Exam 9: Inventory Costing and Capacity Analysis

Glossier Images Inc. ,produces decorative statues.Management has provided the following information: What is the cost per statue if throughput costing is used?

Practical capacity is the denominator-level concept that ________.

Aspen Manufacturing Company sells its products for $33 each.The current production level is 50,000 units,although only 40,000 units are anticipated to be sold. Unit manufacturing costs are: Direct materials \ 6.00 Direct manufacturing labor \ 9.00 Variable manufacturing costs \ 4.50 Total fixed manufacturing costs \ 180,000 Marketing expenses \ 3.00 per unit, plus \ 100,000 per year Required: a.Prepare an income statement using absorption costing. b.Prepare an income statement using variable costing.

Jupiter Corporation incurred fixed manufacturing costs of $16,000 during 2017.Other information for 2017 includes: The budgeted denominator level is 2,300 units. Units produced total 2,600 units. Units sold total 1,600 units. Variable cost per unit is $\$ 4$ Beginning inventory is zero. The fixed manufacturing cost rate is based on the budgeted denominator level. Under variable costing,the fixed manufacturing costs expensed on the income statement (excluding adjustments for variances)total ________.

Cape Cod Technolgy Inc.manufactures heavy duty flash lights.January and February operations were identical in every way except for the planned production. January had a production denominator of 80,000 units. February had a production denominator of 60,000 units. Fixed manufacturing costs totaled $200,000. Sales for both months totaled 62,000 units with variable manufacturing costs of $4 per unit.Selling and administrative costs were $0.60 per unit variable and $51,000 of fixed.The selling price was $10 per unit. Required: Compute the operating income for both months using absorption costing.

Using practical capacity is best for evaluating the marketing manager's performance for a particular year.

Top management at Gifford manufacturing are planning capacity levels and how to assign capacity costs for an upcoming period.Which of the following factors should be considered while developing this plan so that proper control can be achieved?

One of the most common problems reported by companies using variable costing is the difficulty of classifying costs into fixed or variable categories.

The effect of spreading fixed manufacturing costs over a shrinking master-budget capacity utilization amount results in ________.

Which of the following is true about what the Internal Revenue Service requires for calculating indirect manufacturing costs per unit?

To reduce the undesirable incentives to build up inventories management can institute planning,budgeting,and other controls.

The basis of the difference between variable costing and absorption costing is how fixed manufacturing costs are accounted for.

Throughput contribution equals ________.

Which of the following inventory costing methods shown below is required by GAAP (Generally Accepted Accounting Principles)for external financial reporting?

Sutton Hot Dog Stand sells hot dogs for $1.35.Variable costs are $1.05 per unit with fixed production costs of $90,000 per month at a level of 400,000 units.Fixed administrative costs total $30,000.Sales average 400,000 units per month,with planned production of 400,000 hot dogs. Required: a.What are breakeven unit sales under variable costing? b.What are breakeven unit sales under absorption costing if she sells everything she prepares? c.What are breakeven unit sales under absorption costing if average sales are 498,000 and planned production is changed to 500,000?

Which of the following inventory costing methods results in the least amount of costs being inventoried?

Operating income reported on the end-of-period financial statements is changed when ________ is used to handle the production-volume variance at the end of the accounting period.

The choice of the capacity level used to allocate budgeted fixed manufacturing costs to products can greatly affect the product-cost information available to managers.

If the unit level of inventory increases during an accounting period,then ________.

Theoretical capacity is unattainable in the real world.