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 value of ending inventory of finished goods is:

A) $100,000 B) $120,000 C) $140,000 D) $220,000 A) $100,000 B) $120,000 C) $140,000 D) $220,000

Timkon Manufacturing has provided the following operating results for its recent operations: $\begin{array}{lr} \text { Beginning inventory of finished goods } & 4,500 \\ \text { Units produced (no work in process) } & 10,000 \\ \text { Units sold } & 12,500 \\ \text { Units in ending inventory of finished goods } & 2,000\\\text { Sales price }&\$ 50 \text { per unit }\\ \text { Variable manufacturing costs }&\$ 20 \text { per unit }\\\text { manufactured Variable selling expenses }&\$ 2 \text { per unit sold }\\\text { Variable administrative expenses } & \$ 1 \text { per unit sold Fixed manufacturing } \\ \text { costs for the year } & \$ 100,000 \\ \text { Fixed selling expenses for the year } & \$ 52,000 \\ \text { Fixed administrative expenses for the year } & \$ 84,000 \end{array}$ - Net income under the direct (variable)costing method is:

A) $25,000 B) $76,500 C) $126,500 D) $101,500 A) $25,000 B) $76,500 C) $126,500 D) $101,500

Timkon Manufacturing has provided the following operating results for its recent operations: $\begin{array}{lr} \text { Beginning inventory of finished goods } & 4,500 \\ \text { Units produced (no work in process) } & 10,000 \\ \text { Units sold } & 12,500 \\ \text { Units in ending inventory of finished goods } & 2,000\\\text { Sales price }&\$ 50 \text { per unit }\\ \text { Variable manufacturing costs }&\$ 20 \text { per unit }\\\text { manufactured Variable selling expenses }&\$ 2 \text { per unit sold }\\\text { Variable administrative expenses } & \$ 1 \text { per unit sold Fixed manufacturing } \\ \text { costs for the year } & \$ 100,000 \\ \text { Fixed selling expenses for the year } & \$ 52,000 \\ \text { Fixed administrative expenses for the year } & \$ 84,000 \end{array}$ - Net income under the absorption costing method is:

A) $25,000 B) $101,500 C) $76,500 D) $126,500 A) $25,000 B) $101,500 C) $76,500 D) $126,500

Exam 30: Cost-Revenue Analysis for Decision Making

When inventories decrease, the absorption costing income statement will report a lower net income than the net income reported under variable costing.

(True/False)

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Question 61

In its first year of operations, a company has sales of $110,000, ending finished goods inventory of $12,000, variable manufacturing costs of $48,000, and fixed manufacturing costs of $30,000 for the year. Assuming the company uses direct costing, the manufacturing margin for the year is

(Multiple Choice)

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Question 62

A cost that has already been incurred and is irrelevant for decision-making purposes is called a(n)----------cost.

(Short Answer)

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Question 63

The difference in net income reported under direct costing versus the net income reported under absorption costing is calculated based on the change in the inventory levels times the unit fixed manufacturing overhead cost.

(True/False)

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Question 64

A segment of a business shows a contribution margin of $30,000 but incurs controllable fixed costs of $26,000. Eliminating that segment will result in an increase in company-wide net income.

(True/False)

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Question 65

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 value of ending inventory of finished goods is:

(Multiple Choice)

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Question 66

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 - Net income under the direct (variable)costing method is:

(Multiple Choice)

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Question 67

Which of the following represents a valid reason for rejecting a special order?

(Multiple Choice)

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Question 68

Which of the following would not be relevant to a decision about whether to continue making a part or buy it from an outside supplier?

(Multiple Choice)

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Question 69

The difference between revenue and variable costs is referred to as the---------------- .

(Short Answer)

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Question 70

Which of the following is NOT considered regarding a special order?

(Multiple Choice)

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Question 71

McAdd Industries is considering whether to continue making part MPG 411 or buying the part from a supplier. The supplier can sell the needed number of parts (47,000 projected)to McAdd for an amount that is above the company's current cost to manufacture it. If McAdd decides to purchase the parts from its supplier, it will be able to reconfigure the manufacturing floor in order to allow increased production of 50 of its product for an increased contribution margin of $17,000 for the year. The old machine has a book value of $39,000, and can be sold for $4,000. Discuss this situation. What are the considerations?

(Essay)

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Question 72

A segment of a business should probably be discontinued if it does not produce a positive----------.

(Short Answer)

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Question 73

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 - Net income under the absorption costing method is:

(Multiple Choice)

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Question 74

Direct costing differs from absorption costing in that

(Multiple Choice)

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Question 75

Fixed costs often are not relevant in the decision-making process as fixed costs do not vary in total within a relevant range of activity.

(True/False)

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Question 76

When direct costing is used, cost of goods sold reflects

(Multiple Choice)

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Question 77

Marginal income on sales is the equivalent of contribution margin since both take all variable costs into consideration.

(True/False)

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Question 78

The variable operating expenses are deducted from the manufacturing margin to arrive at the--------------on sales.

(Short Answer)

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Question 79

A cost that does not change regardless of the option selected need not be considered in the decision-making process.

(True/False)

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Question 80

Showing 61 - 80 of 126

Exam 30: Cost-Revenue Analysis for Decision Making

When inventories decrease, the absorption costing income statement will report a lower net income than the net income reported under variable costing.

In its first year of operations, a company has sales of $110,000, ending finished goods inventory of $12,000, variable manufacturing costs of $48,000, and fixed manufacturing costs of $30,000 for the year. Assuming the company uses direct costing, the manufacturing margin for the year is

A cost that has already been incurred and is irrelevant for decision-making purposes is called a(n)----------cost.

The difference in net income reported under direct costing versus the net income reported under absorption costing is calculated based on the change in the inventory levels times the unit fixed manufacturing overhead cost.

A segment of a business shows a contribution margin of $30,000 but incurs controllable fixed costs of $26,000. Eliminating that segment will result in an increase in company-wide net income.

Which of the following represents a valid reason for rejecting a special order?

Which of the following would not be relevant to a decision about whether to continue making a part or buy it from an outside supplier?

The difference between revenue and variable costs is referred to as the---------------- .

Which of the following is NOT considered regarding a special order?

A segment of a business should probably be discontinued if it does not produce a positive----------.

Direct costing differs from absorption costing in that

Fixed costs often are not relevant in the decision-making process as fixed costs do not vary in total within a relevant range of activity.

When direct costing is used, cost of goods sold reflects

Marginal income on sales is the equivalent of contribution margin since both take all variable costs into consideration.

The variable operating expenses are deducted from the manufacturing margin to arrive at the--------------on sales.

A cost that does not change regardless of the option selected need not be considered in the decision-making process.

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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