Exam 9: Inventory Costing and Capacity Analysis

The budgeted fixed manufacturing cost rate is the lowest for ________.

A product is sold for $130. Its cost consists of $25 of direct materials, $10 of direct labor, and $30 of manufacturing overhead. What is the throughput margin?

Freetown Corporation incurred fixed manufacturing costs of $26,000 during 2017. Other information for 2017 includes: The budgeted denominator level is 2,800 units. Units produced total 1,500 units. Units sold total 1,300 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. Fixed manufacturing costs expensed on the income statement (excluding adjustments for variances) total ________. (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Which of the following is true of normal capacity utilization?

The following information pertains to Stone Wall Corporation: What is the difference between operating incomes under absorption costing and variable costing?

Ms. Sophia Jones, the company president, has heard that there are multiple breakeven points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for 2017 is as follows: What are breakeven sales in units using absorption costing if the production units are actually 50,000? (Round any intermediary calculations to the nearest cent and your final answer up to the next whole unit.)

Under absorption costing, managers can increase operating income by holding less inventories at the end of the period.

The following data are available for Brennan Soft Toys Company for the year ended September 30, 2017. Required: a.Determine operating income using the variable-costing approach. b.Determine operating income using the absorption-costing approach. c.Explain why operating income is not the same under the two approaches.

The contribution-margin format is used for ________.

The manager of the manufacturing division of Iowa Windows does not understand why income went down when sales went up. Some of the information he has selected for evaluation include: The division operated at normal capacity during January. Variable manufacturing cost per unit was $5, and the fixed costs were $400,000. Selling and administrative expenses were all fixed. Required: Explain the profit differences. How would variable costing income statements help the manager understand the division's operating income?

Swansea Finishing produces and sells a decorative pillow for $100.00 per unit. In the first month of operation, 2,000 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: What is cost of goods sold using variable costing?

The basis of the difference between variable costing and absorption costing is how fixed manufacturing costs are accounted for.

If 1,000 units are produced and only 700 units are sold, ________ results in the greatest amount of expense reported on the income statement.

Jupiter Corporation incurred fixed manufacturing costs of $16,000 during 2017. Other information for 2017 includes: The budgeted denominator level is 2,300 units. Units produced total 2,600 units. Units sold total 1,600 units. Variable cost per unit is $4 Beginning inventory is zero. The fixed manufacturing cost rate is based on the budgeted denominator level. Under variable costing, the fixed manufacturing costs expensed on the income statement (excluding adjustments for variances) total ________.

________ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs.

In absorption costing, fixed manufacturing overhead is treated as a period cost.

Swan Textiles Inc. produces and sells a decorative pillow for $98.00 per unit. In the first month of operation, 2,300 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: What is the contribution margin using variable costing?

Universal Specialty Group produces a sports theme chair. The following information has been provided by management: Required: a.What is the cost per statue if absorption costing is used? b.What is the cost per statue if "super-variable costing" is used? c.What is the total throughput contribution?

For 2017, Rockford, Inc., had sales of 150,000 units and production of 200,000 units. Other information for the year included: There was no beginning inventory. Required: a.Compute the ending finished goods inventory under both absorption and variable costing. b.Compute the cost of goods sold under both absorption and variable costing.

Ireland Corporation planned to be in operation for three years. -During the first year, 2017, it had no sales but incurred $240,000 in variable manufacturing expenses and $80,000 in fixed manufacturing expenses. -In 2018, it sold half of the finished goods inventory from 2017 for $200,000 but it had no manufacturing costs. -In 2019, it sold the remainder of the inventory for $240,000, had no manufacturing expenses and went out of business. -Marketing and administrative expenses were fixed and totaled $40,000 each year. Required: a.Prepare an income statement for each year using absorption costing. b.Prepare an income statement for each year using variable costing.