Exam 9: Inventory Costing and Capacity Analysis

It is most difficult to estimate ________ because of the need to predict demand for the next few years.

In general,if inventory increases during an accounting period,________.

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

A company may use absorption costing for external reporting and still choose to use throughput costing for internal reports.

To reduce the undesirable incentives to build up inventories that absorption costing can create,a number of companies use variable costing for internal reporting.

Aspen Popular Company prepared the following absorption-costing income statement for the year ended May 31,2015. Sales ( 8,000 units) \ 160,000 Cost of goods sold 108,000 Gross margin \ 52,000 Selling and administrative expenses 18,000 Operating income \ 29,000 Additional information follows: Selling and administrative expenses include $1.50 of variable cost per unit sold.There was no beginning inventory,and 8,750 units were produced.Variable manufacturing costs were $11 per unit.Actual fixed costs were equal to budgeted fixed costs Required: Prepare a variable-costing income statement for the same period.

Unile Auto produces and sells an auto part for $60.00 per unit. In 2015, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes: Direct materials \ 20.00 per unit Direct manufacturing labor \ 4.00 per unit Variable manufacturing costs \ 1.00 per unit Sales commissions \ 6.00 per part Fixed manufacturing costs \ 750,000 per year Administrative expenses all fixed \ 270,000 per year -What is the inventoriable cost per unit using variable costing?

Engineering and human resource factors are both important when estimating theoretical or practical capacity.

Charlassier Corporation manufactures and sells laptop computers and uses standard costing.For the month of September there was no beginning inventory,there were 3,000 units produced and 2,500 units sold.The manufacturing variable cost per unit is $385 and the variable operating cost per unit was $312.50.The fixed manufacturing cost is $450,000 and the fixed operating cost is $75,000.The selling price per unit is $925. Required: Prepare the income statement for Charlassier Corporation for September under variable costing.

Job costing system is an example of absorption costing.

Zahra's Decoratives produces and sells a decorative pillow for $97.50 per unit. In the first month of operation, 2,000 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs \ 22.10 per unit Variable marketing costs \ 3.90 per unit Fixed manufacturing costs \ 13.00 per unit Administrative expenses, all fixed \ 19.50 per unit Ending inventories: Direct materials -0- WIP -0- Finished goods 250 units -What is the operating income using variable costing?

Discuss the three methods to dispose of production volume variance.

Raul Technologies is concerned that increased sales did not result in increased profits for 2016.Both variable unit and total fixed manufacturing costs for 2015 and 2016 remained constant at $35 and $3,500,000,respectively. In 2015,the company produced 100,000 units and sold 80,000 units at a price of $87.50 per unit.There was no beginning inventory in 2015.In 2016,the company made 70,000 units and sold 90,000 units at a price of $87.50.Selling and administrative expenses were all fixed at $350,000 each year. Required: a.Prepare income statements for each year using absorption costing. b.Prepare income statements for each year using variable costing. c.Explain why the income was different each year using the two methods.Show computations.

Answer the following questions using the information below: Mariposa Corporation sells "Bigger", its only product. The following information is available for the current month: Selling price per unit \ 100 Standard fixed manufacturing costs per unit \ 50 Variable selling and administrative costs per unit \ 8 Standard variable manufacturing costs per unit \ 2 Fixed selling and administrative costs \ 40,000 Units produced 10,000 units Units sold 9,600 units -What is the variable costing breakeven point in units?

The two most common methods of costing inventories in manufacturing companies are variable costing and absorption costing.

If 1,000 units are produced and only 700 units are sold,________ results in the greatest amount of expense reported on the income statement.

a.Explain the difference between the variable and absorption costing methods. b.Which method(s)are required for external reporting? For internal reporting?

Heston Company has the following information for the current year: Beginning fixed manufacturing overhead in inventory \ 190,000 Fixed manufacturing overhead in production 750,000 Ending fixed manufacturing overhead in inventory 50,000 Beginning variable manufacturing overhead in inventory \ 20,000 Variable manufacturing overhead in production 100,000 Ending variable manufacturing overhead in inventory 30,000 What is the difference between operating incomes under absorption costing and variable costing?

In ________,fixed manufacturing costs are included as inventoriable costs.

Given a constant contribution margin per unit and constant fixed costs,the period-to-period change in operating income under variable costing is driven solely by ________.