Question 1

Under variable costing,it may be possible to report a positive operating income even if the company sells less than the break-even volume of sales.

Accepted Answer

A) True 
 B)False

Question 2

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

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

Accepted Answer

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

Question 3

Data concerning Sonderegger Company's operations last year appear below:

Required:

a) Prepare an income statement for the year using absorption costing.
b) Prepare an income statement for the year using variable costing.
c) Prepare a report reconciling the difference in operating income between absorption and variable costing for the year.

Accepted Answer

The answer of Data concerning Sonderegger Company's operations last year...

Question 4

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

-What was the unit product cost under variable costing?

Accepted Answer

A)  $15. 
B)  $18. 
C)  $20. 
D)  $22. 
A)  $15. 
B)  $18. 
C)  $20. 
D)  $22.

Question 5

For the period noted,which of the following statements best describes the relationship between the operating income under absorption costing and under variable costing?

Accepted Answer

A)  Absorption costing operating income would be higher than the operating income under variable costing. 
B)  Absorption costing operating income would be lower than the operating income under variable costing. 
C)  Absorption costing operating income would be the same as the operating income under variable costing. 
D)  The relationship between absorption costing operating income and variable costing operating income cannot be determined without additional information. 
A)  Absorption costing operating income would be higher than the operating income under variable costing. 
B)  Absorption costing operating income would be lower than the operating income under variable costing. 
C)  Absorption costing operating income would be the same as the operating income under variable costing. 
D)  The relationship between absorption costing operating income and variable costing operating income cannot be determined without additional information.

Question 6

Absorption costing operating income is closer to the operating cash flow of a period than is variable costing operating income.

Accepted Answer

A) True 
 B)False

Question 7

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

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

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 Nelson Company,which has only one product,has provided...

Question 8

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 absorption costing,what was the carrying value on the balance sheet of the ending inventory for the year?

Accepted Answer

A)  $0. 
B)  $170,000. 
C)  $190,800. 
D)  $230,800. 
A)  $0. 
B)  $170,000. 
C)  $190,800. 
D)  $230,800.

Question 9

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.
-Under variable costing,what was the total amount of fixed manufacturing cost in the ending inventory?

Accepted Answer

A)  $0. 
B)  $9,000. 
C)  $14,400. 
D)  $27,000. 
A)  $0. 
B)  $9,000. 
C)  $14,400. 
D)  $27,000.

Question 10

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

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

Accepted Answer

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

Question 11

The EG Company produces and sells one product: a microwave oven.The following data refer to the year just completed:
 
Required:

a) Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.
b) Prepare an income statement for the year using absorption costing.
c) Prepare an income statement for the year using variable costing.
d) Reconcile the absorption costing and variable costing operating income figures in b) and c) above.

Accepted Answer

The answer of The EG Company produces and sells one...

Question 12

Chown 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 variable costing approach?

Accepted Answer

A)  $7,200. 
B)  $35,700. 
C)  $42,000. 
D)  $49,200. 
A)  $7,200. 
B)  $35,700. 
C)  $42,000. 
D)  $49,200.

Question 13

In the preparation of financial statements using variable costing,fixed manufacturing overhead is treated as a period cost.

Accepted Answer

A) True 
 B)False

Question 14

Pabbatti Company,which has only one product,has provided the following data concerning its most recent month of operations:
 
The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

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 Pabbatti Company,which has only one product,has provided...

Question 15

DeAnne Company's variable costing income statement for August appears below:
 
The company produces 35,000 units each month. Variable production costs per unit and total fixed costs have remained constant over the past several months.
-Under the absorption costing method,what was the dollar value of the company's inventory on August 31?

Accepted Answer

A)  $27,000. 
B)  $36,000. 
C)  $42,000. 
D)  $47,000. 
A)  $27,000. 
B)  $36,000. 
C)  $42,000. 
D)  $47,000.

Question 16

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 operating income under variable costing?

Accepted Answer

A)  $2,000. 
B)  $9,000. 
C)  $12,000. 
D)  $21,000. 
A)  $2,000. 
B)  $9,000. 
C)  $12,000. 
D)  $21,000.

Question 17

The Dean Company produces and sells a single product:  a laser printer.The following data refer to the year just completed:

Assume that direct labour is a variable cost.

Required:

a) Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.
b) Prepare an income statement for the year using absorption costing.
c) Prepare an income statement for the year using variable costing.
d) Reconcile the absorption costing and variable costing operating income figures in b) and c) above.

Accepted Answer

The answer of The Dean Company produces and sells a...

Question 18

The Pacific Company manufactures a single product. The following data relate to the year just completed:

During the year, 5,000 units were produced and 4,800 units were sold. There were no beginning inventories.
-Under variable costing,what was the unit product cost?

Accepted Answer

A)  $43. 
B)  $58. 
C)  $72. 
D)  $91. 
A)  $43. 
B)  $58. 
C)  $72. 
D)  $91.

Question 19

Lee Company,which has only one product,has provided the following data concerning its most recent month of operations:
 
The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

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 Lee Company,which has only one product,has provided...

Question 20

Absorption costing treats all manufacturing costs as product costs.

Accepted Answer

A) True 
 B)False

Under variable costing,it may be possible to report a positive operating income even if the company sells less than the break-even volume of sales.

Bateman Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the unit product cost for the month under variable costing?

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

For the period noted,which of the following statements best describes the relationship between the operating income under absorption costing and under variable costing?

Absorption costing operating income is closer to the operating cash flow of a period than is variable costing operating income.

Jarvix Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the unit product cost for the month under variable costing?

Chown 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 variable costing approach?

In the preparation of financial statements using variable costing,fixed manufacturing overhead is treated as a period cost.

The Pacific Company manufactures a single product. The following data relate to the year just completed: During the year, 5,000 units were produced and 4,800 units were sold. There were no beginning inventories. -Under variable costing,what was the unit product cost?

Absorption costing treats all manufacturing costs as product costs.

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

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Exam 8: Variable Costing: A Tool for Management

Under variable costing,it may be possible to report a positive operating income even if the company sells less than the break-even volume of sales.

Bateman Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the unit product cost for the month under variable costing?

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

For the period noted,which of the following statements best describes the relationship between the operating income under absorption costing and under variable costing?

Absorption costing operating income is closer to the operating cash flow of a period than is variable costing operating income.

Jarvix Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the unit product cost for the month under variable costing?

Chown 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 variable costing approach?

In the preparation of financial statements using variable costing,fixed manufacturing overhead is treated as a period cost.

The Pacific Company manufactures a single product. The following data relate to the year just completed: During the year, 5,000 units were produced and 4,800 units were sold. There were no beginning inventories. -Under variable costing,what was the unit product cost?

Absorption costing treats all manufacturing costs as product costs.

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

Filters