Question 1

Many companies link manager bonuses to income computed under absorption costing because this is how income is reported to shareholders.

Accepted Answer

A) True 
 B)False

Question 2

When units produced exceed the units sold, income under absorption costing is higher than income under variable costing.

Accepted Answer

A) True 
 B)False

Question 3

Brush Industries reports the following information for May:   Calculate the gross margin for May under absorption costing.

Accepted Answer

A)  $650,000 
B)  $325,000 
C)  $525,000 
D)  $550,000 
E)  $575,000 
A)  $650,000 
B)  $325,000 
C)  $525,000 
D)  $550,000 
E)  $575,000

Question 4

Using absorption costing, which of the following manufacturing costs are assigned to products?

Accepted Answer

A)  Direct materials and direct labor. 
B)  Direct labor and variable manufacturing overhead. 
C)  Fixed manufacturing overhead, direct materials, and direct labor. 
D)  Variable manufacturing overhead, direct materials, and direct labor. 
E)  Variable manufacturing overhead, direct materials, direct labor, and fixed manufacturing overhead. 
A)  Direct materials and direct labor. 
B)  Direct labor and variable manufacturing overhead. 
C)  Fixed manufacturing overhead, direct materials, and direct labor. 
D)  Variable manufacturing overhead, direct materials, and direct labor. 
E)  Variable manufacturing overhead, direct materials, direct labor, and fixed manufacturing overhead.

Question 5

Which of the following would be reported on a variable costing income statement?

Accepted Answer

A)  Gross margin 
B)  Cost of goods available for sale 
C)  Total cost of goods sold 
D)  Contribution margin 
E)  Work-in-process inventory 
A)  Gross margin 
B)  Cost of goods available for sale 
C)  Total cost of goods sold 
D)  Contribution margin 
E)  Work-in-process inventory

Question 6

Wrap-It Company, a manufacturer of wrapping paper, began operations on June 1 of the current year. During this time, the company produced 370,000 units and sold 310,000 units at a sales price of $50 per unit. Cost information for this period is shown in the following table:
 $$\begin{array} { | l | l | } 
\hline \text { Production costs } & \
\hline \text { Direct materials } & \$ 2.00 \text { per unit } \
\hline \text { Direct labor } & \$ 80 \text { per unit } \
\hline \text { Variable overhead } & \$ 814,000 \text { in total } \
\hline \text { Fixed overhead } & \$ 481,000 \text { in total } \
\hline \text { Non production costs } & \
\hline \text { Variable selling and administrative } & \$ 78,000 \text { in total } \
\hline \text { Fixed selling and administrative } & \$ 210,000 \text { in total } \
\hline
\end{array}$$ a. Prepare Wrap-It's December 31st income statement for the current year under absorption costing.
b. Prepare Wrap-It's December 31st income statement for the current year under variable costing.

Accepted Answer

a.
WRAP-IT COMPANY
Income Statement (Abs

Question 7

A company is currently operating at 75% capacity and producing 3,000 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 200-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 $43 per unit. 
B)  Any amount over $17 per unit. 
C)  Any amount over $21 per unit. 
D)  Any amount over $13 per unit. 
E)  Any amount over $22 per unit. 
A)  Any amount over $43 per unit. 
B)  Any amount over $17 per unit. 
C)  Any amount over $21 per unit. 
D)  Any amount over $13 per unit. 
E)  Any amount over $22 per unit.

Question 8

When excess capacity exists, what is the minimum special order price a manager should accept to increase net income?

Accepted Answer

With excess capacity, increases in produ

Question 9

Blatt Company, a manufacturer of slippers, began operations on June 1 of the current year. During this time, the company produced 210,000 units and sold 185,000 units at a sales price of $40 per unit. Cost information for this period is shown in the following table:
 $$\begin{array}{l}
\text { Production costs }\
\begin{array} { | l | l | } 
\hline \text { Direct materials } & \$ 5.00 \text { per unit } \
\hline \text { Direct labor } & \$ 4.75 \text { per unit } \
\hline \text { Variable overhead } & \$ 302,000 \text { in total } \
\hline \text { Fixed overhead } & \$ 405,000 \text { in total } \
\hline \text { Non-production costs } & \
\hline \text { Variable selling and administrative } & \$ 9,000 \text { in total } \
\hline \text { Fixed selling and administrative } & \$ 25,000 \text { in total } \
\hline
\end{array}
\end{array}$$ a. Prepare Blatt's December 31st income statement for the current year under absorption costing.
b. Prepare Blatt's December 31st income statement for the current year under variable costing.

Accepted Answer

The answer of Blatt Company, a manufacturer of slippers, began...

Question 10

Castaway Company reports the following first year production cost information:
 $$\begin{array} { | l | l | } 
\hline \text { Units produced } & 53,000 \text { units } \
\hline \text { Units sold } & 51,000 \text { units } \
\hline \text { Direct labor } & \$ 8 \text { per unit } \
\hline \text { Direct materials } & \$ 4 \text { per unit } \
\hline \text { Variable overhead } & \$ 41 \text { per unit } \
\hline \text { Fixed overhead } & \$ 3,339,000 \text { in total } \
\hline
\end{array}$$ a. Compute production cost per unit under variable costing.
b. Compute production cost per unit under absorption costing.
c. Determine the cost of ending inventory using variable costing.
d. Determine the cost of ending inventory using absorption costing.

Accepted Answer

a. $8 DL + $4 DM + $41 VOH = $53 per uni

Question 11

The key difference between variable costing and absorption costing is the treatment of ________ costs.

Accepted Answer

The answer of The key difference between variable costing and...

Question 12

A company reports the following information regarding its production cost:
 $$\begin{array} { | l | l | } 
\hline \text { Units produced } & 14,000 \text { units } \
\hline \text { Direct labor } & \$ 13 \text { per unit } \
\hline \text { Direct materials } & \$ 3 \text { per unit } \
\hline \text { Variable overhead } & ? \text { in total } \
\hline \text { Fixed overhead } & \$ 56,000 \text { in total } \
\hline
\end{array}$$ Required: Perform the following independent calculations.
a. Compute total variable overhead cost if the production cost per unit under variable costing is $73.
b. Compute total variable overhead cost if the production cost per unit under absorption costing is $73.

Accepted Answer

a. $13 DL + $3 DM + (VOH/14,000) = $73
V

Question 13

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

Accepted Answer

Under absorption costing, dire

Question 14

Maloney Co. provided the following information for the year 20X1:
   There are no beginning inventories. Prepare an income statement using the variable costing format.

Accepted Answer

@#IMG-DLM& Variable costs = 4,400 units

Question 15

Which of the following statements is true?

Accepted Answer

A)  Variable costing treats fixed overhead as a period cost. 
B)  Absorption costing treats fixed overhead as a period cost. 
C)  Absorption costing treats fixed overhead as an expense in the period it is incurred. 
D)  Variable costing excludes all overhead from product costs. 
E)  Managers can manipulate earnings more easily under variable costing by varying the production level. 
A)  Variable costing treats fixed overhead as a period cost. 
B)  Absorption costing treats fixed overhead as a period cost. 
C)  Absorption costing treats fixed overhead as an expense in the period it is incurred. 
D)  Variable costing excludes all overhead from product costs. 
E)  Managers can manipulate earnings more easily under variable costing by varying the production level.

Question 16

Cost information from both absorption costing and variable costing can aid managers in pricing.

Accepted Answer

A) True 
 B)False

Question 17

Under absorption costing, a company had the following unit costs when 10,000 units were produced:
   The total product cost per unit under absorption costing if 25,000 units had been produced would be $11.

Accepted Answer

A) True 
 B)False

Question 18

On a contribution margin income statement, expenses are grouped according to ________.

Accepted Answer

The answer of On a contribution margin income statement, expenses...

Question 19

Shore Company reports the following information regarding its production cost.   Compute product cost per unit under absorption costing.

Accepted Answer

A)  $57.00 
B)  $60.39 
C)  $47.00 
D)  $23.00 
E)  $24.00 
A)  $57.00 
B)  $60.39 
C)  $47.00 
D)  $23.00 
E)  $24.00

Question 20

[The following information applies to the questions displayed below.]
Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year.
  
-Given Advanced Company's data, compute cost per unit of finished goods under absorption costing.

Accepted Answer

A)  $20.00 
B)  $34.17 
C)  $25.32 
D)  $23.00 
E)  $28.50 
A)  $20.00 
B)  $34.17 
C)  $25.32 
D)  $23.00 
E)  $28.50

Many companies link manager bonuses to income computed under absorption costing because this is how income is reported to shareholders.

When units produced exceed the units sold, income under absorption costing is higher than income under variable costing.

Brush Industries reports the following information for May: Calculate the gross margin for May under absorption costing.

Using absorption costing, which of the following manufacturing costs are assigned to products?

Which of the following would be reported on a variable costing income statement?

When excess capacity exists, what is the minimum special order price a manager should accept to increase net income?

The key difference between variable costing and absorption costing is the treatment of ________ costs.

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

Maloney Co. provided the following information for the year 20X1: There are no beginning inventories. Prepare an income statement using the variable costing format.

Which of the following statements is true?

Cost information from both absorption costing and variable costing can aid managers in pricing.

Under absorption costing, a company had the following unit costs when 10,000 units were produced: The total product cost per unit under absorption costing if 25,000 units had been produced would be $11.

On a contribution margin income statement, expenses are grouped according to ________.

Shore Company reports the following information regarding its production cost. Compute product cost per unit under absorption costing.

[The following information applies to the questions displayed below.] Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year. -Given Advanced Company's data, compute cost per unit of finished goods under absorption costing.

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

Many companies link manager bonuses to income computed under absorption costing because this is how income is reported to shareholders.

When units produced exceed the units sold, income under absorption costing is higher than income under variable costing.

Brush Industries reports the following information for May: Calculate the gross margin for May under absorption costing.

Using absorption costing, which of the following manufacturing costs are assigned to products?

Which of the following would be reported on a variable costing income statement?

When excess capacity exists, what is the minimum special order price a manager should accept to increase net income?

The key difference between variable costing and absorption costing is the treatment of ________ costs.

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

Maloney Co. provided the following information for the year 20X1: There are no beginning inventories. Prepare an income statement using the variable costing format.

Which of the following statements is true?

Cost information from both absorption costing and variable costing can aid managers in pricing.

Under absorption costing, a company had the following unit costs when 10,000 units were produced: The total product cost per unit under absorption costing if 25,000 units had been produced would be $11.

On a contribution margin income statement, expenses are grouped according to ________.

Shore Company reports the following information regarding its production cost. Compute product cost per unit under absorption costing.

[The following information applies to the questions displayed below.] Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year. -Given Advanced Company's data, compute cost per unit of finished goods under absorption costing.

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