Exam 5: Variable Costing for Management Analysis

The level of inventory of a manufactured product has increased by 7,000 units during a period. The following data are also available: What would be the effect on income from operations if absorption costing is used rather than variable costing?

If variable cost of goods sold totaled $90,000 for the year (18,000 units at $5.00 each) and the planned variable cost of goods sold totaled $86,400 (16,000 units at $5.40 each), the effect of the quantity factor on the change in variable cost of goods sold is:

The Excelsior Company has three salespersons. Average sales price per unit sold, average variable manufacturing costs per unit, and number of units sold for each salesperson is shown below. Commissions are according to the following schedule:

The level of inventory of a manufactured product has increased by 4,000 units during a period. The following data are also available: What would be the effect on income from operations if absorption costing is used rather than variable costing?

On the variable costing income statement, variable costs are deducted from contribution margin to yield manufacturing margin.

A business operated at 100% of capacity during its first month and incurred the following costs: If 75 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet?

In determining cost of goods sold, two alternate costing concepts can be used: absorption costing and variable costing.

Contribution margin reporting can be beneficial for analyzing, which of the following?

For a period during which the quantity of inventory at the end equals the inventory at the beginning, income from operations reported under variable costing will be smaller than income from operations reported under absorption costing.

Ford's Expedition sport utility vehicle is its most profitable model. Therefore, Ford need not promote its Expedition model anymore.

If sales totaled $800,000 for the year (80,000 units at $10.00 each) and the planned sales totaled $799,500 (78,000 units at $10.25 each), the effect of the unit price factor on the change in sales is:

Fixed costs are $50 per unit and variable costs are $125 per unit. Production was 130,000 units, while sales were 125,000 units. Determine (a) whether variable cost income from operations is less than or greater than absorption costing income from operations, and (b) the difference in variable costing and absorption costing income from operations.

Another name for variable costing is:

On what effects does contribution margin analysis focus?

Property taxes on a factory building would be included as part of the cost of products manufactured under the absorption costing concept.

In variable costing, fixed costs do not become part of the cost of goods manufactured, but are considered an expense of the period.

The systematic examination of differences between planned and actual contribution margins is termed contribution margin analysis.

If variable selling and administrative expenses totaled $124,000 for the year (80,000 units at $1.55 each) and the planned variable selling and administrative expenses totaled $136,500 (78,000 units at $1.75 each), the effect of the quantity factor on the change in variable selling and administrative expenses is:

Under absorption costing, which of the following costs would not be included in finished goods inventory?

Which of the following statements is correct using the direct costing concept?