Exam 9: Inventory Costing and Capacity Analysis

Answer the following questions using the information below: Veach Corporation incurred fixed manufacturing costs of $6,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 1,000 units. Units produced total 750 units. Units sold total 600 units. Beginning inventory was zero. The company uses variable costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. -Fixed manufacturing costs included in ending inventory total ________.

When large differences exist between practical capacity and master-budget capacity utilization,several companies classify the difference as production-volume variance.

Which of the following inventory costing methods shown below is required by GAAP (Generally Accepted Accounting Principles)for external financial reporting?

Which of the following costs will be treated as period costs under absorption costing?

Using practical capacity is best for evaluating the marketing manager's performance for a particular year.

For 2011,Nichols,Inc.,had sales of 150,000 units and production of 200,000 units.Other information for the year included: Direct manufacturing labor \ 187,500 Variable manufacturing overhead 100,000 Direct materials 150,000 Variable selling expenses 100,000 Fixed ad ministrative expenses 100,000 Fixed manufacturing overhead 200,000 There was no beginning inventory. Required: a.Compute the ending finished goods inventory under both absorption and variable costing. b.Compute the cost of goods sold under both absorption and variable costing.

Tall Statues Inc., produces wood statues. Management has provided the following information: Actual sales 30,000 statues Budgeted production 50,000 statues Selling price \ 46.00 per statue Direct material costs \ 6.90 per statue Variable manufacturing costs \ 3.45 per statue Variable administrative costs \ 5.75 per statue Fixed manufacturing overhead \ 4.60 per statue -What is the cost per statue if throughput costing is used?

Which of the following is a reason for companies to use absorption costing for internal accounting?

Jean Peck's Furniture's manufactures tables for hospitality sector. It takes only bulk orders and each table is sold for $300 after negotiations. In the month of January, it manufactures 3,000 tables and sells 2,250 tables. Actual fixed costs are the same as the amount fixed costs budgeted for the month. The following information is provided for the month of January: Variable manufacturing costs \ 120 per unit Fixed manufacturing costs \ 90,000 per month Fixed Administrative expenses \ 25,000 per month At the end of the month Jean Peck's Furniture's has an ending inventory of finished goods of 750 units. The company also incurs a sales commission of $10 per unit. -What is the gross margin when using absorption costing?

________ is the continuing reduction in the demand for a company's products that occurs when competitor prices are not met.

Which of the following inventory costing methods shown below is most likely to cause undesirable incentives for managers to build up finished goods inventory?

Throughput contribution equals ________.

If 800 units are produced and 1,200 units are sold,the costing method which will result in the greatest operating income is ________.

Adjusted allocation-rate approach restates all amounts in the general and subsidiary ledgers by using actual rather than budgeted cost rates.

Stiller Corporation incurred fixed manufacturing costs of $24,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 2,000 units. Units produced total 1,500 units. Units sold total 1,200 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. -Operating income using absorption costing will be ________ than operating income if using variable costing.

Critics of absorption costing suggest evaluating management on its ability to ________.

Explain the three alternative approaches to dispose of the production-volume variance.

At the end of the accounting period,Armstrong Corporation reports operating income of $30,000.Which of the following statements is true,if Armstrong's inventory levels decrease during the accounting period?

If the unit level of inventory increases during an accounting period,then ________.

The effect of spreading fixed manufacturing costs over a shrinking master-budget capacity utilization amount results in ________.