } & 1.00 \\ \text { Variable selling expenses } & 0.40 \end{array}$ -Refer to Carmel Company.Carmel has decided to begin ordering 60 units at a time.What is the average annual carrying cost of Benton's new policy?

A) $5 B) $30 C) $120 D) $180 A) $5 B) $30 C) $120 D) $180

$\begin{array}{lrr}&\text { Units }\\\text { Month }&\text { Produced }&\text { Sold }\\ \text { June } & 100,000 & 90,000 \\ \text { July } & 100,000 & 105,000 \end{array}$ -Refer to the Figure.What was the net income for June using variable costing?

A) ($40,000) B) ($20,000) C) $20,000 D) $40,000 A) ($40,000) B) ($20,000) C) $20,000 D) $40,000

\[\begin{array} { l r } \text { Beginning inventory } & 1,000 \text { units } \\ \text { Ending inventory } & 6,000 \text { units } \\ \text { Direct labour per unit } & \$ 40 \\ \text { Direct materials per unit } & 20 \\ \text { Variable overhead per unit } & 10 \\ \text { Fixed overhead per unit } & 30 \\ \text { Variable selling and administrative costs per unit } & 6 \\ \text { Fixed selling and administrative costs per unit } & 14 \end{array}\] -Refer to the Figure.What is the ending inventory for Westwood using the absorption costing method?

A) $80,000 B) $120,000 C) $180,000 D) $400,000 A) $80,000 B) $120,000 C) $180,000 D) $400,000

Exam 8: Absorption and Variable Costing,and Inventory Management

Lauren Company orders 250 units at a time and places 15 orders per year.Total ordering cost is $1,600,and total carrying cost is $1,250.What is the economic order quantity?

Free

(Multiple Choice)

4.8/5

(40)

Question 1

Correct Answer:

Verified

B

Beginning inventory 1,000 units Ending inventory 6,000 units Direct labour per unit \ 40 Direct materials per unit 20 Variable overhead per unit 10 Fixed overhead per unit 30 Variable selling and administrative costs per unit 6 Fixed selling and administrative costs per unit 14 -Refer to the Figure.What is the value of the ending inventory using the absorption costing method?

Free

(Multiple Choice)

4.9/5

(38)

Question 2

Correct Answer:

Verified

D

JIT relies on a push system to control finished goods inventory.

Free

(True/False)

4.7/5

(37)

Question 3

Correct Answer:

Verified

False

Timber Company sells 900 units of its deluxe product each year.The cost of setting up for one production run is $150; the cost of carrying one unit in inventory for a year is $3.Timber currently produces 100 deluxe units in one production run. A. What is the annual setup cost of the current policy? B. What is the annual carrying cost of the current policy? C. What is the total inventory-related cost of the current policy? D. Do you suppose that the current production run is smaller or larger than the EOQ? Why?

(Essay)

4.8/5

(45)

Question 4

How does a JIT system respond to the problems traditionally solved by carrying inventories?

(Multiple Choice)

4.8/5

(40)

Question 5

Variable costs per unit: Direct materials \ 4.00 Direct labour 3.20 Variable overhead 1.00 Variable selling expenses 0.40 -Refer to the Figure.What is the operating income under absorption costing?

(Multiple Choice)

4.8/5

(38)

Question 6

Which of the following best defines variable costing?

(Multiple Choice)

4.8/5

(32)

Question 7

Match each statement with the correct item below. -Stockout costs

(Multiple Choice)

4.8/5

(36)

Question 8

Variable costs per unit: Direct materials \ 4.00 Direct labour 3.20 Variable overhead 1.00 Variable selling expenses 0.40 -Refer to Carmel Company.Carmel has decided to begin ordering 60 units at a time.What is the average annual carrying cost of Benton's new policy?

(Multiple Choice)

4.9/5

(43)

Question 9

What is the relationship between absorption costing net income and variable costing net income?

(Multiple Choice)

4.9/5

(36)

Question 10

Inventory under absorption costing includes direct materials,direct labour,variable factory overhead,and fixed factory overhead.

(True/False)

4.8/5

(35)

Question 11

Match each statement with the correct item below. -Carrying costs

(Multiple Choice)

4.8/5

(38)

Question 12

Units Month Produced Sold June 100,000 90,000 July 100,000 105,000 -Refer to the Figure.What was the net income for June using variable costing?

(Multiple Choice)

4.9/5

(37)

Question 13

Segment sales revenue minus which of the following sets of costs is equal to segment margin?

(Multiple Choice)

4.8/5

(37)

Question 14

Beginning inventory 1,000 units Ending inventory 6,000 units Direct labour per unit \ 40 Direct materials per unit 20 Variable overhead per unit 10 Fixed overhead per unit 30 Variable selling and administrative costs per unit 6 Fixed selling and administrative costs per unit 14 -Refer to the Figure.What is the ending inventory for Westwood using the absorption costing method?

(Multiple Choice)

4.8/5

(40)

Question 15

Shedding Company has two divisions with the following segment margins for the current year: Northern,$400,000; Southern,$800,000.Common expenses of the company are $100,000.What is Shedding Company's net income?

(Multiple Choice)

4.9/5

(47)

Question 16

If the number of units produced in a period is smaller than the number of units sold in period,absorption costing income will be higher than variable costing income.

(True/False)

4.9/5

(46)

Question 17

Birdd Company uses 450 units of a part each year.The cost of placing one order is $10; the cost of carrying one unit in inventory for a year is $2.Birdd currently orders 90 units at a time. A. What is the annual ordering cost of Birdd's current policy? B. What is the annual carrying cost of Birdd's current policy? C. What is the total cost of Birdd's current policy? D. What is the EOQ for Birdd? E. What is the total inventory-related cost at the EOQ?

(Essay)

4.7/5

(41)

Question 18

Total inventory-related cost consists of ordering cost and carrying cost.

(True/False)

4.8/5

(44)

Question 19

A major advantage to the JIT inventory approach is that it decreases carrying costs.

(True/False)

4.8/5

(38)

Question 20

Lauren Company orders 250 units at a time and places 15 orders per year.Total ordering cost is $1,600,and total carrying cost is $1,250.What is the economic order quantity?

JIT relies on a push system to control finished goods inventory.

How does a JIT system respond to the problems traditionally solved by carrying inventories?

Variable costs per unit: Direct materials \ 4.00 Direct labour 3.20 Variable overhead 1.00 Variable selling expenses 0.40 -Refer to the Figure.What is the operating income under absorption costing?

Which of the following best defines variable costing?

Match each statement with the correct item below. -Stockout costs

Variable costs per unit: Direct materials \ 4.00 Direct labour 3.20 Variable overhead 1.00 Variable selling expenses 0.40 -Refer to Carmel Company.Carmel has decided to begin ordering 60 units at a time.What is the average annual carrying cost of Benton's new policy?

What is the relationship between absorption costing net income and variable costing net income?

Inventory under absorption costing includes direct materials,direct labour,variable factory overhead,and fixed factory overhead.

Match each statement with the correct item below. -Carrying costs

Units Month Produced Sold June 100,000 90,000 July 100,000 105,000 -Refer to the Figure.What was the net income for June using variable costing?

Segment sales revenue minus which of the following sets of costs is equal to segment margin?

Shedding Company has two divisions with the following segment margins for the current year: Northern,$400,000; Southern,$800,000.Common expenses of the company are $100,000.What is Shedding Company's net income?

If the number of units produced in a period is smaller than the number of units sold in period,absorption costing income will be higher than variable costing income.

Total inventory-related cost consists of ordering cost and carrying cost.

A major advantage to the JIT inventory approach is that it decreases carrying costs.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters