Timkon Manufacturing has provided the following operating results for its recent operations: $\begin{array}{lr} \text { Beginning inventory of finished goods } & 4,500 \\ \text { Units produced (no work in process) } & 10,000 \\ \text { Units sold } & 12,500 \\ \text { Units in ending inventory of finished goods } & 2,000\\\text { Sales price }&\$ 50 \text { per unit }\\ \text { Variable manufacturing costs }&\$ 20 \text { per unit }\\\text { manufactured Variable selling expenses }&\$ 2 \text { per unit sold }\\\text { Variable administrative expenses } & \$ 1 \text { per unit sold Fixed manufacturing } \\ \text { costs for the year } & \$ 100,000 \\ \text { Fixed selling expenses for the year } & \$ 52,000 \\ \text { Fixed administrative expenses for the year } & \$ 84,000 \end{array}$ - Assuming beginning inventory cost per unit is not different than ending inventory cost, the value of the ending inventory under absorption costing is:

A) $60,000 B) $63,000 C) $46,000 D) $40,000 A) $60,000 B) $63,000 C) $46,000 D) $40,000

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, cost of goods manufactured for the year is:

A) $450,000 B) $660,000 C) $550,000 D) $900,000 A) $450,000 B) $660,000 C) $550,000 D) $900,000

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 direct costing, the manufacturing margin is:

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

Exam 30: Cost-Revenue Analysis for Decision Making

Company A's inventory increased 525 units over the prior year end. Its variable manufacturing costs are $6 per unit and fixed costs for the period were $275,000. During the current year, Company A produced 12,500 units. Absorption costing net income will be:

(Multiple Choice)

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Question 41

Timkon Manufacturing has provided the following operating results for its recent operations: Beginning inventory of finished goods 4,500 Units produced (no work in process) 10,000 Units sold 12,500 Units in ending inventory of finished goods 2,000 Sales price \ 50 per unit Variable manufacturing costs \ 20 per unit manufactured Variable selling expenses \ 2 per unit sold Variable administrative expenses \ 1 per unit sold Fixed manufacturing costs for the year \ 100,000 Fixed selling expenses for the year \ 52,000 Fixed administrative expenses for the year \ 84,000 - Assuming beginning inventory cost per unit is not different than ending inventory cost, the value of the ending inventory under absorption costing is:

(Multiple Choice)

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Question 42

The difference in cost between two alternatives is called a(n)------------cost.

(Short Answer)

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Question 43

Which of the following is not true of the direct costing procedure?

(Multiple Choice)

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Question 44

Manufacturing margin less variable selling and administrative expenses equals marginal income.

(True/False)

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Question 45

The excess of net sales over the cost of goods sold, based on variable costs only, is--------------- referred to as the .

(Short Answer)

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Question 46

It is appropriate to consider nonfinancial factors in the decision-making process.

(True/False)

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Question 47

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, cost of goods manufactured for the year is:

(Multiple Choice)

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Question 48

Which of the following is NOT a step in the decision-making process?

(Multiple Choice)

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Question 49

The sum of unit variable and fixed costs is used as a basis for determining whether to accept or reject a special order.

(True/False)

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Question 50

Opportunity costs are earnings or potential benefits foregone because a certain course of action is taken.

(True/False)

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Question 51

The direct costing procedure is sometimes referred to as variable costing.

(True/False)

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Question 52

Differential cost analysis emphasizes evaluating alternatives by calculating the differences in relevant costs.

(True/False)

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Question 53

The data given below pertains to the operations of the Newton Products Corporation for the year ended December 31, 2019 Based on the information given prepare an income statement for the year using the direct costing approach. Assume that the beginning finished goods inventory had a cost of $25 per unit.

(Essay)

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Question 54

In its first year of operations, a company has sales of $162,000, ending finished goods inventory of $9,000, variable manufacturing costs of $55,000, and fixed manufacturing costs of $32,000 for the year. The company pays 12% commission to its sales force and has fixed selling and administrative expenses of $25,000 annually. The company has no other variable expenses. Assuming the company uses direct costing, the contribution margin for the year is

(Multiple Choice)

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Question 55

In making a decision to replace a machine, which of the following would not be relevant?

(Multiple Choice)

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Question 56

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

(True/False)

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Question 57

Using the given information, determine the income under both the absorption and the direct (variable)costing methods for CRL Company this year. Explain the difference, if any.

(Essay)

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Question 58

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 direct costing, the manufacturing margin is:

(Multiple Choice)

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Question 59

GAAP requires the use of the absorption costing method for financial reporting.

(True/False)

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Question 60

Exam 30: Cost-Revenue Analysis for Decision Making

Company A's inventory increased 525 units over the prior year end. Its variable manufacturing costs are $6 per unit and fixed costs for the period were $275,000. During the current year, Company A produced 12,500 units. Absorption costing net income will be:

The difference in cost between two alternatives is called a(n)------------cost.

Which of the following is not true of the direct costing procedure?

Manufacturing margin less variable selling and administrative expenses equals marginal income.

The excess of net sales over the cost of goods sold, based on variable costs only, is--------------- referred to as the .

It is appropriate to consider nonfinancial factors in the decision-making process.

Which of the following is NOT a step in the decision-making process?

The sum of unit variable and fixed costs is used as a basis for determining whether to accept or reject a special order.

Opportunity costs are earnings or potential benefits foregone because a certain course of action is taken.

The direct costing procedure is sometimes referred to as variable costing.

Differential cost analysis emphasizes evaluating alternatives by calculating the differences in relevant costs.

In making a decision to replace a machine, which of the following would not be relevant?

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

Using the given information, determine the income under both the absorption and the direct (variable)costing methods for CRL Company this year. Explain the difference, if any.

GAAP requires the use of the absorption costing method for financial reporting.

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

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

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