$\begin{array}{lrr}&\text { Units }\\\text { Month }&\text { Produced }&\text { Sold }\\ \text { June } & 100,000 & 90,000 \\ \text { July } & 100,000 & 105,000 \end{array}$ -Refer to the Figure.What is the May ending inventory for Theele Corporation when using the absorption costing method?

A) $39,000 B) $45,000 C) $148,500 D) $300,000 A) $39,000 B) $45,000 C) $148,500 D) $300,000

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

A) $452,000 B) $480,000 C) $600,000 D) $2,088,000 A) $452,000 B) $480,000 C) $600,000 D) $2,088,000

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

A) $240,000 B) $350,000 C) $360,000 D) $420,000 A) $240,000 B) $350,000 C) $360,000 D) $420,000

$\begin{array}{lrr}&\text { Units }\\\text { Month }&\text { Produced }&\text { Sold }\\ \text { June } & 100,000 & 90,000 \\ \text { July } & 100,000 & 105,000 \end{array}$ -Refer to the Figure.What is the April ending inventory for Theele Corporation when using the variable costing method?

A) $87,000 B) $90,000 C) $108,000 D) $260,000 A) $87,000 B) $90,000 C) $108,000 D) $260,000

\[\begin{array} { l r } \text { Direct materials } & \$ 28 \\ \text { Indirect materials (variable) } & 8 \\ \text { Direct labour } & 16 \\ \text { Indirect labour (variable) } & 12 \\ \text { Other variable factory overhead } & 20 \\ \text { Fixed factory overhead } & 56 \\ \text { Variable selling expenses } & 40 \\ \text { Fixed selling expenses } & 28 \end{array}\] -Refer to the Figure.What is the inventory cost per unit using absorption costing?

A) $32 B) $84 C) $104 D) $140 A) $32 B) $84 C) $104 D) $140

\[\begin{array} { l r } \text { Beginning inventory } & 0 \text { units } \\ \text { Ending inventory } & 6,000 \text { units } \\ \text { Direct labour per unit } & \$ 2022 \\ \text { Direct materials per unit } & 1618 \\ \text { Variable overhead per unit } & 48 \\ \text { Fixed overhead per unit } & 1012 \\ \text { Variable selling costs per unit } & 1214 \\ \text { Fixed selling costs per unit } & 1618 \end{array}\] -Refer to the Figure.What is the value of ending inventory when using the variable costing method?

A) $288,000 B) $320,000 C) $250,000 D) $390,000 A) $288,000 B) $320,000 C) $250,000 D) $390,000

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

A) 20 B) 30 C) 45 D) 162 A) 20 B) 30 C) 45 D) 162

\[\begin{array} { l r } \text { Beginning inventory } & 0 \text { units } \\ \text { Ending inventory } & 6,000 \text { units } \\ \text { Direct labour per unit } & \$ 2022 \\ \text { Direct materials per unit } & 1618 \\ \text { Variable overhead per unit } & 48 \\ \text { Fixed overhead per unit } & 1012 \\ \text { Variable selling costs per unit } & 1214 \\ \text { Fixed selling costs per unit } & 1618 \end{array}\] -Refer to the Figure.What is the relationship between absorption-costing net income and variable-costing net income?

A) Absorption-costing net income is $72,000 less. B) Absorption-costing net income is $70,000 less. C) Absorption-costing net income is $72,000 greater. D) Absorption-costing net income is $70,000 greater. A) Absorption-costing net income is $72,000 less. B) Absorption-costing net income is $70,000 less. C) Absorption-costing net income is $72,000 greater. D) Absorption-costing net income is $70,000 greater.

$\begin{array}{lrr}&\text { European } & \text { American } \\ &\text { Division } & \text { Division }\\ \text { Variable selling and administrative expenses } & \$ 40,000 & \$ 55,000 \\ \text { Direct fixed manufacturing expenses } & 22,000 & 60,000 \\ \text { Sales } & 120,000 & 220,000 \\ \text { Direct fixed selling and administrative expenses } & 18,000 & 45,000 \\ \text { Variable manufacturing expenses } & 25,000 & 55,000 \end{array}$ -Refer to the Figure.What is the net income for Cara Company?

A) $2,000 B) $32,500 C) $150,000 D) $300,000 A) $2,000 B) $32,500 C) $150,000 D) $300,000

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

A) $20,000 B) $40,000 C) $50,000 D) $80,000 A) $20,000 B) $40,000 C) $50,000 D) $80,000

\[\begin{array} { l r } \text { Direct materials } & \$ 10,000 \\ \text { Direct labour } & 15,000 \\ \text { Variable factory overhead } & 5,000 \\ \text { Fixed factory overhead } & 20,000 \\ \text { Variable selling expense } & 7,200 \\ \text { Fixed selling expense } & 5,000 \\ \text { Fixed administrative expense } & 12,000 \end{array}\] -Refer to the Figure.What is the operating income for last year under variable costing?

A) $6,800 B) $9,000 C) $9,800 D) $11,800 A) $6,800 B) $9,000 C) $9,800 D) $11,800

Consider the following portion of a segmented income statement for the year just ended.Assume fixed expenses of Division A include $60,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments or reduce the common expenses. \[\begin{array} { l r } &\text { Division } A\\ \text { Sales } & \$ 200,000 \\ \text { Variable manufacturing costs } & 120,000 \\ \text { Gross profit } & \$ 80,000 \\ \text { Fixed expenses (direct and allocated) } & 100,000 \\ \text { Operating income (loss) } & \$ ( 20,000 ) \end{array}\] What is A's divisional segment margin?

A) ($10,000) B) $10,000 C) $40,000 D) $100,000 A) ($10,000) B) $10,000 C) $40,000 D) $100,000

Exam 8: Absorption and Variable Costing,and Inventory Management

Units Month Produced Sold June 100,000 90,000 July 100,000 105,000 -Refer to the Figure.What is the May ending inventory for Theele Corporation when using the absorption costing method?

(Multiple Choice)

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Question 21

What is the formula to calculate total carrying cost?

(Multiple Choice)

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Question 22

Which of the following types of costs does NOT appear on a variable costing income statement?

(Multiple Choice)

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Question 23

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 net income for Westwood using the absorption costing method?

(Multiple Choice)

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Question 24

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 variable costing method?

(Multiple Choice)

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Question 25

Units Month Produced Sold June 100,000 90,000 July 100,000 105,000 -Refer to the Figure.What is the April ending inventory for Theele Corporation when using the variable costing method?

(Multiple Choice)

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Question 26

Direct materials \ 28 Indirect materials (variable) 8 Direct labour 16 Indirect labour (variable) 12 Other variable factory overhead 20 Fixed factory overhead 56 Variable selling expenses 40 Fixed selling expenses 28 -Refer to the Figure.What is the inventory cost per unit using absorption costing?

(Multiple Choice)

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Question 27

What is the formula to calculate ordering cost?

(Multiple Choice)

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Question 28

Beginning inventory 0 units Ending inventory 6,000 units Direct labour per unit \ 2022 Direct materials per unit 1618 Variable overhead per unit 48 Fixed overhead per unit 1012 Variable selling costs per unit 1214 Fixed selling costs per unit 1618 -Refer to the Figure.What is the value of ending inventory when using the variable costing method?

(Multiple Choice)

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Question 29

Which inventory cost can include lost sales,cost of expediting,and cost of interrupted production?

(Multiple Choice)

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Question 30

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 EOQ for Benton?

(Multiple Choice)

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Question 31

Beginning inventory 0 units Ending inventory 6,000 units Direct labour per unit \ 2022 Direct materials per unit 1618 Variable overhead per unit 48 Fixed overhead per unit 1012 Variable selling costs per unit 1214 Fixed selling costs per unit 1618 -Refer to the Figure.What is the relationship between absorption-costing net income and variable-costing net income?

(Multiple Choice)

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Question 32

European American Division Division Variable selling and administrative expenses \ 40,000 \ 55,000 Direct fixed manufacturing expenses 22,000 60,000 Sales 120,000 220,000 Direct fixed selling and administrative expenses 18,000 45,000 Variable manufacturing expenses 25,000 55,000 -Refer to the Figure.What is the net income for Cara Company?

(Multiple Choice)

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Question 33

Gross margin is to absorption costing as which of the following is to variable costing?

(Multiple Choice)

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Question 34

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

(Multiple Choice)

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Question 35

Which of the following costs is NOT included in inventory under absorption costing?

(Multiple Choice)

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Question 36

Direct materials \ 10,000 Direct labour 15,000 Variable factory overhead 5,000 Fixed factory overhead 20,000 Variable selling expense 7,200 Fixed selling expense 5,000 Fixed administrative expense 12,000 -Refer to the Figure.What is the operating income for last year under variable costing?

(Multiple Choice)

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Question 37

Prairie Inc.mines three products.Gold ore sells for $1,000 per ton,variable costs are $600 per ton,and fixed mining costs are $250,000.The segment margin for the year was ($100,000).The management of Prairie Mining was considering dropping the mining of gold ore.Only one-half of the fixed expenses are direct and would be eliminated if the segment was dropped. What were the sales in tons for the year?

(Multiple Choice)

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Question 38

Consider the following portion of a segmented income statement for the year just ended.Assume fixed expenses of Division A include $60,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments or reduce the common expenses. Division A Sales \ 200,000 Variable manufacturing costs 120,000 Gross profit \ 80,000 Fixed expenses (direct and allocated) 100,000 Operating income (loss) \ (20,000) What is A's divisional segment margin?

(Multiple Choice)

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Question 39

Suppose production is less than sales volume.What is the relationship between net income under absorption costing and profits when using variable-costing procedures?

(Multiple Choice)

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Question 40

Units Month Produced Sold June 100,000 90,000 July 100,000 105,000 -Refer to the Figure.What is the May ending inventory for Theele Corporation when using the absorption costing method?

What is the formula to calculate total carrying cost?

Which of the following types of costs does NOT appear on a variable costing income statement?

Units Month Produced Sold June 100,000 90,000 July 100,000 105,000 -Refer to the Figure.What is the April ending inventory for Theele Corporation when using the variable costing method?

Direct materials \ 28 Indirect materials (variable) 8 Direct labour 16 Indirect labour (variable) 12 Other variable factory overhead 20 Fixed factory overhead 56 Variable selling expenses 40 Fixed selling expenses 28 -Refer to the Figure.What is the inventory cost per unit using absorption costing?

What is the formula to calculate ordering cost?

Which inventory cost can include lost sales,cost of expediting,and cost of interrupted production?

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 EOQ for Benton?

Gross margin is to absorption costing as which of the following is to variable costing?

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

Which of the following costs is NOT included in inventory under absorption costing?

Direct materials \ 10,000 Direct labour 15,000 Variable factory overhead 5,000 Fixed factory overhead 20,000 Variable selling expense 7,200 Fixed selling expense 5,000 Fixed administrative expense 12,000 -Refer to the Figure.What is the operating income for last year under variable costing?

Suppose production is less than sales volume.What is the relationship between net income under absorption costing and profits when using variable-costing procedures?

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

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