Question 1

Under variable costing,which of the following costs are treated as period costs?

Accepted Answer

A)  Only fixed manufacturing costs. 
B)  Both variable and fixed manufacturing costs. 
C)  All fixed costs. 
D)  Only fixed selling and administrative costs. 
A)  Only fixed manufacturing costs. 
B)  Both variable and fixed manufacturing costs. 
C)  All fixed costs. 
D)  Only fixed selling and administrative costs.

Question 2

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 absorption 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 3

During the last year,Moore Company's total variable production costs were $10,000,and its total fixed manufacturing overhead costs were $6,800.The company produced 5,000 units during the year and sold 4,600 units.There were no units in the beginning inventory.Which of the following statements is true?

Accepted Answer

A)  The operating income under absorption costing for the year will be $800 higher than operating income under variable costing. 
B)  The operating income under absorption costing for the year will be $544 higher than operating income under variable costing. 
C)  The operating income under absorption costing for the year will be $544 lower than operating income under variable costing. 
D)  The operating income under absorption costing for the year will be $800 lower than operating income under variable costing. 
A)  The operating income under absorption costing for the year will be $800 higher than operating income under variable costing. 
B)  The operating income under absorption costing for the year will be $544 higher than operating income under variable costing. 
C)  The operating income under absorption costing for the year will be $544 lower than operating income under variable costing. 
D)  The operating income under absorption costing for the year will be $800 lower than operating income under variable costing.

Question 4

Gordon Company produces a single product that sells for $10 per unit. Last year, there were no beginning inventories, 100,000 units were produced, and 80,000 units were sold. The company has the following cost structure:

-Under absorption costing,what was the carrying value on the balance sheet of the ending finished goods inventory?

Accepted Answer

A)  $80,000. 
B)  $104,000. 
C)  $110,000. 
D)  $200,000. 
A)  $80,000. 
B)  $104,000. 
C)  $110,000. 
D)  $200,000.

Question 5

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 absorption costing,what was the cost of goods sold for the year?

Accepted Answer

A)  $206,400. 
B)  $278,400. 
C)  $345,600. 
D)  $360,000. 
A)  $206,400. 
B)  $278,400. 
C)  $345,600. 
D)  $360,000.

Question 6

During the year just ended,Roberts Company's operating income under absorption costing was $3,000 lower than its operating income under variable costing.The company sold 9,000 units during the year,and its variable costs were $9 per unit,of which $3 was variable selling expense.If production cost is $11 per unit under absorption costing every year,how many units did the company produce during the year?

Accepted Answer

A)  8,000 units. 
B)  8,400 units. 
C)  9,600 units. 
D)  10,000 units. 
A)  8,000 units. 
B)  8,400 units. 
C)  9,600 units. 
D)  10,000 units.

Question 7

Although variable costing is NOT permitted for income tax purposes in Canada,it is widely accepted for external financial reports.

Accepted Answer

A) True 
 B)False

Question 8

Erie Company manufactures a single product. Assume the following data for the year just completed:

There were no units in inventory at the beginning of the year. During the year, 30,000 units were produced and 25,000 units were sold. Each unit sells for $35.
-What was the total contribution margin for the month under the variable costing approach?

Accepted Answer

A)  $142,000. 
B)  $179,400. 
C)  $390,000. 
D)  $421,200. 
A)  $142,000. 
B)  $179,400. 
C)  $390,000. 
D)  $421,200.

Question 9

Gabbert 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 absorption costing approach?

Accepted Answer

A)  $61,200. 
B)  $88,400. 
C)  $93,600. 
D)  $182,000 
A)  $61,200. 
B)  $88,400. 
C)  $93,600. 
D)  $182,000

Question 10

Which of the following statements is true about the difference in operating income between variable costing and absorption costing if the number of units in work-in-process and finished goods inventories increase?

Accepted Answer

A)  There will be no difference in net income. 
B)  Operating income computed using variable costing will be higher. 
C)  The difference in operating income cannot be determined from the information given. 
D)  Operating income computed using variable costing will be lower. 
A)  There will be no difference in net income. 
B)  Operating income computed using variable costing will be higher. 
C)  The difference in operating income cannot be determined from the information given. 
D)  Operating income computed using variable costing will be lower.

Question 11

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. 
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 12

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

-What is the total period cost for the month under the absorption costing approach?

Accepted Answer

A)  $24,000. 
B)  $60,000. 
C)  $170,100. 
D)  $230,100. 
A)  $24,000. 
B)  $60,000. 
C)  $170,100. 
D)  $230,100.

Question 13

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

Therefore,fixed manufacturing overhead d

Question 14

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

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

Question 15

Fahey Company manufactures a single product that it sells for $25 per unit. The company has the following cost structure:

There were no units in beginning inventory. During the year, 18,000 units were produced and 15,000 units were sold.
-Under absorption costing,what was the unit product cost?

Accepted Answer

A)  $9. 
B)  $12. 
C)  $13. 
D)  $16. 
A)  $9. 
B)  $12. 
C)  $13. 
D)  $16.

Under variable costing,which of the following costs are treated as period costs?

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 absorption costing,what was the cost of goods sold for the year?

Although variable costing is NOT permitted for income tax purposes in Canada,it is widely accepted for external financial reports.

Gabbert 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 absorption costing approach?

Which of the following statements is true about the difference in operating income between variable costing and absorption costing if the number of units in work-in-process and finished goods inventories increase?

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

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

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

Fahey Company manufactures a single product that it sells for $25 per unit. The company has the following cost structure: There were no units in beginning inventory. During the year, 18,000 units were produced and 15,000 units were sold. -Under absorption costing,what was the unit product cost?

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

Exam 8: Variable Costing: A Tool for Management

Under variable costing,which of the following costs are treated as period costs?

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 absorption costing,what was the cost of goods sold for the year?

Although variable costing is NOT permitted for income tax purposes in Canada,it is widely accepted for external financial reports.

Gabbert 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 absorption costing approach?

Which of the following statements is true about the difference in operating income between variable costing and absorption costing if the number of units in work-in-process and finished goods inventories increase?

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

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

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

Fahey Company manufactures a single product that it sells for $25 per unit. The company has the following cost structure: There were no units in beginning inventory. During the year, 18,000 units were produced and 15,000 units were sold. -Under absorption costing,what was the unit product cost?

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