Question 1

The product costing approach required by GAAP is referred to as ________.

Accepted Answer

The answer of The product costing approach required by GAAP...

Question 2

Lukin Corporation reports the following first year production cost information:
 $$\begin{array} { | l | l | } 
\hline \text { Units produced } & 62,000 \text { units } \
\hline \text { Units sold } & 59,000 \text { units } \
\hline \text { Sales price } & \$ 350 \text { per unit } \
\hline \text { Direct labor } & \$ 41 \text { per unit } \
\hline \text { Direct materials } & \$ 15 \text { per unit } \
\hline \text { Variable overhead } & \$ 150 \text { per unit } \
\hline \text { Fixed overhead } & \$ 4,340,000 \text { in total } \
\hline \text { Operating expenses } & \$ 1,000,000 \
\hline
\end{array}$$ 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.

Accepted Answer

a. $41 DL + $15 DM + $150 VOH = $206 per

Question 3

Variable costing is required by Generally Accepted Accounting Principles (GAAP) for financial statement purposes.

Accepted Answer

A) True 
 B)False

Question 4

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:   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?

Accepted Answer

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.

Question 5

[The following information applies to the questions displayed below.]
Scavenger Company, a manufacturer of recycling bins, began operations on January 1 of the current year. During this time, the company produced 60,000 units and sold 55,000 units at a sales price of $15 per unit. Cost information for this year is shown in the following table:
  
-Given the Scavenger Company data, what is net income using variable costing?

Accepted Answer

A)  $201,250 
B)  $181,250 
C)  $150,000 
D)  $177,600 
E)  $276,250 
A)  $201,250 
B)  $181,250 
C)  $150,000 
D)  $177,600 
E)  $276,250

Question 6

A company reports the following information for its first year of operations:   If the company's cost per unit of finished goods using variable costing is $2,375, what is total variable overhead?

Accepted Answer

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

Question 7

How will net income under variable costing compare to net income under absorption costing in the following three situations? Explain briefly the cause of any differences.
(a) Units produced equal units sold
(b) Units produced exceed units sold
(c) Units produced are less than units sold

Accepted Answer

(a) Income is identical under variable c

Question 8

Mentor Corp. has provided the following information for the current year:   Calculate the unit product cost using absorption costing.

Accepted Answer

A)  $245 
B)  $275 
C)  $55 
D)  $145 
E)  $125 
A)  $245 
B)  $275 
C)  $55 
D)  $145 
E)  $125

Question 9

Variable costing treats fixed overhead cost as a period cost.

Accepted Answer

A) True 
 B)False

Question 10

Absorption costing is required under GAAP.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following best describes costs assigned to the product under the absorption costing method? Direct labor (DL)
Direct materials (DM)
Variable selling and administrative (VSA)
Variable manufacturing overhead (VOH)
Fixed selling and administrative (FSA)
Fixed manufacturing overhead (FOH)

Accepted Answer

A)  DL, DM, VSA, and VOH. 
B)  DL, DM, and VOH. 
C)  DL, DM, VOH, and FOH. 
D)  DL and DM. 
E)  DL, DM, FSA, and FOH. 
A)  DL, DM, VSA, and VOH. 
B)  DL, DM, and VOH. 
C)  DL, DM, VOH, and FOH. 
D)  DL and DM. 
E)  DL, DM, FSA, and FOH.

Question 12

Decko Industries reported the following monthly data:   What is the company's contribution margin for this month if 50,000 units were sold?

Accepted Answer

A)  $1,326,000 
B)  $1,716,000 
C)  $1,275,000 
D)  $1,650,000 
E)  $1,450,000 
A)  $1,326,000 
B)  $1,716,000 
C)  $1,275,000 
D)  $1,650,000 
E)  $1,450,000

Question 13

A company normally sells a product for $20 per unit. Variable per unit costs for this product are: $2 direct materials, $4 direct labor, and $1.50 variable overhead. The company is currently operating at 70% of capacity producing 14,000 units per year. Total fixed costs are $42,000 per year. The company should not accept a special order for 2,000 units which would be sold for $10 per unit because there would be an incremental loss on the order.

Accepted Answer

A) True 
 B)False

Question 14

Under absorption costing, a company had the following unit costs when 9,000 units were produced.   Compute the total product cost per unit under absorption costing if 25,000 units had been produced.

Accepted Answer

A)  $28.25 
B)  $23.45 
C)  $26.25 
D)  $20.75 
E)  $15.25 
A)  $28.25 
B)  $23.45 
C)  $26.25 
D)  $20.75 
E)  $15.25

Question 15

Assuming fixed costs remain constant, and a company produces more units than it sells, then income under absorption costing is less than income under variable costing.

Accepted Answer

A) True 
 B)False

Question 16

A company is currently operating at 70% capacity producing 8,000 units. Cost information relating to this current production is shown in the following table:
 
$$\begin{array} { | l | r | } 
\hline & \text { Per Unit } \
\hline \text { Sales price } & \$ 15.00 \
\hline \text { Direct material } & \$ 3.20 \
\hline \text { Direct labor } & \$ 7.10 \
\hline \text { Variable overhead } & \$ 0.05 \
\hline \text { Fixed overhead } & \$ 0.60 \
\hline
\end{array}$$ The company has been approached by a customer with a request for a special order for 1,500 units. The sales price per unit for this special order is $10. Should the company accept the special order?

Accepted Answer

8,000/.7 - 8,000 = 3,428 unit

Question 17

Under an income statement prepared using absorption costing, expenses are grouped according to cost behavior.

Accepted Answer

A) True 
 B)False

Question 18

Reporting contribution margin by market segment is useful in assessing the profitability of each segment.

Accepted Answer

A) True 
 B)False

Question 19

Given the following data, calculate the total product cost per unit under absorption costing.

Accepted Answer

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

Question 20

What is a contribution margin report?

Accepted Answer

A contribution margin report presents co

The product costing approach required by GAAP is referred to as ________.

Variable costing is required by Generally Accepted Accounting Principles (GAAP) for financial statement purposes.

A company reports the following information for its first year of operations: If the company's cost per unit of finished goods using variable costing is $2,375, what is total variable overhead?

How will net income under variable costing compare to net income under absorption costing in the following three situations? Explain briefly the cause of any differences. (a) Units produced equal units sold (b) Units produced exceed units sold (c) Units produced are less than units sold

Mentor Corp. has provided the following information for the current year: Calculate the unit product cost using absorption costing.

Variable costing treats fixed overhead cost as a period cost.

Absorption costing is required under GAAP.

Which of the following best describes costs assigned to the product under the absorption costing method? Direct labor (DL) Direct materials (DM) Variable selling and administrative (VSA) Variable manufacturing overhead (VOH) Fixed selling and administrative (FSA) Fixed manufacturing overhead (FOH)

Decko Industries reported the following monthly data: What is the company's contribution margin for this month if 50,000 units were sold?

Under absorption costing, a company had the following unit costs when 9,000 units were produced. Compute the total product cost per unit under absorption costing if 25,000 units had been produced.

Assuming fixed costs remain constant, and a company produces more units than it sells, then income under absorption costing is less than income under variable costing.

Under an income statement prepared using absorption costing, expenses are grouped according to cost behavior.

Reporting contribution margin by market segment is useful in assessing the profitability of each segment.

Given the following data, calculate the total product cost per unit under absorption costing.

What is a contribution margin report?

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 Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

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Exam 6: Variable Costing and Analysis

The product costing approach required by GAAP is referred to as ________.

Variable costing is required by Generally Accepted Accounting Principles (GAAP) for financial statement purposes.

A company reports the following information for its first year of operations: If the company's cost per unit of finished goods using variable costing is $2,375, what is total variable overhead?

How will net income under variable costing compare to net income under absorption costing in the following three situations? Explain briefly the cause of any differences. (a) Units produced equal units sold (b) Units produced exceed units sold (c) Units produced are less than units sold

Mentor Corp. has provided the following information for the current year: Calculate the unit product cost using absorption costing.

Variable costing treats fixed overhead cost as a period cost.

Absorption costing is required under GAAP.

Which of the following best describes costs assigned to the product under the absorption costing method? Direct labor (DL) Direct materials (DM) Variable selling and administrative (VSA) Variable manufacturing overhead (VOH) Fixed selling and administrative (FSA) Fixed manufacturing overhead (FOH)

Decko Industries reported the following monthly data: What is the company's contribution margin for this month if 50,000 units were sold?

Under absorption costing, a company had the following unit costs when 9,000 units were produced. Compute the total product cost per unit under absorption costing if 25,000 units had been produced.

Assuming fixed costs remain constant, and a company produces more units than it sells, then income under absorption costing is less than income under variable costing.

Under an income statement prepared using absorption costing, expenses are grouped according to cost behavior.

Reporting contribution margin by market segment is useful in assessing the profitability of each segment.

Given the following data, calculate the total product cost per unit under absorption costing.

What is a contribution margin report?

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 Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

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