Exam 9: Inventory Costing and Capacity Analysis

Garfield Company has the following information for the current year: What is the difference between operating incomes under absorption costing and variable costing?

Time Again,LLC produces and sells a mantel clock for $100 per unit.In 2017,42,125 clocks were produced and 37,958 were sold.Other information for the year includes: What is the inventoriable cost per unit using variable costing?

Using ________ as the denominator level also gives the manager a more accurate idea of the resources needed and used to produce a unit by excluding the cost of unused capacity.

Fast Track Auto produces and sells an auto part for $85 per unit.In 2017,110,000 parts were produced and 90,000 units were sold.Other information for the year includes: What is the inventoriable cost per unit using absorption costing?

Which of the following is true of variable costing?

If the variable manufacturing overhead is $50 per unit for a company,the lowest budgeted manufacturing cost per unit can be obtained by using normal capacity utilization as the denominator level capacity.

Jupiter Corporation incurred fixed manufacturing costs of $18,000 during 2017.Other information for 2017 includes: The budgeted denominator level is 2,400 units. Units produced total 2,700 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. The operating income using variable costing will be ________ as compared to the operating income under absorption costing.(Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar. )

In variable costing,all nonmanufacturing costs are subtracted from contribution margin.

If 1,000 units are produced and only 700 units are sold,________ results in the greatest amount of expense reported on the income statement.

Absorption-costing income statements usually do not differentiate between variable and fixed costs.

________ is the level of capacity utilization that managers expect for the current budget period,which is typically one year.

When production quantity exceeds sales,throughput costing results in reporting lower operating income than variable costing.

Swan Textiles Inc.produces and sells a decorative pillow for $98.00 per unit.In the first month of operation,2,200 units were produced and 1,800 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes: Variable manufacturing costs \ 22.00 per unit Variable marketing costs \ 3.90 per unit Fixed manufacturing costs \ 14 per unit Administrative expenses, all fixed \ 19.50 per unit Ending inventories: Direct materials -0- WIP -0- Finished goods 400 units What is the operating income using variable costing?

A company should use the same denominator level capacity for all the budgets and other purposes so as to facilitate comparability and avoid misrepresentation.

Throughput costing provides less incentive to produce for inventory than either variable costing or,especially,absorption costing.

Under variable costing,if a manager's bonus is tied to operating income,then increasing inventory levels compared to last year would result in ________.

A product is sold for $130.Its cost consists of $25 of direct materials,$10 of direct labor,and $30 of manufacturing overhead.What is the throughput margin?

A company may use absorption costing for external reporting and still choose to use throughput costing for internal reports.

Usually there is no production-volume variance when normal capacity utilization is used as the denominator level.

Swansea Finishing produces and sells a decorative pillow for $103.00 per unit.In the first month of operation,2,300 units were produced and 1,800 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes: Variable manufacturing costs \ 23.00 per unit Variable marketing costs \ 8.00 per unit Fixed manufacturing costs \ 14 per unit Administrative expenses, all fixed \ 20.00 per unit Ending inventories: -0- Direct materials -0- WIP 500 units Finished goods What is cost of goods sold per unit using variable costing?