Exam 5: Variable Costing for Management Analysis

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and variable factory overhead cost?

On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January:

In contribution margin analysis, the effect of a difference in the number of units sold, assuming no change in unit sales price or cost, is termed the unit price or unit cost factor.

The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured:

The factory superintendent's salary would be included as part of the cost of products manufactured under the variable costing concept.

Under variable costing, which of the following costs would be included in finished goods inventory?

Fixed factory overhead costs are included as part of the cost of products manufactured under the absorption costing concept.

In the absorption costing income statement, deduction of the cost of goods sold from sales yields net profit.

On the variable costing income statement, all of the fixed costs are deducted from the contribution margin.

In contribution margin analysis, the quantity factor is computed as:

In contribution margin analysis, the effect of a difference in unit sales price or unit cost on the number of units sold is termed the quantity factor.

On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is the:

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what is the amount of the manufacturing margin that would be reported on the absorption costing income statement?

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

In contribution margin analysis, the effect of a difference in the number of units sold, assuming no change in unit sales price or cost, is termed the quantity factor.

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,600 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

Service firms can only have one activity base for analyzing changes in costs.

The amount of income under absorption costing will be less than the amount of income under variable costing when units manufactured:

If variable cost of goods sold totaled $80,000 for the year (16,000 units at $5.00 each) and the planned variable cost of goods sold totaled $86,250 (15,000 units at $5.75 each), the effect of the unit cost factor on the change in variable cost of goods sold is:

The systematic examination of the differences between planned and actual contribution margin is termed the: