Question 1

________ is the amount remaining from sales revenues after all variable expenses have been deducted.

Accepted Answer

The answer of ________ is the amount remaining from sales...

Question 2

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 contribution margin for the company.

Accepted Answer

The answer of Countdown Inc. sold 17,000 units of its...

Question 3

Castaway Company reports the following first year production cost information:
  a. Determine the net income using variable costing.
b. Determine the net income using absorption costing.

Accepted Answer

The answer of Castaway Company reports the following first year...

Question 4

Given the following data, total product cost per unit under absorption costing is $11.40.

Accepted Answer

A) True 
 B)False

Question 5

Assume a company sells a given product for $95 per unit. Variable selling costs are $24.25 per unit and variable production costs are $53.50 per unit. If the company breaks even when selling 260,000 units, what are total fixed costs?

Accepted Answer

The answer of Assume a company sells a given product...

Question 6

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

Accepted Answer

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

Question 7

Which of the following would be a line item for 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

Question 8

Given the Galaxy, Inc. data, what is net income using absorption costing?

Accepted Answer

A)  $11,275,000 
B)  $17,400,000 
C)  $16,360,000 
D)  $16,800,000 
E)  $16,220,000

Question 9

How can the use of absorption costing result in overproduction?

Accepted Answer

The answer of How can the use of absorption costing...

Question 10

Special order decisions should be made using variable costing because:

Accepted Answer

A)  Special order decisions usually focus on fixed costs 
B)  Variable costing includes all overhead costs in the calculation of product costs. 
C)  Only variable costs will increase as a result of the special order. 
D)  All costs, including variable and fixed costs, must be covered by the special order pricing.

Question 11

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.

Accepted Answer

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

Question 12

Given Advanced Company's data, compute cost of finished goods in inventory under variable costing.

Accepted Answer

A)  $285,000 
B)  $712,500 
C)  $427,500 
D)  $230,000 
E)  $345,000

Question 13

Under absorption costing, a company had the following unit costs when 8,000 units were produced.  Compute the total production cost per unit under variable costing if 25,000 units had been produced.

Accepted Answer

A)  $31.75 
B)  $27.25 
C)  $26.25 
D)  $24.25 
E)  $17.50

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

What is a contribution margin report?

Accepted Answer

The answer of What is a contribution margin report?...

Question 16

How does contribution margin differ from gross margin?

Accepted Answer

The answer of How does contribution margin differ from gross...

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

________ is the amount remaining from sales revenues after cost of goods sold has been deducted.

Accepted Answer

The answer of ________ is the amount remaining from sales...

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A company normally sells a product for $25 per unit. Variable per unit costs for this product are: $3 direct materials, $5 direct labor, and $2 variable overhead. The company is currently operating at 100% of capacity producing 30,000 units per year. Total fixed costs are $75,000 per year. The company should accept a special order for 1,000 units which would be sold for $13 per unit because the special order price exceeds variable costs.

Accepted Answer

A) True 
 B)False

Exam 6: Variable Costing and Analysis

________ is the amount remaining from sales revenues after all variable expenses have been deducted.

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 contribution margin for the company.

Castaway Company reports the following first year production cost information: a. Determine the net income using variable costing. b. Determine the net income using absorption costing.

Given the following data, total product cost per unit under absorption costing is $11.40.

Assume a company sells a given product for $95 per unit. Variable selling costs are $24.25 per unit and variable production costs are $53.50 per unit. If the company breaks even when selling 260,000 units, what are total fixed costs?

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

Which of the following would be a line item for a variable costing income statement?

Given the Galaxy, Inc. data, what is net income using absorption costing?

How can the use of absorption costing result in overproduction?

Special order decisions should be made using variable costing because:

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.

Given Advanced Company's data, compute cost of finished goods in inventory under variable costing.

Under absorption costing, a company had the following unit costs when 8,000 units were produced. Compute the total production cost per unit under variable costing if 25,000 units had been produced.

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

What is a contribution margin report?

How does contribution margin differ from gross margin?

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

________ is the amount remaining from sales revenues after cost of goods sold has been deducted.

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