Question 1

The term "gross margin" for a manufacturing company refers to the excess of sales over which of the following?

Accepted Answer

A)  Cost of goods sold,excluding fixed manufacturing overhead. 
B)  All variable costs,including variable selling and administrative expenses. 
C)  Cost of goods sold,including fixed manufacturing overhead. 
D)  Variable costs,excluding variable selling and administrative expenses. 
A)  Cost of goods sold,excluding fixed manufacturing overhead. 
B)  All variable costs,including variable selling and administrative expenses. 
C)  Cost of goods sold,including fixed manufacturing overhead. 
D)  Variable costs,excluding variable selling and administrative expenses.

Question 2

During the most recent year,Evans Company had operating income of $90,000 using absorption costing and $84,000 using variable costing.The fixed manufacturing overhead application rate was $6 per unit.There were no beginning inventories.If 22,000 units were produced last year,what were the sales for last year?

Accepted Answer

A)  15,000 units. 
B)  21,000 units. 
C)  23,000 units. 
D)  28,000 units. 
A)  15,000 units. 
B)  21,000 units. 
C)  23,000 units. 
D)  28,000 units.

Question 3

Operating data for Fowler Company and its absorption costing income statements for the last two years are presented below:
 
Variable manufacturing costs are $6 per unit. Fixed manufacturing overhead totals $72,000 in each year. This overhead is applied at the rate of $4 per unit. Variable selling and administrative expenses were $2 per unit sold.

Required:

a) What was the unit product cost in each year under variable costing?
b) Prepare new income statements for each year using variable costing.
c) Reconcile the absorption costing and variable costing operating income for each year.

Accepted Answer

a) The manufacturing cost of $

Question 4

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

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

Accepted Answer

A)  ($17,000). 
B)  $6,000. 
C)  $10,600. 
D)  $16,600. 
A)  ($17,000). 
B)  $6,000. 
C)  $10,600. 
D)  $16,600.

Question 5

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 absorption costing,what was the unit product cost?

Accepted Answer

A)  $9.00. 
B)  $12.00. 
C)  $13.40. 
D)  $14.00. 
A)  $9.00. 
B)  $12.00. 
C)  $13.40. 
D)  $14.00.

Question 6

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 absorption costing?

Accepted Answer

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

Question 7

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 absorption 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 8

Jarvix 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 variable costing?

Accepted Answer

A)  $0. 
B)  $61,600. 
C)  $230,700. 
D)  $310,800. 
A)  $0. 
B)  $61,600. 
C)  $230,700. 
D)  $310,800.

Question 9

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

Question 10

An allocated portion of fixed manufacturing overhead is included in product costs under which of the following?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 11

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

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...

Question 12

Operating income reported under absorption costing will generally exceed operating income reported under variable costing for a given period in which of the following cases?

Accepted Answer

A)  If production equals sales for that period. 
B)  If production exceeds sales for that period. 
C)  If sales exceed production for that period. 
D)  If the variable manufacturing overhead exceeds the fixed manufacturing overhead. 
A)  If production equals sales for that period. 
B)  If production exceeds sales for that period. 
C)  If sales exceed production for that period. 
D)  If the variable manufacturing overhead exceeds the fixed manufacturing overhead.

Question 13

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

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

Accepted Answer

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

Question 14

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

-What is the unit product cost for the month under absorption costing?

Accepted Answer

A)  $60. 
B)  $66. 
C)  $87. 
D)  $93. 
A)  $60. 
B)  $66. 
C)  $87. 
D)  $93.

Question 15

Crystal Company's variable costing income statement for the month of May appears below:
 
The company produces 80,000 units each month. Variable production costs per unit and total fixed costs have remained constant over the past several months.
-What was the dollar value of the company's inventory on May 31 under the absorption costing method?

Accepted Answer

A)  $60,000. 
B)  $75,000. 
C)  $90,000. 
D)  $120,000. 
A)  $60,000. 
B)  $75,000. 
C)  $90,000. 
D)  $120,000.

Question 16

The unit product cost under absorption costing contains no element of fixed manufacturing overhead cost.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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

Question 18

Last year,Silver Company's total variable production costs were $7,500,and its total fixed manufacturing overhead costs were $4,500.The company produced 3,000 units during the year and sold 2,400 units.There were no units in the beginning inventory.Which of the following statements is true?

Accepted Answer

A)  Under variable costing,the average cost of the units in the ending inventory will be $4 each. 
B)  The operating income under absorption costing for the year will be $900 lower than the operating income under variable costing. 
C)  The ending inventory under variable costing will be $900 lower than the ending inventory under absorption costing. 
D)  Under absorption costing,the average cost of the units in ending inventory will be $2.50 each. 
A)  Under variable costing,the average cost of the units in the ending inventory will be $4 each. 
B)  The operating income under absorption costing for the year will be $900 lower than the operating income under variable costing. 
C)  The ending inventory under variable costing will be $900 lower than the ending inventory under absorption costing. 
D)  Under absorption costing,the average cost of the units in ending inventory will be $2.50 each.

Question 19

Khanam 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.
-What is the amount of fixed overhead released under absorption costing?

Accepted Answer

A)  $0 
B)  $3,200 
C)  $4,000 
D)  $67,200 
A)  $0 
B)  $3,200 
C)  $4,000 
D)  $67,200

Question 20

The total fixed manufacturing overhead costs of Cay Company are $100,000,and the total variable selling costs are $80,000.Under variable costing,how should these costs be classified?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

The term "gross margin" for a manufacturing company refers to the excess of sales over which of the following?

Farron Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the operating income (loss)for the month under variable costing?

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 absorption costing?

Jarvix 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 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?

An allocated portion of fixed manufacturing overhead is included in product costs under which of the following?

Operating income reported under absorption costing will generally exceed operating income reported under variable costing for a given period in which of the following cases?

Elliot Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the operating income (loss)for the month under absorption costing?

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

The unit product cost under absorption costing contains no element of fixed manufacturing overhead cost.

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

Last year,Silver Company's total variable production costs were $7,500,and its total fixed manufacturing overhead costs were $4,500.The company produced 3,000 units during the year and sold 2,400 units.There were no units in the beginning inventory.Which of the following statements is true?

The total fixed manufacturing overhead costs of Cay Company are $100,000,and the total variable selling costs are $80,000.Under variable costing,how should these costs be classified?

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

The term "gross margin" for a manufacturing company refers to the excess of sales over which of the following?

Farron Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the operating income (loss)for the month under variable costing?

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 absorption costing?

Jarvix 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 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?

An allocated portion of fixed manufacturing overhead is included in product costs under which of the following?

Operating income reported under absorption costing will generally exceed operating income reported under variable costing for a given period in which of the following cases?

Elliot Company, which has only one product, has provided the following data concerning its most recent month of operations: -What was the operating income (loss)for the month under absorption costing?

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

The unit product cost under absorption costing contains no element of fixed manufacturing overhead cost.

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

Last year,Silver Company's total variable production costs were $7,500,and its total fixed manufacturing overhead costs were $4,500.The company produced 3,000 units during the year and sold 2,400 units.There were no units in the beginning inventory.Which of the following statements is true?

The total fixed manufacturing overhead costs of Cay Company are $100,000,and the total variable selling costs are $80,000.Under variable costing,how should these costs be classified?

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