Exam 8: Absorption and Variable Costing, and Inventory Management

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

Stosho Company Stosho Company incurred the following costs in manufacturing desk calculators: Direct materials \ 28 Indirect materials (variable) 8 Direct labour 16 Indirect labour (variable) 12 Other variable manufacturing overhead 20 Fixed manufacturing overhead 56 Variable selling expenses 40 Fixed selling expenses 28 During the period, the company produced and sold 2,000 units. -Refer to Stosho Company. What is the inventory cost per unit using the variable costing method?

Match each of the following descriptions with the correct term from the items listed below. -Just-in-time

Direct fixed expenses are avoidable if a segment is eliminated.

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 absorption costing method?

Stosho Company Stosho Company incurred the following costs in manufacturing desk calculators: Direct materials \ 28 Indirect materials (variable) 8 Direct labour 16 Indirect labour (variable) 12 Other variable manufacturing overhead 20 Fixed manufacturing overhead 56 Variable selling expenses 40 Fixed selling expenses 28 During the period, the company produced and sold 2,000 units. -Refer to Stosho Company. What is the inventory cost per unit using the absorption costing method?

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

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 net income for Cara Company?

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. Which statement best describes the economic order quantity?

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

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 May ending Finished Goods Inventory using the absorption costing method?

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 absorption costing method?

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. Calculate the annual setup cost of the current policy. B. Calculate the annual carrying cost of the current policy. C. Calculate 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?

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 cost of ending Finished Goods Inventory using the variable costing method?

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

Assuming more items are sold during a period than are produced in that same period, which of the following will result?

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

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

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. Calculate the annual ordering cost of Birdd's current policy. B. Calculate the annual carrying cost of Birdd's current policy. C. Calculate the total cost of Birdd's current policy. D. Calculate the EOQ for Birdd. E. Calculate the total inventory-related cost at the EOQ.

Which of the following would NOT be considered a segment?