Exam 9: Inventory Costing and Capacity Analysis

Bosely Corporation is in the business of selling computers.The following expenses were incurred in March 2011: Fixed manufacturing costs \ 75,000 Fixed nonmanufacturing costs \ 35,000 Unit selling price \ 1,200 Variable manufacturing cost \ 700 Units produced 1,500 What will be the breakeven point if variable costing is used?

The contribution-margin format of the income statement distinguishes manufacturing costs from nonmanufacturing costs.

Both theoretical capacity and practical capacity measure capacity levels in terms of demand for the output of the plant.

Jeff Corporation is having trouble selling its inventory because of its ongoing dispute with its logistical partner.The company was not able to sell any inventory in the month of January because of the dispute.It manufactured 8,000 units in January.Jeff had no other fixed costs commitment other than fixed manufacturing costs of $100,000.It follows absorption costing.If actual production in January was equal to the denominator level,what is the amount of sales required to attain breakeven point?

The higher the denominator level the higher the budgeted fixed manufacturing cost rate per unit.

Which of the following is true of unused capacity?

Under absorption costing,fixed manufacturing costs ________.

Practical capacity is the denominator-level concept that ________.

The contribution-margin format of the income statement is used with absorption costing.

Which of the following statements is true of gross-margin format of the income statement?

Briefly explain why many companies use absorption costing for external reporting as well as internal accounting.

Under absorption costing,if a manager's bonus is tied to operating income,then increasing inventory levels compared to last year would result in ________.

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 cost of goods sold per unit when using absorption costing?

U.S.tax reporting requires end-of-period reconciliation between actual and applied indirect costs using the adjusted allocation-rate method or the proration method.

________ is a method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs.

Which of the following steps can a management take to reduce the undesirable effects of absorption costing?

Which of the following capacity levels should a company choose,from a long-run product costing perspective,to allocate budgeted fixed manufacturing costs to products?

An favorable production-volume variance occurs when ________.

Answer the following questions using the information below: Jupiter Corporation incurred fixed manufacturing costs of $16,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 2,000 units. Units produced total 2,200 units. Units sold total 1,900 units. Variable cost per unit is $4. Beginning inventory is zero. The fixed manufacturing cost rate is based on the budgeted denominator level. -The operating income using variable costing will be ________ as compared to the operating income under absorption costing.

Which of the following best describes practical capacity?