Exam 8: Absorption and Variable Costing, and Inventory Management

Theele Corporation Theele Corporation has the following information for April, May, and June: April May June Units produced 10,000 10,000 10,000 Units sold 7,000 8,500 10,500 Production costs per unit (based on 10,000 units) are as follows: Direct materials \ 13 Direct labour 9 Variable manufacturing overhead 7 Fixed manufacturing overhead 5 Variable selling and administrative expenses 10 Fixed selling and administrative expenses 4 The company had no beginning inventories for April, and all units were sold for $55 per unit. Costs are stable over the three months. -Refer to Theele Corporation. What is the June ending Finished Goods Inventory using the variable costing method?

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?

Select the appropriate classification of each of the costs listed below.* Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Direct materials for units sold

Inventory using the absorption costing method includes direct materials, direct labour, variable manufacturing overhead, and fixed manufacturing overhead.

Ella Company Last year, Ella Company produced 10,000 units and sold 9,000 units at a sales price of $9 per unit. Costs for last year were as follows: Direct materials \ 10,000 Direct labour 15,000 Variable manufacturing overhead 5,000 Fixed manufacturing overhead 20,000 Variable selling expense 7,200 Fixed selling expense 5,000 Fixed administrative expense 12,000 Fixed manufacturing overhead is applied on the basis of expected production. Last year, the company expected to produce 10,000 units.The company had no beginning inventories. -Refer to Ella Company. What is the value of ending Finished Goods Inventory using the variable costing method?

How does a JIT system achieve the objective of minimizing purchase costs without carrying inventory?

Which of the following occurs under a JIT system?

Westwood Company Westwood Company has the following information the current year: Selling sales price \ 300 per unit Variable production costs \ 80 per unit produced Variable selling and administrative expenses \ 32 per unit sold Fixed production costs \ 400,000 Fixed selling and administrative expenses \ 280,000 Units produced 20,000 units Units sold 16,000 units The company had no beginning inventories -Refer to Westwood Company. What is the ending Finished Goods Inventory using the absorption costing method?

All other things being equal, if the number of units produced in a period is larger than the number of units sold in a period, absorption costing income will be higher than variable costing income.

Match each of the following descriptions with the correct term from the items listed below. -Economic order quantity

Direct fixed expenses are fixed expenses that are directly traceable to a segment.

Which type of cost does NOT appear on a variable costing income statement?

Inventory costs using the variable costing method include only direct materials, direct labour, and fixed manufacturing overhead.

Select the appropriate classification of each of the costs listed below.* Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Fixed manufacturing overhead

Nute Corporation The following information pertains to Nute Corporation (the per unit amounts apply to all years): Beginning inventory 1,000 units Ending Finished Goods Inventory 6,000 units Direct labour per unit \ 40 Direct materials per unit 20 Variable manufacturing overhead per unit 10 Fixed manufacturing overhead per unit 30 Variable selling and administrative costs per unit 6 Fixed selling and administrative costs per unit 14 -Refer to Nute Corporation. What is the value of the ending Finished Goods Inventory using the variable costing method?

Refer to Carmel Company. The company has decided to begin ordering 60 units at a time. What is the average annual ordering cost of this new policy?

Theele Corporation Theele Corporation has the following information for April, May, and June: April May June Units produced 10,000 10,000 10,000 Units sold 7,000 8,500 10,500 Production costs per unit (based on 10,000 units) are as follows: Direct materials \ 13 Direct labour 9 Variable manufacturing overhead 7 Fixed manufacturing overhead 5 Variable selling and administrative expenses 10 Fixed selling and administrative expenses 4 The company had no beginning inventories for April, and all units were sold for $55 per unit. Costs are stable over the three months. -Refer to Theele Corporation. What is the April ending Finished Goods Inventory using the variable costing method?

Cara Company Cara Company has the following information pertaining to its two divisions for the current year: european division american 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 Wariable manufacturing expenses 25,000 55,000 Common expenses are $18,000 for the current year. -Refer to Cara Company. What is the segment margin for the American Division?

Select the appropriate classification of each of the costs listed below.* Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Variable manufacturing overhead

Which of the following reflects the formula to calculate ordering cost?