Exam 8: Absorption and Variable Costing,and Inventory Management

Which of the following would NOT be considered a segment?

Sales \ 600,000 Variable manufacturing expenses 120,000 Direct fixed manufacturing expenses 75,000 Variable selling and administrative expenses 65,000 Direct fixed selling and administrative expenses 60,000 -Refer to the Figure.What is the segment margin of the product line?

The variable costing income statement for Kilem Company for this year is as follows: Selected data for this year concerning the operations of the company are as follows: Beginning inventory -0 - units Units produced 8,000 units Manufacturing costs: Direct labour \ 3.00 per unit Direct materials 1.40 per unit Variable overhead 1.60 per unit Required: Prepare an absorption costing income statement for this year.

On a segmented income statement,fixed costs are broken down into direct fixed costs and overall fixed costs.

Sales \ 600,000 Variable manufacturing expenses 120,000 Direct fixed manufacturing expenses 75,000 Variable selling and administrative expenses 65,000 Direct fixed selling and administrative expenses 60,000 -Refer to the Figure.What is the contribution margin of the product line?

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.Benton has decided to begin ordering 60 units at a time.What is the average annual ordering cost of Benton's new policy?

Fellow's Manufacturing Company produces three products: X,Y,and Z.The income statement for this year is as follows: The sales,contribution margin ratios,and direct fixed expenses for the three types of products are as follows: X Y Z Sales \ 60,000 \ 40,000 \ 100,000 Contribution margin ratio 35\% 30\% 40\% Direct fixed expenses of products \ 8,000 \ 5,000 \ 4,000 Required: Prepare income statements segmented by products.Include a column for the entire firm in the statement.

What costs do the ordering costs become when the economic order quantity (EOQ)model is applied to units produced within the company?

The costs of NOT having a product available when demanded by a customer are called setup costs.

Inventory costs under variable costing include only direct materials,direct labour,and fixed factory overhead.

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.Assume that beginning inventory was zero.What is the value of ending inventory under absorption costing?

What is the economic order quantity (EOQ)?

2L1S Company orders 250 units at a time and places 15 orders per year.Total ordering cost is $1,100,and total carrying cost is $1,750.What is the economic order quantity?

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 relationship between absorption costing net income and variable costing net income?

Which inventory cost can include processing costs,cost of insurance for shipping,and unloading?

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 variable costing method?

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 cost of ending inventory for Westwood using the variable costing method?

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 unit product cost under variable costing?

North Division South Division Variable selling and administrative expenses \ 70,000 \ 90,000 Direct fixed manufacturing expenses 35,000 100,000 Sales 300,000 500,000 Direct fixed selling and administrative expenses 30,000 70,000 Variable manufacturing expenses 40,000 100,000 -Refer to the Figure.What is the net income for Operating Company?

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 variable costing?