Question 1

Under variable costing,product costs consist of direct labor,direct materials,and variable overhead.

Accepted Answer

A) True 
 B)False

Question 2

Urban Company reports the following information regarding its production cost:  Compute production cost per unit under variable costing.

Accepted Answer

A) $18.00 
B) $36.50 
C) $42.00 
D) $13.00 
E) $31.00 
A) $18.00 
B) $36.50 
C) $42.00 
D) $13.00 
E) $31.00

Question 3

Assume a company sells a given product for $95 per unit.Variable selling costs are $24.25 per unit and variable production costs are $53.50 per unit.If the company breaks even when selling 260,000 units,what are total fixed costs?

Accepted Answer

$95 - $24.25 - $53.50 = $17.25

Question 4

Under absorption costing,a company had the following unit costs when 8,000 units were produced.   Compute the total production cost per unit under variable costing if 25,000 units had been produced.

Accepted Answer

A) $31.75 
B) $27.25 
C) $26.25 
D) $24.25 
E) $17.50 
A) $31.75 
B) $27.25 
C) $26.25 
D) $24.25 
E) $17.50

Question 5

Given the Cool Pools Company data,what is net income using variable costing?

Accepted Answer

A) $1,649,480 
B) $1,648,600 
C) $1,627,150 
D) $1,709,480 
E) $1,708,600 
A) $1,649,480 
B) $1,648,600 
C) $1,627,150 
D) $1,709,480 
E) $1,708,600

Question 6

Given the following data,total product cost per unit under absorption costing will be greater than total product cost per unit under variable costing.

Accepted Answer

A) True 
 B)False

Question 7

Mentor Corp.has provided the following information for the current year:  
-Calculate the unit product cost using variable costing.

Accepted Answer

A) $245 
B) $275 
C) $55 
D) $145 
E) $125 
A) $245 
B) $275 
C) $55 
D) $145 
E) $125

Question 8

The variable costing income statement classifies costs based on cost behavior rather than function.

Accepted Answer

A) True 
 B)False

Question 9

Kluber,Inc.had net income of $900,000 based on variable costing.Beginning and ending inventories were 55,000 units and 52,000 units,respectively.Assume the fixed overhead per unit was $1.25 for both the beginning and ending inventory.What is net income under absorption costing?

Accepted Answer

A) $833,125 
B) $903,750 
C) $966,875 
D) $896,250 
E) $900,000 
A) $833,125 
B) $903,750 
C) $966,875 
D) $896,250 
E) $900,000

Question 10

Sales less total variable costs equals manufacturing margin.

Accepted Answer

A) True 
 B)False

Question 11

During its first year of operations,the McCormick Company incurred the following manufacturing costs: Direct materials,$5 per unit,Direct labor,$3 per unit,Variable overhead,$4 per unit,and Fixed overhead,$250,000.The company produced 25,000 units,and sold 20,000 units,leaving 5,000 units in inventory at year-end.Income calculated under variable costing is determined to be $315,000.How much income is reported under absorption costing?

Accepted Answer

A) $315,000 
B) $265,000 
C) $565,000 
D) $365,000 
E) $290,000 
A) $315,000 
B) $265,000 
C) $565,000 
D) $365,000 
E) $290,000

Question 12

Vision Tester,Inc.,a manufacturer of optical glass,began operations on February 1 of the current year.During this time,the company produced 900,000 units and sold 800,000 units at a sales price of $12 per unit.Cost information for this year is shown in the following table:   Given this information,which of the following is true?

Accepted Answer

A) Net income under variable costing will exceed net income under absorption costing by $50,000. 
B) Net income under absorption costing will exceed net income under variable costing by $50,000. 
C) Net income will be the same under both absorption and variable costing. 
D) Net income under variable costing will exceed net income under absorption costing by $60,000. 
E) Net income under absorption costing will exceed net income under variable costing by $60,000. 
A) Net income under variable costing will exceed net income under absorption costing by $50,000. 
B) Net income under absorption costing will exceed net income under variable costing by $50,000. 
C) Net income will be the same under both absorption and variable costing. 
D) Net income under variable costing will exceed net income under absorption costing by $60,000. 
E) Net income under absorption costing will exceed net income under variable costing by $60,000.

Question 13

Quaker Corporation sold 6,600 units of its product at a price of $42.40 per unit.Total variable cost per unit is $19.25,consisting of $10.15 in variable production cost and $9.10 in variable selling and administrative cost.Compute contribution margin for the company.

Accepted Answer

A) $279,840 
B) $119,130 
C) $66,990 
D) $152,790 
E) $60,060 
A) $279,840 
B) $119,130 
C) $66,990 
D) $152,790 
E) $60,060

Question 14

The biggest problems with producing too much are lost sales and customer dissatisfaction.

Accepted Answer

A) True 
 B)False

Question 15

State Industries has the following information for 20X1:
   There are no beginning inventories.Prepare an income statement for the year under absorption costing.

Accepted Answer

The answer of State Industries has the following information for...

Question 16

Given the Cool Pools Company data,what is net income using absorption costing?

Accepted Answer

A) $1,649,480 
B) $1,648,600 
C) $1,627,150 
D) $1,709,480 
E) $1,708,600 
A) $1,649,480 
B) $1,648,600 
C) $1,627,150 
D) $1,709,480 
E) $1,708,600

Question 17

A company is currently operating at 75% capacity and producing 3,000 units.Current cost information relating to this production is shown in the table below:   The company has been approached by a customer with a request for a 200-unit special order.What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

Accepted Answer

A) Any amount over $43 per unit. 
B) Any amount over $17 per unit. 
C) Any amount over $21 per unit. 
D) Any amount over $13 per unit. 
E) Any amount over $22 per unit. 
A) Any amount over $43 per unit. 
B) Any amount over $17 per unit. 
C) Any amount over $21 per unit. 
D) Any amount over $13 per unit. 
E) Any amount over $22 per unit.

Question 18

The absorption costing approach assigns all manufacturing costs to products.

Accepted Answer

A) True 
 B)False

Question 19

If a company has excess capacity,increases in production level will increase variable production costs but not fixed production costs.

Accepted Answer

A) True 
 B)False

Question 20

Anchovy,Inc.,a producer of frozen pizzas,began operations this year.During this year,the company produced 16,000 cases of pizza and sold 15,000.At year-end,the company reported the following income statement using absorption costing:
   Production costs per case total $19,which consists of $15.50 in variable production costs and $3.50 in fixed production costs (based on the 16,000 units produced).Eight percent of total selling and administrative expenses are variable.Compute net income under variable costing.

Accepted Answer

Income under absorption costing = Income

Exam 19: Variable Costing and Analysis

Under variable costing,product costs consist of direct labor,direct materials,and variable overhead.

Urban Company reports the following information regarding its production cost: Compute production cost per unit under variable costing.

Assume a company sells a given product for $95 per unit.Variable selling costs are $24.25 per unit and variable production costs are $53.50 per unit.If the company breaks even when selling 260,000 units,what are total fixed costs?

Under absorption costing,a company had the following unit costs when 8,000 units were produced. Compute the total production cost per unit under variable costing if 25,000 units had been produced.

Given the Cool Pools Company data,what is net income using variable costing?

Given the following data,total product cost per unit under absorption costing will be greater than total product cost per unit under variable costing.

Mentor Corp.has provided the following information for the current year: -Calculate the unit product cost using variable costing.

The variable costing income statement classifies costs based on cost behavior rather than function.

Kluber,Inc.had net income of $900,000 based on variable costing.Beginning and ending inventories were 55,000 units and 52,000 units,respectively.Assume the fixed overhead per unit was $1.25 for both the beginning and ending inventory.What is net income under absorption costing?

Sales less total variable costs equals manufacturing margin.

Quaker Corporation sold 6,600 units of its product at a price of $42.40 per unit.Total variable cost per unit is $19.25,consisting of $10.15 in variable production cost and $9.10 in variable selling and administrative cost.Compute contribution margin for the company.

The biggest problems with producing too much are lost sales and customer dissatisfaction.

State Industries has the following information for 20X1: There are no beginning inventories.Prepare an income statement for the year under absorption costing.

Given the Cool Pools Company data,what is net income using absorption costing?

The absorption costing approach assigns all manufacturing costs to products.

If a company has excess capacity,increases in production level will increase variable production costs but not fixed production costs.

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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