Question 1

A business operated at 100% of capacity during its first month, with the following results:  What is the amount of the manufacturing margin that would be reported on the variable costing income statement?

Accepted Answer

A)  $30,000 
B)  $38,000 
C)  $56,000 
D)  $44,000

Question 2

Changes in the quantity of finished goods inventory, caused by differences in the levels of sales and production, directly affects the amount of income from operations reported under absorption costing.

Accepted Answer

A) True 
 B)False

Question 3

For a period during which the quantity of inventory at the end equals the inventory at the beginning, income from operations reported under variable costing will be smaller than income from operations reported under absorption costing.

Accepted Answer

A) True 
 B)False

Question 4

A business operated at 100% of capacity during its first month and incurred the following costs:  If 1,600 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

Accepted Answer

A)  $64,000 
B)  $56,000 
C)  $66,400 
D)  $78,400

Question 5

A business operated at 100% of capacity during its first month, with the following results:  What is the amount of the contribution margin that would be reported on the variable costing income statement?

Accepted Answer

A)  $34,200 
B)  $20,200 
C)  $29,700 
D)  $26,200

Question 6

In contribution margin analysis, the effect of a difference in unit sales price or unit cost on the number of units sold is termed the quantity factor.

Accepted Answer

A) True 
 B)False

Question 7

In contribution margin analysis, the unit price or unit cost factor is computed as the difference between actual quantity sold and the planned quantity sold, multiplied by the planned unit sales price or unit cost.

Accepted Answer

A) True 
 B)False

Question 8

A business operated at 100% of capacity during its first month and incurred the following costs:  
If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what is the amount of the contribution margin that would be reported on the variable costing income statement?

Accepted Answer

A)  $51,400 
B)  $52,000 
C)  $54,000 
D)  $53,000

Question 9

Edna's Chocolates had planned to sell chocolate-covered strawberries for $3.00 each. Due to various factors, the actual price was $2.75. Edna's was able to sell 1,000 more strawberries than the anticipated 4,000. What is (1) the quantity factor and (2) the price factor for sales?

Accepted Answer

A)  (1) $3,000, (2) $(1,250) 
B)  (1) $3,000, (2) $3,000 
C)  (1) $1,250, (2) $3,000 
D)  (1) $(4,000) (2) $(3,000)

Question 10

Ford's Expedition sport utility vehicle is its most profitable model. Therefore, Ford need not promote its Expedition model anymore.

Accepted Answer

A) True 
 B)False

Question 11

In determining cost of goods sold, two alternate costing concepts can be used: direct costing and variable costing.

Accepted Answer

A) True 
 B)False

Question 12

For a supervisor of a manufacturing department, which of the following costs is controllable?

Accepted Answer

A)  direct materials 
B)  insurance on factory building 
C)  depreciation of factory building 
D)  rent on factory building

Question 13

Which of the following would be included in the cost of a product manufactured according to absorption costing?

Accepted Answer

A)  advertising expense 
B)  sales salaries 
C)  depreciation expense on factory building 
D)  office supplies costs

Question 14

If variable selling and administrative expenses totaled $124,000 for the year (80,000 units at $1.55 each) and the planned variable selling and administrative expenses totaled $136,500 (78,000 units at $1.75 each), the effect of the quantity factor on the change in variable selling and administrative expenses is:

Accepted Answer

A)  $3,000 increase 
B)  $3,500 decrease 
C)  $3,000 decrease 
D)  $3,500 increase

Exam 20: Variable Costing for Management Analysis

A business operated at 100% of capacity during its first month, with the following results: What is the amount of the manufacturing margin that would be reported on the variable costing income statement?

Changes in the quantity of finished goods inventory, caused by differences in the levels of sales and production, directly affects the amount of income from operations reported under absorption costing.

For a period during which the quantity of inventory at the end equals the inventory at the beginning, income from operations reported under variable costing will be smaller than income from operations reported under absorption costing.

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,600 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

A business operated at 100% of capacity during its first month, with the following results: What is the amount of the contribution margin that would be reported on the variable costing income statement?

In contribution margin analysis, the effect of a difference in unit sales price or unit cost on the number of units sold is termed the quantity factor.

In contribution margin analysis, the unit price or unit cost factor is computed as the difference between actual quantity sold and the planned quantity sold, multiplied by the planned unit sales price or unit cost.

Edna's Chocolates had planned to sell chocolate-covered strawberries for $3.00 each. Due to various factors, the actual price was $2.75. Edna's was able to sell 1,000 more strawberries than the anticipated 4,000. What is (1) the quantity factor and (2) the price factor for sales?

Ford's Expedition sport utility vehicle is its most profitable model. Therefore, Ford need not promote its Expedition model anymore.

In determining cost of goods sold, two alternate costing concepts can be used: direct costing and variable costing.

For a supervisor of a manufacturing department, which of the following costs is controllable?

Which of the following would be included in the cost of a product manufactured according to absorption costing?