Question 1

Under absorption costing,what was the reported operating income (loss)for the month ending May 31?

Accepted Answer

A)  ($30,000). 
B)  $0. 
C)  $30,000. 
D)  $60,000.

Question 2

UHF Antennas,Inc. ,produces and sells a unique television antenna.The company has just opened a new plant to manufacture the antenna,and the following cost and revenue data have been reported for the first month of the new plant's operation:  
Management is anxious to see how profitable the new antenna will be and has asked that an income statement be prepared for the month.Assume that direct labour is a variable cost.
Required:
a)Assuming that the company uses absorption costing,compute the unit product cost and prepare an income statement.
b)Assuming that the company uses variable costing,compute the unit product cost and prepare an income statement.
c)Explain the reason for any difference in the ending inventories under the two costing methods and the impact of this difference on reported operating income.

Accepted Answer

The answer of UHF Antennas,Inc. ,produces and sells a unique...

Question 3

Which of the following is normally included in product cost under the variable costing method?

Accepted Answer

A)  Direct materials cost,direct labour cost,but NOT manufacturing overhead cost. 
B)  Direct materials cost,direct labour cost,and variable manufacturing overhead cost. 
C)  Prime cost but NOT conversion cost. 
D)  Prime cost and all conversion cost.

Question 4

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 5

X Company reported operating income for Year 2 of $1,200,000 under variable costing and $1,600,000 under absorption costing.The total variable manufacturing cost of the company's ending finished goods inventory was $120,000.The cost of the company's beginning-of-year finished goods inventory under 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 cost of your ending finished inventory under absorption costing in part (a)with that given under variable costing.Does the difference make sense? Why or why not?

Accepted Answer

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

Question 6

What was the unit product cost for the month under absorption costing?

Accepted Answer

A)  $69. 
B)  $74. 
C)  $84. 
D)  $89.

Question 7

What is the costing method that can be used most easily with break-even analysis and other cost-volume-profit techniques?

Accepted Answer

A)  Variable costing. 
B)  Absorption costing. 
C)  Process costing. 
D)  Job-order costing.

Question 8

Last year,Stephen Company had 20,000 units in its ending inventory.During the year,Stephen Company's variable production costs were $12 per unit.The fixed manufacturing overhead cost was $8 per unit in the beginning inventory.The company's operating income for the year was $9,600 higher under variable costing than it was under absorption costing.Given these facts,what must have been the number of units of product in the beginning inventory last year?

Accepted Answer

A)  18,800 units. 
B)  19,200 units. 
C)  19,520 units. 
D)  21,200 units.

Question 9

What was the operating income for the month under variable costing?

Accepted Answer

A)  $3,200. 
B)  $8,500. 
C)  $9,300. 
D)  $15,100.Op.Inc.= 8,500 * (97 - 20 - 37 - 1 - 11)- 67,200 - 161,500 = $9,300.

Question 10

West Co.'s manufacturing costs are as follows: 
What amount should be considered product costs for external reporting purposes if the company uses absorption costing?

Accepted Answer

A)  $700,000. 
B)  $800,000. 
C)  $880,000. 
D)  $898,000.

Question 11

Which of the following are considered to be product costs under absorption costing?

Accepted Answer

A)  I,II,and III. 
B)  I and II only. 
C)  I and III only. 
D)  I only.

Question 12

It is generally true that if production and sales are NOT equal there are income statement differences in terms of operating incomes under absorption costing and variable costing.
Required:
a)Which elements,if any,of the balance sheet are also likely to be different under absorption and variable costing? Explain.

Accepted Answer

The answer of It is generally true that if production...

Question 13

Under absorption costing,what was the value of the ending inventory for the year?

Accepted Answer

A)  $152,000. 
B)  $179,500. 
C)  $213,500. 
D)  $222,000.

Question 14

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 15

What was the operating income for the year under variable costing as opposed to absorption costing?

Accepted Answer

A)  $28,000 lower than under absorption costing. 
B)  $28,000 higher than under absorption costing. 
C)  $50,000 lower than under absorption costing. 
D)  $50,000 higher than under absorption costing.

Question 16

What was the unit product cost for the month under variable costing?

Accepted Answer

A)  $78. 
B)  $89. 
C)  $97. 
D)  $107.

Question 17

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

Accepted Answer

A)  ($19,600). 
B)  $8,400. 
C)  $9,600. 
D)  $18,000.

Question 18

What was the operating income for the month under absorption costing?

Accepted Answer

A)  $2,100. 
B)  $17,800. 
C)  $18,500. 
D)  $25,900.

Question 19

What was the unit product cost for the month under absorption costing?

Accepted Answer

A)  $74. 
B)  $81. 
C)  $83. 
D)  $90.

Question 20

Oakes Company,which has only one product,has provided the following data concerning its most recent month of operations:  
Required:
a)Prepare an income statement for the month using the contribution format and the variable costing method.
b)Prepare an income statement for the month using the absorption costing method.

Accepted Answer

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

Exam 8: Variable Costing: a Tool for Management

Under absorption costing,what was the reported operating income (loss) for the month ending May 31?

Which of the following is normally included in product cost under the variable costing method?

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

What was the unit product cost for the month under absorption costing?

What is the costing method that can be used most easily with break-even analysis and other cost-volume-profit techniques?

What was the operating income for the month under variable costing?

West Co.'s manufacturing costs are as follows: What amount should be considered product costs for external reporting purposes if the company uses absorption costing?

Which of the following are considered to be product costs under absorption costing?

Under absorption costing,what was the value of the ending inventory for the year?

What was the operating income for the year under variable costing as opposed to absorption costing?

What was the unit product cost for the month under variable costing?

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

What was the operating income for the month under absorption costing?

What was the unit product cost for the month under absorption costing?