Costmore Manufacturing has provided the following operating results for its first year operations: $\begin{array}{lr} \text { Beginning inventory of finished goods } & 0 \\ \text { Units produced (no work in process) } & 22,000 \\ \text { Units sold } & 18,000 \\ \text { Units in ending inventory of finished goods } & 4,000\\\text { Sales price }&\$55\text { per unit }\\ \text { Variable manufacturing costs }&\$25\text { per unit }\\\text { manufactured Variable selling and }\text { administrative expenses }&\$ 7 \text { per unit }\\\text { sold Fixed manufacturing }\text { costs for the year } & \$ 110,000 \\ \text { Fixed selling and administrative expenses for the year } & \$ 124,000 \end{array}$ - Using the absorption costing method, the cost of goods sold is:

A) $540,000 B) $550,000 C) $480,000 D) $450,000 A) $540,000 B) $550,000 C) $480,000 D) $450,000

Costmore Manufacturing has provided the following operating results for its first year operations: $\begin{array}{lr} \text { Beginning inventory of finished goods } & 0 \\ \text { Units produced (no work in process) } & 22,000 \\ \text { Units sold } & 18,000 \\ \text { Units in ending inventory of finished goods } & 4,000\\\text { Sales price }&\$55\text { per unit }\\ \text { Variable manufacturing costs }&\$25\text { per unit }\\\text { manufactured Variable selling and }\text { administrative expenses }&\$ 7 \text { per unit }\\\text { sold Fixed manufacturing }\text { costs for the year } & \$ 110,000 \\ \text { Fixed selling and administrative expenses for the year } & \$ 124,000 \end{array}$ - Using the absorption costing method, the gross profit on sales is:

A) $550,000 B) $450,000 C) $480,000 D) $540,000 A) $550,000 B) $450,000 C) $480,000 D) $540,000

Exam 30: Cost-Revenue Analysis for Decision Making

In its first year of operations, a company has sales of $116,000, ending finished goods inventory of $11,800, variable manufacturing costs of $57,600, and fixed manufacturing costs of $28,000 for the year. Assuming the company uses direct costing, the cost of goods sold for the year is

(Multiple Choice)

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Question 21

Irrelevant costs are those that will not impact the decision maker's options and thus can be eliminated from analyses.

(True/False)

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Question 22

Costmore Manufacturing has provided the following operating results for its first year operations: Beginning inventory of finished goods 0 Units produced (no work in process) 22,000 Units sold 18,000 Units in ending inventory of finished goods 4,000 Sales price \5 5 per unit Variable manufacturing costs \2 5 per unit manufactured Variable selling and administrative expenses \ 7 per unit sold Fixed manufacturing costs for the year \ 110,000 Fixed selling and administrative expenses for the year \ 124,000 - Using the absorption costing method, the cost of goods sold is:

(Multiple Choice)

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Question 23

Under absorption costing, a portion of the fixed manufacturing overhead is deferred to future periods as part of the inventory value.

(True/False)

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Question 24

Analyze the following divisions of Johannes' Clothing Company. Management has to make a decision whether to close one of the divisions or keep both open. Make a recommendation to management based on the information given. Of the fixed costs, parts are controllable within the divisions, but $31,000 of the total are company headquarters fixed costs. Of these, $16,000 are allocated to the Skirt Division and $15,000 to the Shirt Division.

(Essay)

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Question 25

Earnings or potential benefits foregone because a certain course of action is taken are called-------------costs.

(Short Answer)

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Question 26

Green Manufacturing makes 30,000 units per year of a part used in the manufacture of its new camcorder. An outside supplier has offered to sell Green all of these parts for $48 a unit. If the parts were purchased from the supplier, all of the direct labor costs would be avoided as well as $5 of manufacturing overhead costs per unit. Product cost information for the part under review is as follows: Direct Materials \1 8 Direct Labor \2 4 Manufacturing overhead \1 6 Unit product cost \5 8 If Green has no other use for the space vacated by the decision to purchase the part from the outside supplier, what is the net total dollar advantage (disadvantage)of purchasing the part rather than making it?

(Multiple Choice)

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Question 27

Net income under both the direct costing and absorption costing approaches will always equal.

(True/False)

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Question 28

Which is the final step in the decision-making process?

(Multiple Choice)

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Question 29

In deciding whether to manufacture or to purchase a product,-------------- costs are generally ignored.

(Short Answer)

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Question 30

Costmore Manufacturing has provided the following operating results for its first year operations: Beginning inventory of finished goods 0 Units produced (no work in process) 22,000 Units sold 18,000 Units in ending inventory of finished goods 4,000 Sales price \5 5 per unit Variable manufacturing costs \2 5 per unit manufactured Variable selling and administrative expenses \ 7 per unit sold Fixed manufacturing costs for the year \ 110,000 Fixed selling and administrative expenses for the year \ 124,000 - Using the absorption costing method, the gross profit on sales is:

(Multiple Choice)

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Question 31

Under----------- costing, a portion of fixed manufacturing overhead is deferred to future periods as part of the inventory value.

(Short Answer)

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Question 32

Company Zee produces a widget that requires $15 of material per unit along with ½ hour of labor, the average rate being $18/hour. The company's predetermined overhead rate includes $5 of variable cost and $6 of fixed cost per labor hour when the activity level is 10,000 labor hours. Direct costing would cost this widget at $29.50 per unit.

(True/False)

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Question 33

Common costs are allocated to each segment of a business to determine the segment's contribution margin.

(True/False)

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Question 34

Under direct costing, all fixed costs are expensed in the period incurred, including fixed selling and administrative costs.

(True/False)

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Question 35

If the finished goods inventory increases during the period, the reported net income will be larger under variable costing than under absorption costing.

(True/False)

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Question 36

A segment of a business reported a contribution margin of $33,000 and common costs of $11,000. If the segment is eliminated, the company-wide net income would be

(Multiple Choice)

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Question 37

The difference in net income reported under direct costing versus the net income reported under absorption costing is calculated based on the increase or decrease in the units available for sale.

(True/False)

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Question 38

If a decision must be made about whether or not to replace a machine, the-------------- of the existing machine is irrelevant.

(Short Answer)

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Question 39

Contribution margin is calculated by

(Multiple Choice)

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Question 40

Showing 21 - 40 of 126

Exam 30: Cost-Revenue Analysis for Decision Making

In its first year of operations, a company has sales of $116,000, ending finished goods inventory of $11,800, variable manufacturing costs of $57,600, and fixed manufacturing costs of $28,000 for the year. Assuming the company uses direct costing, the cost of goods sold for the year is

Irrelevant costs are those that will not impact the decision maker's options and thus can be eliminated from analyses.

Under absorption costing, a portion of the fixed manufacturing overhead is deferred to future periods as part of the inventory value.

Earnings or potential benefits foregone because a certain course of action is taken are called-------------costs.

Net income under both the direct costing and absorption costing approaches will always equal.

Which is the final step in the decision-making process?

In deciding whether to manufacture or to purchase a product,-------------- costs are generally ignored.

Under----------- costing, a portion of fixed manufacturing overhead is deferred to future periods as part of the inventory value.

Common costs are allocated to each segment of a business to determine the segment's contribution margin.

Under direct costing, all fixed costs are expensed in the period incurred, including fixed selling and administrative costs.

If the finished goods inventory increases during the period, the reported net income will be larger under variable costing than under absorption costing.

A segment of a business reported a contribution margin of $33,000 and common costs of $11,000. If the segment is eliminated, the company-wide net income would be

The difference in net income reported under direct costing versus the net income reported under absorption costing is calculated based on the increase or decrease in the units available for sale.

If a decision must be made about whether or not to replace a machine, the-------------- of the existing machine is irrelevant.

Contribution margin is calculated by

Accounting: The Language of Business

Analyzing Business Transactions

Analyzing Business Transactions Using T Accounts

The General Journal and the General Ledger

Adjustments and the Worksheet

Closing Entries and Teh Postclosing Trial Balance

Accounting for Sales and Accounts Receivable

Accounting for Purchases and Accounts Payable

Cash Receipts, Cash Payments, and Banking Procedures

Payroll Computations, Records, and Payment

Payroll Taxes, Deposits, and Reports

Accruals, Deferrals, and the Worksheet

Financial Statements and Closing Procedures

Accounting Principles and Reporting Standards

Accounts Receivable and Uncollectible Accounts

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analysis

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

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Controlling Manufacturing Costs: Standard Costs

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