Given the following data, calculate product cost per unit under variable costing. \[\begin{array} { | l | c | } \hline \text { Direct labor } & \$ 7 \text { per unit } \\ \hline \text { Direct materials } & \$ 1 \text { per unit } \\ \hline \text { Overhead } & \\ \hline \text { Total variable overhead } & \$ 20,000 \\ \hline \text { Total fixed overhead } & \$ 90,000 \\ \hline & \\ \hline \text { Expected units to be produced } & 40,000 \text { units } \\ \hline \end{array}\]

A) $8 per unit B) $8.50 per unit C) $10.25 per unit D) $10.75 per unit E) $12 per unit A) $8 per unit B) $8.50 per unit C) $10.25 per unit D) $10.75 per unit E) $12 per unit

Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year. \[\begin{array} { l l } \text { Units produced this year } & 25,000 \text { units } \\ \text { Units sold this year } & 15,000 \text { units } \\ \text { Direct materials } & \$ 9 \text { per unit } \\ \text { Direct labor } & \$ 11 \text { per unit } \\ \text { Variable overhead } & \$ 75,000 \text { in total } \\ \text { Fixed overhead } & \$ 137,500 \text { in total } \end{array}\] -Given Advanced Company's data, and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under variable costing.

A) $55,000 B) $67,500 C) $80,500 D) $122,500 E) $205,000 A) $55,000 B) $67,500 C) $80,500 D) $122,500 E) $205,000

Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year. \[\begin{array} { l l } \text { Units produced this year } & 25,000 \text { units } \\ \text { Units sold this year } & 15,000 \text { units } \\ \text { Direct materials } & \$ 9 \text { per unit } \\ \text { Direct labor } & \$ 11 \text { per unit } \\ \text { Variable overhead } & \$ 75,000 \text { in total } \\ \text { Fixed overhead } & \$ 137,500 \text { in total } \end{array}\] -Given Advanced Company's data, and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under absorption costing.

A) $55,000 B) $67,500 C) $80,500 D) $122,500 E) $205,000 A) $55,000 B) $67,500 C) $80,500 D) $122,500 E) $205,000

Lukin-Evers Corporation reports the following first year production cost information. \[\begin{array} { l l } \text { Units produced } & 62,000 \text { units } \\ \text { Units sold } & 59,000 \text { units } \\ \text { Sales price } & \$ 350 \text { per unit } \\ \text { Direct labor } & \$ 41 \text { per unit } \\ \text { Direct materials } & \$ 15 \text { per unit } \\ \text { Variable overhead } & \$ 9,300,000 \text { in total } \\ \text { Fixed overhead } & \$ 4,340,000 \text { in total } \\ \text { Operating expenses } & \$ 1,000,000 \end{array}\] (a.) Compute production cost per unit under variable costing. (b.) Compute production cost per unit under absorption costing. (c.) Determine the net income using variable costing. (d.) Determine the net income using absorption costing.

(a.) $41 DL + $15 DM + $9,300,000/62,000

Swisher, Incorporated reports the following annual cost data for its single product. \[\begin{array} { l l } \text { Normal production level } & 30,000 \text { units } \\ \text { Direct materials } & \$ 6.40 \text { per unit } \\ \text { Direct labor } & \$ 3.93 \text { per unit } \\ \text { Variable overhead } & \$ 5.80 \text { per unit } \\ \text { Fixed overhead } & \$ 150,000 \text { in total } \end{array}\] This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's gross margin increase or decrease under variable costing?

A) $60,000 decrease. B) $90,000 decrease. C) There is no change in gross margin. D) $90,000 increase. E) $60,000 increase. A) $60,000 decrease. B) $90,000 decrease. C) There is no change in gross margin. D) $90,000 increase. E) $60,000 increase.

A company reports the following information for its first year of operations. \[\begin{array} { l l } \text { Units produced this year } & 650 \text { units } \\ \text { Units sold this year } & 500 \text { units } \\ \text { Direct materials } & \$ 750 \text { per unit } \\ \text { Direct labor } & \$ 1,000 \text { per unit } \\ \text { Variable overhead } & ? \text { in total } \\ \text { Fixed overhead } & \$ 308,750 \text { in total } \end{array}\] If the company's cost per unit of finished goods using variable costing is $2,375, what is total variable overhead?

A) $237,500 B) $75,000 C) $312,500 D) $406,250 E) $97,500 A) $237,500 B) $75,000 C) $312,500 D) $406,250 E) $97,500

Given the following data, calculate the total product cost per unit under absorption costing. \[\begin{array} { | l | c | } \hline \text { Direct labor } & \$ 3.50 \text { per unit } \\ \hline \text { Direct materials } & \$ 1.25 \text { per unit } \\ \hline \text { Overhead } & \\ \hline \text { Total variable overhead } & \$ 41,400 \\ \hline \text { Total fixed overhead } & \$ 150,000 \\ \hline & \\ \hline \text { Expected units to be produced } & 18,000 \text { units } \\ \hline \end{array}\]

A) $4.75 per unit B) $7.05 per unit C) $13.08 per unit D) $15.38 per unit E) $16 per unit A) $4.75 per unit B) $7.05 per unit C) $13.08 per unit D) $15.38 per unit E) $16 per unit

A company is currently operating at 80% capacity producing 5,000 units. Current cost information relating to this production is shown in the table below. \[\begin{array} { | l | c | } \hline & \text { Per Unit } \\ \hline \text { Sales price } & \$ 34 \\ \hline \text { Direct material } & \$ 2 \\ \hline \text { Direct labor } & \$ 3 \\ \hline \begin{array} { l } \text { Variable } \\ \text { overhead } \end{array} & \$ 4 \\ \hline \text { Fixed overhead } & \$ 5 \\ \hline \end{array}\] The company has been approached by a customer with a request for a 100 unit special order. What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

A) Any amount over $34 per unit. B) Any amount over $20 per unit. C) Any amount over $14 per unit. D) Any amount over $9 per unit. E) Any amount over $5 per unit. A) Any amount over $34 per unit. B) Any amount over $20 per unit. C) Any amount over $14 per unit. D) Any amount over $9 per unit. E) Any amount over $5 per unit.

Red and White Company reported the following monthly data. \[\begin{array} { l l } \text { Units produced } & 2,000 \text { units } \\ \text { Sales price } & \$ 25 \text { per unit } \\ \text { Direct materials } & \$ 1 \text { per unit } \\ \text { Direct labor } & \$ 2 \text { per unit } \\ \text { Variable overhead } & \$ 3 \text { per unit } \\ \text { Fixed overhead } & \$ 8,000 \text { in total } \end{array}\] -What is Red White's net income under absorption costing if 980 units are sold and operating expenses are $12,000:

A) $(1,380) B) $(2,000) C) $2,700 D) $6,620 E) $10,620 A) $(1,380) B) $(2,000) C) $2,700 D) $6,620 E) $10,620

Given the following data, calculate product cost per unit under absorption costing. \[\begin{array} { | l | c | } \hline \text { Direct labor } & \$ 7 \text { per unit } \\ \hline \text { Direct materials } & \$ 1 \text { per unit } \\ \hline \text { Overhead } & \\ \hline \text { Total variable overhead } & \$ 20,000 \\ \hline \text { Total fixed overhead } & \$ 90,000 \\ \hline & \\ \hline \text { Expected units to be produced } & 40,000 \text { units } \\ \hline \end{array}\]

A) $8 per unit B) $8.50 per unit C) $10.25 per unit D) $10.75 per unit E) $12 per unit A) $8 per unit B) $8.50 per unit C) $10.25 per unit D) $10.75 per unit E) $12 per unit

Exam 19: Variable Costing and Performance Reporting

Given the following data, total product cost per unit under variable costing is $10.75. Direct labor \ 7 per unit Direct materials \ 1 per unit Overhead Total variable overhead \ 20,000 Total fixed overhead \ 90,000 Expected units to be produced 40,000 units

(True/False)

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Question 121

Given the following data, total product cost per unit under absorption costing will be $400 greater than total product cost per unit under variable costing. Direct labor \ 1.50 per unit Direct materials \ 1.50 per unit Overhead Total variable overhead \ 900,000 Total fixed overhead \ 1,200,000 Expected units to be produced 3,000 units

(True/False)

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Question 122

When excess capacity exists managers should accept a special order if the special order price exceeds the ________________________.

(Short Answer)

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Question 123

Given the following data, calculate product cost per unit under variable costing. Direct labor \ 7 per unit Direct materials \ 1 per unit Overhead Total variable overhead \ 20,000 Total fixed overhead \ 90,000 Expected units to be produced 40,000 units

(Multiple Choice)

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Question 124

Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year. Units produced this year 25,000 units Units sold this year 15,000 units Direct materials \ 9 per unit Direct labor \ 11 per unit Variable overhead \ 75,000 in total Fixed overhead \ 137,500 in total -Given Advanced Company's data, and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under variable costing.

(Multiple Choice)

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Question 125

Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year. Units produced this year 25,000 units Units sold this year 15,000 units Direct materials \ 9 per unit Direct labor \ 11 per unit Variable overhead \ 75,000 in total Fixed overhead \ 137,500 in total -Given Advanced Company's data, and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under absorption costing.

(Multiple Choice)

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Question 126

Lukin-Evers Corporation reports the following first year production cost information. Units produced 62,000 units Units sold 59,000 units Sales price \ 350 per unit Direct labor \ 41 per unit Direct materials \ 15 per unit Variable overhead \ 9,300,000 in total Fixed overhead \ 4,340,000 in total Operating expenses \ 1,000,000 (a.) Compute production cost per unit under variable costing. (b.) Compute production cost per unit under absorption costing. (c.) Determine the net income using variable costing. (d.) Determine the net income using absorption costing.

(Essay)

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Question 127

Swisher, Incorporated reports the following annual cost data for its single product. Normal production level 30,000 units Direct materials \ 6.40 per unit Direct labor \ 3.93 per unit Variable overhead \ 5.80 per unit Fixed overhead \ 150,000 in total This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's gross margin increase or decrease under variable costing?

(Multiple Choice)

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Question 128

A company reports the following information for its first year of operations. Units produced this year 650 units Units sold this year 500 units Direct materials \ 750 per unit Direct labor \ 1,000 per unit Variable overhead ? in total Fixed overhead \ 308,750 in total If the company's cost per unit of finished goods using variable costing is $2,375, what is total variable overhead?

(Multiple Choice)

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Question 129

Given the following data, calculate the total product cost per unit under absorption costing. Direct labor \ 3.50 per unit Direct materials \ 1.25 per unit Overhead Total variable overhead \ 41,400 Total fixed overhead \ 150,000 Expected units to be produced 18,000 units

(Multiple Choice)

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Question 130

It is not possible to convert reports prepared using variable costing to absorption costing reports.

(True/False)

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Question 131

A company is currently operating at 80% capacity producing 5,000 units. Current cost information relating to this production is shown in the table below. Per Unit Sales price \ 34 Direct material \ 2 Direct labor \ 3 Variable overhead \ 4 Fixed overhead \ 5 The company has been approached by a customer with a request for a 100 unit special order. What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

(Multiple Choice)

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Question 132

Red and White Company reported the following monthly data. Units produced 2,000 units Sales price \ 25 per unit Direct materials \ 1 per unit Direct labor \ 2 per unit Variable overhead \ 3 per unit Fixed overhead \ 8,000 in total -What is Red White's net income under absorption costing if 980 units are sold and operating expenses are $12,000:

(Multiple Choice)

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Question 133

Using a traditional costing approach, which of the following manufacturing costs are assigned to products?

(Multiple Choice)

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Question 134

The traditional costing approach assigns all manufacturing costs to products.

(True/False)

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Question 135

Given the following data, calculate product cost per unit under absorption costing. Direct labor \ 7 per unit Direct materials \ 1 per unit Overhead Total variable overhead \ 20,000 Total fixed overhead \ 90,000 Expected units to be produced 40,000 units

(Multiple Choice)

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Question 136

What costs are treated as product costs under the absorption costing method?

(Essay)

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Question 137

_______________________ costing is the only acceptable basis for both external reporting and tax reporting.

(Short Answer)

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Question 138

Product costs consist of direct labor, direct materials, and _________________.

(Short Answer)

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Question 139

During a given year, if a company produces more units than it sells, then ending inventory units will be less than beginning inventory units.

(True/False)

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Question 140

Given the following data, total product cost per unit under variable costing is $10.75. Direct labor \ 7 per unit Direct materials \ 1 per unit Overhead Total variable overhead \ 20,000 Total fixed overhead \ 90,000 Expected units to be produced 40,000 units

When excess capacity exists managers should accept a special order if the special order price exceeds the ________________________.

Given the following data, calculate product cost per unit under variable costing. Direct labor \ 7 per unit Direct materials \ 1 per unit Overhead Total variable overhead \ 20,000 Total fixed overhead \ 90,000 Expected units to be produced 40,000 units

Given the following data, calculate the total product cost per unit under absorption costing. Direct labor \ 3.50 per unit Direct materials \ 1.25 per unit Overhead Total variable overhead \ 41,400 Total fixed overhead \ 150,000 Expected units to be produced 18,000 units

It is not possible to convert reports prepared using variable costing to absorption costing reports.

Using a traditional costing approach, which of the following manufacturing costs are assigned to products?

The traditional costing approach assigns all manufacturing costs to products.

Given the following data, calculate product cost per unit under absorption costing. Direct labor \ 7 per unit Direct materials \ 1 per unit Overhead Total variable overhead \ 20,000 Total fixed overhead \ 90,000 Expected units to be produced 40,000 units

What costs are treated as product costs under the absorption costing method?

_______________________ costing is the only acceptable basis for both external reporting and tax reporting.

Product costs consist of direct labor, direct materials, and _________________.

During a given year, if a company produces more units than it sells, then ending inventory units will be less than beginning inventory units.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

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