Exam 20: Variable Costing for Management Analysis

In contribution margin analysis,the unit price or unit cost factor is computed as the difference between actual quantity sold and the planned quantity sold,multiplied by the planned unit sales price or unit cost.

For short-run production planning,information in the absorption costing format is more useful to management than is information in the variable costing format.

The contribution margin ratio is computed as contribution margin divided by sales.

Contribution margin reporting and analysis is appropriate only for manufacturing firms,not for service firms.

In contribution margin analysis,the unit price or unit cost factor is computed as:

For an accounting period during which the quantity of inventory at the end was smaller than the quantity at the beginning,income from operations reported under variable costing will be larger than income from operations reported under absorption costing.

Another name for variable costing is:

If variable cost of goods sold totaled $80,000 for the year (16,000 units at $5.00 each)and the planned variable cost of goods sold totaled $86,250 (15,000 units at $5.75 each),the effect of the quantity factor on the change in contribution margin is:

During the first year of operations,18,000 units were manufactured and 13,500 units were sold.On August 31,Olympic Inc.prepared the following income statement based on the variable costing concept: ​ Determine the unit cost of goods manufactured,based on (a)the variable costing concept and (b)the absorption costing concept.

Which of the following causes the difference between the planned and actual contribution margin?

Service firms can only have one activity base for analyzing changes in costs.

On the variable costing income statement,all of the fixed costs are deducted from the contribution margin.

If the ability to sell and the amount of production facilities devoted to each of two products is equal,it is profitable to increase the sales of that product with the lowest contribution margin.

Under variable costing,which of the following costs would be included in finished goods inventory?

A business operated at 100% of capacity during its first month and incurred the following costs: ​ If 600 units remain unsold at the end of the month,what is the amount of inventory that would be reported on the absorption costing balance sheet?

The factory superintendent's salary would be included as part of the cost of products manufactured under the absorption costing concept.

Direct labor cost is an example of a controllable cost for the supervisor of a manufacturing department.

Under absorption costing,the cost of finished goods includes only direct materials,direct labor,and variable factory overhead.

Variable costing is also known as direct costing.

If sales totaled $800,000 for the year (80,000 units at $10.00 each)and the planned sales totaled $799,500 (78,000 units at $10.25 each),the effect of the unit price factor on the change in sales is: