Exam 9: Inventory Costing and Capacity Analysis

The contribution-margin format of the income statement is used with absorption costing.

Throughput costing considers only direct materials and direct manufacturing labor to be truly variable costs.

In absorption costing,fixed manufacturing overhead is treated as a period cost.

Should a company with high fixed costs and unused capacity raise selling prices to try to fully recoup its costs?

Jean Peck's Furniture manufactures tables for hospitality sector.It takes only bulk orders and each table is sold for $400 after negotiations.In the month of January,it manufactures 3,200 tables and sells 2,400 tables.Actual fixed costs are the same as the amount of fixed costs budgeted for the month. The following information is provided for the month of January: Variable manufarturing costs \ 130 per unit Fixed manufacturing costs \ 90,000 per month Fixed Administrative expenses \ 30,000 per month At the end of the month Jean Peck's Furniture has an ending inventory of finished goods of 800 units.The company also incurs a sales commission of $11 per unit. What is the cost of goods sold per unit when using absorption costing?

Speedy Supplies sells a product at a price of $150.It's variable manufactured cost is $30 and the variable marketing cost per unit is $17.50 with fixed cost per period of $60,000.What would be the change in operating income under variable costs if sales increase from 10,000 to 10,500 units?

Fixed manufacturing overhead is a period cost both under variable costing and under absorption costing.

Which of the following steps can a management take to reduce the undesirable effects of absorption costing?

Jarvis Golf Company sells a special putter for $20 each.In March,it sold 28,000 putters while manufacturing 30,000.There was no beginning inventory on March 1.Production information for March was: Required: a.Compute the cost per unit under both absorption and variable costing. b.Compute the ending inventories under both absorption and variable costing. c.Compute operating income under both absorption and variable costing.

Which of the following statements is true of gross-margin format of the income statement?

Which of the following would not lead to a build up inventory as a strategy to increase operating income?

Henry Chapman Manufacturing Inc.incurred the following expenses during 2017: Fixed manufacturing costs \ 110,000 Fixed nonmanufacturing costs \ 86,000 Unit selling price \ 260 Total unit cost \ 130 Variable manufacturing cost rate \ 50 Units produced 1,330 units What will be the breakeven point in units if absorption costing is used? (Round your final answer up to the next whole unit. )

Ms.Sophia Jones,the company president,has heard that there are multiple breakeven points for every product.She does not believe this and has asked you to provide the evidence of such a possibility.Some information about the company for 2017 is as follows: Total fixed manufacturing overhead \ 180,000 Total other fixed expenses \ 204,000 Total variable manufacturing expenses \ 250,000 Total other variable expenses \ 240,000 Units produced 60,000 units Budgeted production 60,000 units Units sold 50,000 units Selling price \ 42 What are breakeven sales in units using absorption costing? (Round any intermediary calculations to the nearest cent and your final answer up to the next whole unit. )

The amount of fixed manufacturing costs inventoried depends on two factors: the number of units in ending inventory and the rate at which fixed manufacturing overhead costs are allocated to each unit.

In general,if inventory increases during an accounting period,________.

Customers expect to pay a price that includes ________.

The proration approach restates only the ending balances of two inventory accounts: work-in-process and finished goods,to what they would have been if actual rates had been used.

Glossier Images Inc. ,produces decorative statues.Management has provided the following information: What is the total throughput contribution?

Both theoretical capacity and master-budget capacity measure capacity levels in terms of demand for the output of the plant.

Venus Corporation incurred fixed manufacturing costs of $6,600 during 2017.Other information for 2017 includes: The budgeted denominator level is 1,600 units. Units produced total 770 units. Units sold total 600 units. Beginning inventory was zero. The company uses variable costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold. The production-volume variance totals ________.