Stosho Company incurred the following costs in manufacturing desk calculators: During the period, the company produced and sold 2,000 units. \[\begin{array} { l r } \text { Direct materials } & \$ 28 \\ \text { Indirect materials (variable) } & 8 \\ \text { Direct labour } & 16 \\ \text { Indirect labour (variable) } & 12 \\ \text { Other variable factory overhead } & 20 \\ \text { Fixed factory overhead } & 56 \\ \text { Variable selling expenses } & 40 \\ \text { Fixed selling expenses } & 28 \end{array}\] -Refer to the Figure.What is the inventory cost per unit using absorption costing?

A) $32 B) $84 C) $104 D) $140 A) $32 B) $84 C) $104 D) $140

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 segment margin of the product line?

A) $280,000 B) $325,000 C) $350,000 D) $400,000 A) $280,000 B) $325,000 C) $350,000 D) $400,000

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 net income for Westwood using the variable costing method?

A) $412,000 B) $480,000 C) $600,000 D) $1,200,000 A) $412,000 B) $480,000 C) $600,000 D) $1,200,000

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

A) $41,000 B) $65,000 C) $215,000 D) $325,000 A) $41,000 B) $65,000 C) $215,000 D) $325,000

Exam 8: Absorption and Variable Costing, and Inventory Management

Stosho Company incurred the following costs in manufacturing desk calculators: During the period, the company produced and sold 2,000 units. Direct materials \ 28 Indirect materials (variable) 8 Direct labour 16 Indirect labour (variable) 12 Other variable factory overhead 20 Fixed factory overhead 56 Variable selling expenses 40 Fixed selling expenses 28 -Refer to the Figure.What is the inventory cost per unit using absorption costing?

(Multiple Choice)

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Question 81

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 segment margin of the product line?

(Multiple Choice)

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Question 82

Which inventory cost can include processing costs,cost of insurance for shipping,and unloading?

(Multiple Choice)

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Question 83

If the number of units produced in a period is larger than the number of units sold in a period,absorption costing income will be higher than variable costing income.

(True/False)

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Question 84

Which of the following is NOT a traditional reason for carrying inventory?

(Multiple Choice)

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Question 85

Carmel Company uses 810 units of a part each year. The cost of placing one order is $10; the cost of carrying one unit in inventory for a year is $4. -Refer to the Figure.What is the EOQ for Benton?

(Multiple Choice)

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Question 86

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

(Multiple Choice)

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Question 87

Which of the following costs is NOT included in inventory under absorption costing?

(Multiple Choice)

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Question 88

What is the primary difference between variable and absorption costing?

(Multiple Choice)

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Question 89

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

(Multiple Choice)

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Question 90

On which type of income statement does each of the following costs appear? -Direct materials for units sold

(Multiple Choice)

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Question 91

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 variable costing method?

(Multiple Choice)

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Question 92

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 net income for Operating Company?

(Multiple Choice)

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Question 93

Inventory under absorption costing includes direct materials,direct labour,variable factory overhead,and fixed factory overhead.

(True/False)

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Question 94

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

(Multiple Choice)

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Question 95

Suppose monthly production volume is constant and sales volume is less than production.How will net income react when using variable-costing procedures?

(Multiple Choice)

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Question 96

What costs do the ordering costs become when the economic order quantity (EOQ)model is applied to units produced within the company?

(Multiple Choice)

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Question 97

Which inventory cost can include processing costs,cost of insurance for shipping,and unloading?

If the number of units produced in a period is larger than the number of units sold in a period,absorption costing income will be higher than variable costing income.

Which of the following is NOT a traditional reason for carrying inventory?

Carmel Company uses 810 units of a part each year. The cost of placing one order is $10; the cost of carrying one unit in inventory for a year is $4. -Refer to the Figure.What is the EOQ for Benton?

Which of the following costs is NOT included in inventory under absorption costing?

What is the primary difference between variable and absorption costing?

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

On which type of income statement does each of the following costs appear? -Direct materials for units sold

Inventory under absorption costing includes direct materials,direct labour,variable factory overhead,and fixed factory overhead.

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

Suppose monthly production volume is constant and sales volume is less than production.How will net income react when using variable-costing procedures?

What costs do the ordering costs become when the economic order quantity (EOQ)model is applied to units produced within the company?

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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