Question 1

Jarvix Company, which has only one product, has provided the following data concerning its most recent month of operations:

-What was the amount of fixed overhead released for the month under absorption costing?

Accepted Answer

A)  $0. 
B)  $2,100. 
C)  $2,800. 
D)  $61,600.

Question 2

Iancu Company, which has only one product, has provided the following data concerning its most recent month of operations:

-What was the operating income (loss)for the month under variable costing?

Accepted Answer

A)  ($7,200). 
B)  $11,100. 
C)  $16,200. 
D)  $27,300.

Question 3

Erie Company manufactures a single product. Assume the following data for the year just completed:

There were no units in inventory at the beginning of the year. During the year, 30,000 units were produced and 25,000 units were sold. Each unit sells for $35.
-Under absorption costing,what was the unit product cost?

Accepted Answer

A)  $8.00. 
B)  $10.75. 
C)  $13.00 
D)  $17.75.

Question 4

Under variable costing,the impact of both fixed manufacturing and non-manufacturing cost is emphasized because the total amount of such cost for the period appears in the income statement.

Accepted Answer

A) True 
 B)False

Question 5

Peaceman Company, which has only one product, has provided the following data concerning its most recent month of operations:

-What was the total contribution margin for the month?

Accepted Answer

A)  $39,600. 
B)  $88,000. 
C)  $123,200. 
D)  $171,600.

Question 6

Qabar Company,which has only one product,has provided the following data concerning its most recent month of operations:

Required:

a) What is the unit product cost for the month under variable costing?
b) Prepare an income statement for the month using the contribution format and the variable costing method.
c) Without preparing an income statement, determine the absorption costing operating income for the month. (Hint: Use the reconciliation method.)

Accepted Answer

The answer of Qabar Company,which has only one product,has provided...

Question 7

The following data were provided by Green Enterprises for the most recent period:

-What was the unit product cost under absorption costing?

Accepted Answer

A)  $15. 
B)  $18. 
C)  $20. 
D)  $25.

Question 8

Sales volume is the only driver of operating income under absorption costing.

Accepted Answer

A) True 
 B)False

Question 9

Gordon Company produces a single product that sells for $10 per unit. Last year, there were no beginning inventories, 100,000 units were produced, and 80,000 units were sold. The company has the following cost structure:

-What was the operating income under variable costing?

Accepted Answer

A)  $114,000. 
B)  $210,000. 
C)  $234,000. 
D)  $330,000.

Question 10

Gabbert Company, which has only one product, has provided the following data concerning its most recent month of operations:

-What was the total gross margin for the month under the absorption costing approach?

Accepted Answer

A)  $90,000. 
B)  $95,200. 
C)  $125,800. 
D)  $156,400.

Question 11

Under variable costing,the unit product cost contains some fixed manufacturing overhead cost.

Accepted Answer

A) True 
 B)False

Question 12

Mahugh Company,which has only one product,has provided the following data concerning its most recent month of operations:

Required:

a) What is the unit product cost for the month under variable costing?
b) What is the unit product cost for the month under absorption costing?
c) Prepare an income statement for the month using the contribution format and the variable costing method.
d) Prepare an income statement for the month using the absorption costing method.
e) Reconcile the variable costing and absorption costing operating incomes for the month.

Accepted Answer

The answer of Mahugh Company,which has only one product,has provided...

Question 13

Last year, Walsh Company manufactured 25,000 units and sold 22,000 units. Production costs were as follows:

Total sales were $440,000, total variable selling and administrative expenses were $110,000, and total fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labour is a variable cost.
-What was the contribution margin per unit?

Accepted Answer

A)  $6.00. 
B)  $8.00. 
C)  $11.00. 
D)  $15.00.

Question 14

Y Company reported operating income for Year 2 of $1,600,000 under variable costing and $1,200,000 under absorption costing.The total variable manufacturing cost of the company's beginning finished goods inventory was $120,000.The cost of the company's end-of-year finished goods inventory under standard absorption costing was $50,000 higher than the cost of the beginning-of-year finished goods inventory under variable costing.
Required:
a)Calculate the cost of ending finished goods inventory under absorption costing.
b)Compare the operating incomes under absorption costing and variable costing.What do the numbers suggest in terms of relationship,if any,between units sold and units produced in Year 2? Explain.

Accepted Answer

The answer of Y Company reported operating income for Year...

Question 15

Gabbert Company, which has only one product, has provided the following data concerning its most recent month of operations:

-What was the total contribution margin for the month under the variable costing approach?

Accepted Answer

A)  $62,800. 
B)  $95,200. 
C)  $156,400. 
D)  $183,600.

Question 16

Delvin Company, which has only one product, has provided the following data concerning its most recent month of operations:

-What was the total period cost for the month under the absorption costing approach?

Accepted Answer

A)  $7,200. 
B)  $28,500. 
C)  $42,000. 
D)  $49,200.

Question 17

When lean production methods are introduced,the difference in operating income calculated using the absorption and variable costing methods is reduced.

Accepted Answer

A) True 
 B)False

Question 18

Operating income determined using absorption costing can be reconciled to operating income determined using variable costing by computing the difference between which of the following?

Accepted Answer

A)  Fixed manufacturing overhead costs deferred in or released from inventories. 
B)  Discretionary costs included in the beginning and ending inventories. 
C)  Gross margin (absorption costing method)and contribution margin (variable costing method). 
D)  Sales as recorded under the variable costing method and sales as recorded under the absorption costing method.

Question 19

Chown Company, which has only one product, has provided the following data concerning its most recent month of operations:

-What was the total gross margin for the month under the absorption costing approach?

Accepted Answer

A)  $7,800. 
B)  $179,400. 
C)  $196,800. 
D)  $390,000.

Question 20

Last year, Harris Company manufactured 17,000 units and sold 13,000 units. Production costs for the year were as follows:

Sales were $780,000 for the year, variable selling and administrative expenses were $88,400, and fixed selling and administrative expenses were $170,000. There was no beginning inventory. Assume that direct labour is a variable cost.
-Under variable costing,what was the company's operating income for the year,as compared with under absorption costing?

Accepted Answer

A)  $60,000 higher than under absorption costing. 
B)  $108,000 higher than under absorption costing. 
C)  $108,000 lower than under absorption costing. 
D)  $60,000 lower than under absorption costing.

Exam 8: Variable Costing: A Tool for Management

Jarvix Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the amount of fixed overhead released for the month under absorption costing?

Iancu Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the operating income (loss) for the month under variable costing?

Under variable costing,the impact of both fixed manufacturing and non-manufacturing cost is emphasized because the total amount of such cost for the period appears in the income statement.

Peaceman Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the total contribution margin for the month?

The following data were provided by Green Enterprises for the most recent period: -What was the unit product cost under absorption costing?

Sales volume is the only driver of operating income under absorption costing.

Gordon Company produces a single product that sells for $10 per unit. Last year, there were no beginning inventories, 100,000 units were produced, and 80,000 units were sold. The company has the following cost structure: -What was the operating income under variable costing?

Gabbert Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the total gross margin for the month under the absorption costing approach?

Under variable costing,the unit product cost contains some fixed manufacturing overhead cost.

Gabbert Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the total contribution margin for the month under the variable costing approach?

Delvin Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the total period cost for the month under the absorption costing approach?

When lean production methods are introduced,the difference in operating income calculated using the absorption and variable costing methods is reduced.

Operating income determined using absorption costing can be reconciled to operating income determined using variable costing by computing the difference between which of the following?

Chown Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the total gross margin for the month under the absorption costing approach?