Question 1

The bottom line of a contribution margin report is net income.

Accepted Answer

A) True 
 B)False

Question 2

Vision Tester, Inc., a manufacturer of optical glass, began operations on February 1 of the current year. During this time, the company produced 900,000 units and sold 800,000 units at a sales price of $12 per unit. Cost information for this year is shown in the following table:   Given this information, which of the following is true?

Accepted Answer

A)  Net income under variable costing will exceed net income under absorption costing by $50,000. 
B)  Net income under absorption costing will exceed net income under variable costing by $50,000. 
C)  Net income will be the same under both absorption and variable costing. 
D)  Net income under variable costing will exceed net income under absorption costing by $60,000. 
E)  Net income under absorption costing will exceed net income under variable costing by $60,000. 
A)  Net income under variable costing will exceed net income under absorption costing by $50,000. 
B)  Net income under absorption costing will exceed net income under variable costing by $50,000. 
C)  Net income will be the same under both absorption and variable costing. 
D)  Net income under variable costing will exceed net income under absorption costing by $60,000. 
E)  Net income under absorption costing will exceed net income under variable costing by $60,000.

Question 3

Contribution margin is also known as gross margin.

Accepted Answer

A) True 
 B)False

Question 4

Countdown Inc. sold 17,000 units of its product at a price of $81 per unit. Total variable cost per unit is $72.09, consisting of $69.05 in variable production cost and $3.04 in variable selling and administrative cost. Compute the total contribution margin.

Accepted Answer

$81.00 - $

Question 5

Fields Cutlery, a manufacturer of gourmet knife sets, produced 20,000 sets and sold 23,000 units during the current year. Beginning inventory under absorption costing consisted of 3,000 units valued at $66,000 (Direct materials $12 per unit; Direct labor, $3 per unit; Variable Overhead, $2 per unit, and Fixed overhead, $5 per unit.) All manufacturing costs have remained constant over the 2-year period. At year-end, the company reported the following income statement using absorption costing:   60% of total selling and administrative expenses are variable. Compute net income under variable costing.

Accepted Answer

A)  $414,000 
B)  $399,000 
C)  $529,000 
D)  $429,000 
E)  $644,000 
A)  $414,000 
B)  $399,000 
C)  $529,000 
D)  $429,000 
E)  $644,000

Question 6

32 Degrees, Inc., a manufacturer of frozen food, began operations on July 1 of the current year. During this time, the company produced 140,000 units and sold 140,000 units at a sales price of $125 per unit. Cost information for this period is shown in the following table:
   a. Prepare 32 Degree's December 31st income statement for the current year under absorption costing.
b. Prepare 32 Degree's December 31st income statement for the current year under variable costing.

Accepted Answer

a.
32 DEGREES, INC
Income Statement (Abs

Question 7

Wind Fall, a manufacturer of leaf blowers, began operations this year. During this year, the company produced 10,000 leaf blowers and sold 8,500. At year-end, the company reported the following income statement using absorption costing:   Production costs per leaf blower total $20, which consists of $16 in variable production costs and $4 in fixed production costs (based on the 10,000 units produced). Fifteen percent of total selling and administrative expenses are variable. Compute net income under variable costing.

Accepted Answer

A)  $146,500 
B)  $158,500 
C)  $237,500 
D)  $206,500 
E)  $246,500 
A)  $146,500 
B)  $158,500 
C)  $237,500 
D)  $206,500 
E)  $246,500

Question 8

What is the general procedure for converting variable costing net income to absorption costing net income?

Accepted Answer

The general formula is variabl

Question 9

________ is a costing method that includes all manufacturing costs in unit product costs.

Accepted Answer

The answer of ________ is a costing method that includes...

Question 10

Dataport Company reports the following annual cost data for its single product:
   This product is normally sold for $230 per unit. If Dataport increases its production to 100,000 units, while sales remain at the current 89,000 unit level, by how much would the company's gross margin increase or decrease under absorption costing? Assume the company has idle capacity to increase current production.

Accepted Answer

$3,738,000/89,000 units = $42 FOH per un

Question 11

Swola Company reports the following annual cost data for its single product.   This product is normally sold for $25 per unit. If Swola increases its production to 200,000 units, while sales remain at the current 75,000 unit level, by how much would the company's income increase or decrease under variable costing?

Accepted Answer

A)  $187,500 increase. 
B)  $112,500 increase. 
C)  There will be no change in income. 
D)  $112,500 decrease. 
E)  $187,500 decrease. 
A)  $187,500 increase. 
B)  $112,500 increase. 
C)  There will be no change in income. 
D)  $112,500 decrease. 
E)  $187,500 decrease.

Question 12

Hayes Inc. provided the following information for the current year:

What is the unit product cost for the year using variable costing?

Accepted Answer

A)  $98 
B)  $66 
C)  $74 
D)  $96 
E)  $95 
A)  $98 
B)  $66 
C)  $74 
D)  $96 
E)  $95

Question 13

Alexis Co. reported the following information for May:   What is the contribution margin for Part A?

Accepted Answer

A)  $1,000,000 
B)  $1,400,000 
C)  $3,600,000 
D)  $2,600,000 
E)  $3,000,000 
A)  $1,000,000 
B)  $1,400,000 
C)  $3,600,000 
D)  $2,600,000 
E)  $3,000,000

Question 14

When units produced equal units sold, reported income is identical under absorption costing and variable costing.

Accepted Answer

A) True 
 B)False

Question 15

The traditional income statement format used for financial reporting is called the contribution margin format.

Accepted Answer

A) True 
 B)False

Question 16

[The following information applies to the questions displayed below.]
Cool Pools, a manufacturer of above ground pools, began operations on January 1 of the current year. During this time, the company produced 45,000 units and sold 44,000 units at a sales price of $60 per unit. Cost information for this year is shown in the following table:
  
-Given the Cool Pools Company data, what is net income using variable costing?

Accepted Answer

A)  $1,649,480 
B)  $1,648,600 
C)  $1,627,150 
D)  $1,709,480 
E)  $1,708,600 
A)  $1,649,480 
B)  $1,648,600 
C)  $1,627,150 
D)  $1,709,480 
E)  $1,708,600

Question 17

Since fixed costs remain constant in the short run, special orders should be accepted as long as the order price is greater than the variable costs.

Accepted Answer

A) True 
 B)False

Question 18

Reliance Corporation sold 4,000 units of its product at a price of $15 per unit. Total variable cost per unit is $8.50, consisting of $7.75 in variable production cost and $0.75 in variable selling and administrative cost. Compute the contribution margin for the company.

Accepted Answer

A)  $26,000 
B)  $34,000 
C)  $60,000 
D)  $31,000 
E)  $36,900 
A)  $26,000 
B)  $34,000 
C)  $60,000 
D)  $31,000 
E)  $36,900

Question 19

Under absorption costing, a company had the following unit costs when 9,000 units were produced.   Compute the total product cost per unit under variable costing if 30,000 units had been produced.

Accepted Answer

A)  $31.75 
B)  $28.25 
C)  $23.45 
D)  $15.25 
E)  $20.75 
A)  $31.75 
B)  $28.25 
C)  $23.45 
D)  $15.25 
E)  $20.75

Question 20

Contribution margin is the excess of sales over total variable costs.

Accepted Answer

A) True 
 B)False

The bottom line of a contribution margin report is net income.

Contribution margin is also known as gross margin.

Countdown Inc. sold 17,000 units of its product at a price of $81 per unit. Total variable cost per unit is $72.09, consisting of $69.05 in variable production cost and $3.04 in variable selling and administrative cost. Compute the total contribution margin.

What is the general procedure for converting variable costing net income to absorption costing net income?

________ is a costing method that includes all manufacturing costs in unit product costs.

Hayes Inc. provided the following information for the current year: What is the unit product cost for the year using variable costing?

Alexis Co. reported the following information for May: What is the contribution margin for Part A?

When units produced equal units sold, reported income is identical under absorption costing and variable costing.

The traditional income statement format used for financial reporting is called the contribution margin format.

Since fixed costs remain constant in the short run, special orders should be accepted as long as the order price is greater than the variable costs.

Reliance Corporation sold 4,000 units of its product at a price of $15 per unit. Total variable cost per unit is $8.50, consisting of $7.75 in variable production cost and $0.75 in variable selling and administrative cost. Compute the contribution margin for the company.

Under absorption costing, a company had the following unit costs when 9,000 units were produced. Compute the total product cost per unit under variable costing if 30,000 units had been produced.

Contribution margin is the excess of sales over total variable costs.

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 bottom line of a contribution margin report is net income.

Contribution margin is also known as gross margin.

Countdown Inc. sold 17,000 units of its product at a price of $81 per unit. Total variable cost per unit is $72.09, consisting of $69.05 in variable production cost and $3.04 in variable selling and administrative cost. Compute the total contribution margin.

What is the general procedure for converting variable costing net income to absorption costing net income?

________ is a costing method that includes all manufacturing costs in unit product costs.

Hayes Inc. provided the following information for the current year: What is the unit product cost for the year using variable costing?

Alexis Co. reported the following information for May: What is the contribution margin for Part A?

When units produced equal units sold, reported income is identical under absorption costing and variable costing.

The traditional income statement format used for financial reporting is called the contribution margin format.

Since fixed costs remain constant in the short run, special orders should be accepted as long as the order price is greater than the variable costs.

Reliance Corporation sold 4,000 units of its product at a price of $15 per unit. Total variable cost per unit is $8.50, consisting of $7.75 in variable production cost and $0.75 in variable selling and administrative cost. Compute the contribution margin for the company.

Under absorption costing, a company had the following unit costs when 9,000 units were produced. Compute the total product cost per unit under variable costing if 30,000 units had been produced.

Contribution margin is the excess of sales over total variable costs.

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

Filters