Cara Company has the following information pertaining to its two divisions for the current year: Common expenses are $18,000 for the current year. $\begin{array}{lrr}&\text { European } & \text { American } \\ &\text { Division } & \text { Division }\\ \text { Variable selling and administrative expenses } & \$ 40,000 & \$ 55,000 \\ \text { Direct fixed manufacturing expenses } & 22,000 & 60,000 \\ \text { Sales } & 120,000 & 220,000 \\ \text { Direct fixed selling and administrative expenses } & 18,000 & 45,000 \\ \text { Variable manufacturing expenses } & 25,000 & 55,000 \end{array}$ -Refer to the Figure.What is the net income for Cara Company?

A) $2,000 B) $32,500 C) $150,000 D) $300,000 A) $2,000 B) $32,500 C) $150,000 D) $300,000

Last year, Ella Company produced 10,000 units and sold 9,000 units at a price of $9 per unit. Costs for last year were as follows: Fixed factory overhead is applied on the basis of expected production. Last year, Ella expected to produce 10,000 units. \[\begin{array} { l r } \text { Direct materials } & \$ 10,000 \\ \text { Direct labour } & 15,000 \\ \text { Variable factory overhead } & 5,000 \\ \text { Fixed factory overhead } & 20,000 \\ \text { Variable selling expense } & 7,200 \\ \text { Fixed selling expense } & 5,000 \\ \text { Fixed administrative expense } & 12,000 \end{array}\] -Refer to the Figure.What is the operating income for last year under absorption costing?

A) $11,300 B) $11,800 C) $12,520 D) $36,000 A) $11,300 B) $11,800 C) $12,520 D) $36,000

Westwood Company has the following information the current year: Eastwood had no beginning inventories. $\begin{array}{lr} \text { Selling price } & \$ 300 \text { per unit } \\ \text { Variable production costs } & \$ 80 \text { per unit produced } \\ \text { Variable selling and administrative expenses } & \$ 32 \text { per unit sold } \\ \text { Fixed production costs } & \$ 400,000 \\ \text { Fixed selling and administrative expenses } & \$ 280,000 \\ \text { Units produced } & 20,000 \text { units } \\ \text { Units sold } & 16,000 \text { units } \end{array}$ -Refer to the Figure.What is the ending inventory for Westwood using the absorption costing method?

A) $80,000 B) $120,000 C) $180,000 D) $400,000 A) $80,000 B) $120,000 C) $180,000 D) $400,000

The following information pertains to Shark Corporation: \[\begin{array} { l r } \text { Beginning inventory } & 0 \text { units } \\ \text { Ending inventory } & 6,000 \text { units } \\ \text { Direct labour per unit } & \$ 2022 \\ \text { Direct materials per unit } & 1618 \\ \text { Variable overhead per unit } & 48 \\ \text { Fixed overhead per unit } & 1012 \\ \text { Variable selling costs per unit } & 1214 \\ \text { Fixed selling costs per unit } & 1618 \end{array}\] -Refer to the Figure.What is the value of ending inventory when using the absorption-costing method?

A) $200,000 B) $348,000 C) $368,000 D) $390,000 A) $200,000 B) $348,000 C) $368,000 D) $390,000

Cara Company has the following information pertaining to its two divisions for the current year: Common expenses are $18,000 for the current year. $\begin{array}{lrr}&\text { European } & \text { American } \\ &\text { Division } & \text { Division }\\ \text { Variable selling and administrative expenses } & \$ 40,000 & \$ 55,000 \\ \text { Direct fixed manufacturing expenses } & 22,000 & 60,000 \\ \text { Sales } & 120,000 & 220,000 \\ \text { Direct fixed selling and administrative expenses } & 18,000 & 45,000 \\ \text { Variable manufacturing expenses } & 25,000 & 55,000 \end{array}$ -Refer to the Figure.What is the segment margin for American Division?

A) $5,000 B) $55,000 C) $105,000 D) $155,000 A) $5,000 B) $55,000 C) $105,000 D) $155,000

Assume the following information for Green Bluff's #1 Product Line: \[\begin{array} { l r } \text { Sales } & \$ 600,000 \\ \text { Variable manufacturing expenses } & 120,000 \\ \text { Direct fixed manufacturing expenses } & 75,000 \\ \text { Variable selling and administrative expenses } & 65,000 \\ \text { Direct fixed selling and administrative expenses } & 60,000 \end{array}\] -Refer to the Figure.What is the contribution margin of the product line?

A) $215,000 B) $325,000 C) $415,000 D) $480,000 A) $215,000 B) $325,000 C) $415,000 D) $480,000

The following information pertains to Shark Corporation: \[\begin{array} { l r } \text { Beginning inventory } & 0 \text { units } \\ \text { Ending inventory } & 6,000 \text { units } \\ \text { Direct labour per unit } & \$ 2022 \\ \text { Direct materials per unit } & 1618 \\ \text { Variable overhead per unit } & 48 \\ \text { Fixed overhead per unit } & 1012 \\ \text { Variable selling costs per unit } & 1214 \\ \text { Fixed selling costs per unit } & 1618 \end{array}\] -Refer to the Figure.What is the value of ending inventory when using the variable costing method?

A) $288,000 B) $320,000 C) $250,000 D) $390,000 A) $288,000 B) $320,000 C) $250,000 D) $390,000

Exam 8: Absorption and Variable Costing, and Inventory Management

Cara Company has the following information pertaining to its two divisions for the current year: Common expenses are $18,000 for the current year. European American Division 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 Variable manufacturing expenses 25,000 55,000 -Refer to the Figure.What is the net income for Cara Company?

(Multiple Choice)

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Question 41

Match each statement with the correct item below. -Carrying costs

(Multiple Choice)

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Question 42

Last year, Ella Company produced 10,000 units and sold 9,000 units at a price of $9 per unit. Costs for last year were as follows: Fixed factory overhead is applied on the basis of expected production. Last year, Ella expected to produce 10,000 units. Direct materials \ 10,000 Direct labour 15,000 Variable factory overhead 5,000 Fixed factory overhead 20,000 Variable selling expense 7,200 Fixed selling expense 5,000 Fixed administrative expense 12,000 -Refer to the Figure.What is the operating income for last year under absorption costing?

(Multiple Choice)

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Question 43

How does a JIT system respond to the problems traditionally solved by carrying inventories?

(Multiple Choice)

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Question 44

Westwood Company has the following information the current year: Eastwood had no beginning inventories. Selling 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 -Refer to the Figure.What is the ending inventory for Westwood using the absorption costing method?

(Multiple Choice)

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Question 45

What is the economic order quantity (EOQ)?

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Question 46

Theele Corporation has the following information for April, May, and June: Production costs per unit (based on 10,000 units) are as follows: April June Units produced 10,000 10,000 10,000 Units sold 7,000 8,500 10,500 Theele Corporation had no beginning inventories for April, and all units were sold for $55 per unit. Costs are stable over the three months. Direct materials \ 13 Direct labour 9 Variable factory overhead 7 Fixed factory overhead 5 Variable selling and administrative expenses 10 Fixed selling and administrative expenses 4 -Refer to the Figure.What is the May ending inventory for Theele Corporation when using the absorption costing method?

(Multiple Choice)

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Question 47

Match each statement with the correct item below. -Economic order quantity

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Question 48

Consider the following portion of a segmented income statement for the year just ended.Assume fixed expenses of Division A include $60,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments or reduce the common expenses. What is A's divisional segment margin? Sales \ 200,000 Variable manufacturing costs 120,000 Gross profit \ 80,000 Fixed expenses (direct and allocated) 100,000 Operating income (loss) \ (20,000)

(Multiple Choice)

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Question 49

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

(Multiple Choice)

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Question 50

Theele Corporation has the following information for April, May, and June: Production costs per unit (based on 10,000 units) are as follows: April June Units produced 10,000 10,000 10,000 Units sold 7,000 8,500 10,500 Theele Corporation had no beginning inventories for April, and all units were sold for $55 per unit. Costs are stable over the three months. Direct materials \ 13 Direct labour 9 Variable factory overhead 7 Fixed factory overhead 5 Variable selling and administrative expenses 10 Fixed selling and administrative expenses 4 -Refer to the Figure.What is the May contribution margin for Theele Corporation when using the variable costing method?

(Multiple Choice)

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Question 51

The following information pertains to Shark Corporation: Beginning inventory 0 units Ending inventory 6,000 units Direct labour per unit \ 2022 Direct materials per unit 1618 Variable overhead per unit 48 Fixed overhead per unit 1012 Variable selling costs per unit 1214 Fixed selling costs per unit 1618 -Refer to the Figure.What is the value of ending inventory when using the absorption-costing method?

(Multiple Choice)

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Question 52

Total inventory-related cost consists of ordering cost and carrying cost.

(True/False)

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Question 53

Match each statement with the correct item below. -Stockout costs

(Multiple Choice)

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Question 54

Segment sales revenue minus which of the following sets of costs is equal to segment margin?

(Multiple Choice)

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Question 55

Cara Company has the following information pertaining to its two divisions for the current year: Common expenses are $18,000 for the current year. European American Division 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 Variable manufacturing expenses 25,000 55,000 -Refer to the Figure.What is the segment margin for American Division?

(Multiple Choice)

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Question 56

Assume the following information for Green Bluff's #1 Product Line: Sales \ 600,000 Variable manufacturing expenses 120,000 Direct fixed manufacturing expenses 75,000 Variable selling and administrative expenses 65,000 Direct fixed selling and administrative expenses 60,000 -Refer to the Figure.What is the contribution margin of the product line?

(Multiple Choice)

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Question 57

The following information pertains to Shark Corporation: Beginning inventory 0 units Ending inventory 6,000 units Direct labour per unit \ 2022 Direct materials per unit 1618 Variable overhead per unit 48 Fixed overhead per unit 1012 Variable selling costs per unit 1214 Fixed selling costs per unit 1618 -Refer to the Figure.What is the value of ending inventory when using the variable costing method?

(Multiple Choice)

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Question 58

What is the difference between absorption-costing income and variable-costing income?

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Question 59

Fellow's Manufacturing Company produces three products: X,Y,and Z.The income statement for this year is as follows: The sales,contribution margin ratios,and direct fixed expenses for the three types of products are as follows: $Fellow's Manufacturing Company produces three products: X,Y,and Z.The income statement for this year is as follows: The sales,contribution margin ratios,and direct fixed expenses for the three types of products are as follows: Required: Prepare income statements segmented by products.Include a column for the entire firm in the statement. \begin{array}{lrrr} & X & Y & Z \\ \text { Sales } & \$ 60,000 & \$ 40,000 & \$ 100,000 \\ \text { Contribution margin ratio } & 35 \% & 30 \% & 40 \% \\ \text { Direct fixed expenses of products } & \$ 8,000 & \$ 5,000 & \$ 4,000 \end{array}$ Required: Prepare income statements segmented by products.Include a column for the entire firm in the statement. X Y Z Sales \ 60,000 \ 40,000 \ 100,000 Contribution margin ratio 35\% 30\% 40\% Direct fixed expenses of products \ 8,000 \ 5,000 \ 4,000

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Question 60

Showing 41 - 60 of 97

Match each statement with the correct item below. -Carrying costs

How does a JIT system respond to the problems traditionally solved by carrying inventories?

What is the economic order quantity (EOQ)?

Match each statement with the correct item below. -Economic order quantity

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

Total inventory-related cost consists of ordering cost and carrying cost.

Match each statement with the correct item below. -Stockout costs

Segment sales revenue minus which of the following sets of costs is equal to segment margin?

What is the difference between absorption-costing income and variable-costing income?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

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