Exam 8: Absorption and Variable Costing,and Inventory Management

Stimpson 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. A. What is the economic order quantity? B. What is the annual setup cost of the EOQ policy? C. What is the annual carrying cost of the EOQ policy? D. What is the total inventory-related cost of the EOQ policy?

What is the primary difference between variable and absorption 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 segment margin for Division South?

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 absorption costing?

Match each statement with the correct item below. -Economic order quantity

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 absorption-costing method?

What are the two major costs associated with inventory?

Which accounting method is used for external reporting?

What is the general relationship between inventory values calculated using variable costing and inventory values calculated using absorption costing?

Which inventory cost can include insurance,inventory taxes,and obsolescence?

Suppose monthly production volume is constant and sales volume is less than production.How will net income react when using variable-costing procedures?

LaTiffa Company orders 250 units at a time and places 15 orders per year.Total ordering cost is $1,100,and total carrying cost is $1,100.Which best describes the economic order quantity?

Darker Company produced 30,000 units and sold 28,000 units in the current year.Beginning inventory was zero.During the period,the following costs were incurred: Indirect labour \ 60,000 Indirect materials 30,000 Other 90,000 Fixed manufacturing overhead 180,000 Fixed administrative expenses 150,000 Fixed selling expenses 120,000 Variable selling expenses, per unit 40 Direct labour, per unit 80 Direct materials, per unit 20 Required: Compute the dollar amount of ending inventory using: A. Absorption costing B. Variable costing

Which of the following is NOT a traditional reason for carrying inventory?

Match each statement with the correct item below. -Just-in-time

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 absorption costing?

Which of the following types of costs is NOT included in product cost?

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 segment margin for American Division?

Units Month Produced Sold June 100,000 90,000 July 100,000 105,000 -Refer to the Figure.What is the May contribution margin for Theele Corporation when 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 operating income under variable costing?