Exam 8: Absorption and Variable Costing, and Inventory Management

What is the formula to calculate ordering cost?

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 cost of ending inventory for Westwood using the variable costing method?

Product cost includes all costs of the company.

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 net income for Westwood using the absorption costing method?

What is the relationship between absorption costing net income and variable costing net income?

Which of the following types of costs does NOT appear on a variable costing income statement?

What is the formula to calculate total carrying cost?

On which type of income statement does each of the following costs appear? -Fixed factory overhead for the period

Prairie Inc.mines three products.Gold ore sells for $1,000 per ton,variable costs are $600 per ton,and fixed mining costs are $250,000.The segment margin for the year was ($100,000).The management of Prairie Mining was considering dropping the mining of gold ore.Only one-half of the fixed expenses are direct and would be eliminated if the segment was dropped. What were the sales in tons for the year?

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 April ending inventory for Theele Corporation when using the variable costing method?

Shedding Company has two divisions with the following segment margins for the current year: Northern,$400,000; Southern,$800,000.Common expenses of the company are $100,000.What is Shedding Company's net income?

The following information pertains to Nute Corporation: Beginning inventory 1,000 units Ending inventory 6,000 units Direct labour per unit \ 40 Direct materials per unit 20 Variable overhead per unit 10 Fixed overhead per unit 30 Variable selling and administrative costs per unit 6 Fixed selling and administrative costs per unit 14 -Refer to the Figure.What is the value of the ending inventory using the absorption costing method?

Operating Company has the following information pertaining to its two divisions for the current year: Common expenses are $50,000 for the current year. North Division South Division Variable selling and administrative expenses \ 70,000 \ 90,000 Direct fixed manufacturing expenses 35,000 100,000 Sales 300,000 500,000 Direct fixed selling and administrative expenses 30,000 70,000 Variable manufacturing expenses 40,000 100,000 -Refer to the Figure.What is the segment margin for Division South?

Stimpson Company sells 900 units of its deluxe product each year.The cost of setting up for one production run is $150; the cost of carrying one unit in inventory for a year is $3. A. What is the economic order quantity? B. What is the annual setup cost of the EOQ policy? C. What is the annual carrying cost of the EOQ policy? D. What is the total inventory-related cost of the EOQ policy?

On which type of income statement does each of the following costs appear? -Variable selling expense

Absorption costing income statements and variable costing income statements may differ because of their treatment of fixed overhead costs.

Which inventory cost can include lost sales,cost of expediting,and cost of interrupted production?

Darker Company produced 30,000 units and sold 28,000 units in the current year.Beginning inventory was zero.During the period,the following costs were incurred: Required: Compute the dollar amount of ending inventory using: A. Absorption costing B. Variable costing

Triple M Company had the following data for the month: Fixed overhead is $4,000 per month, which is applied to production on the basis of normal activity of 2,000 units. During the month, 2,000 units were produced. Loring started the month with 300 units in beginning inventory, with unit product cost equal to this month's unit product cost. A total of 2,100 units were sold during the month at price of $14 per unit. Selling and administrative expense for the month, all fixed, totalled $3,600. Variable costs per unit: Direct materials \ 4.00 Direct labour 3.20 Variable overhead 1.00 Variable selling expenses 0.40 -Refer to the Figure.What is the operating income under absorption costing?

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 variable costing?