Swanson,Inc.has collected the following data.(There are no beginning inventories.) \[\begin{array} { | l | r | } \hline \text { Units produced } & { 700 \text { units } } \\ \hline \text { Sales price } & \$ 130 \text { per unit } \\ \hline \text { Direct materials } & \$ 40 \text { per unit } \\ \hline \text { Direct labor } & \$ 11 \text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$ 7 \text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 17,100 \text { per year } \\ \hline \text { Variable selling and administrative costs } & \$ 4 \text { per unit } \\ \hline \text { Fixed selling and administrative costs } & \$ 14,000 \text { per year } \\ \hline \end{array}\] What is the ending balance in Finished Goods Inventory using absorption costing if 400 units are sold? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

A) $7,329 B) $17,400 C) $31,929 D) $24,729 A) $7,329 B) $17,400 C) $31,929 D) $24,729

Candy Man,Inc.reports the following information: \[\begin{array} { | l | r | } \hline \text { Beginning Finished Goods Inventory } & 50 \text { units } \\ \hline \text { Units produced } & 580 \text { units } \\ \hline \text { Units sold } & 630 \text { units } \\ \hline \text { Sales price } & \$ 180 \text { per unit } \\ \hline \text { Direct materials } & \$ 29 \text { per unit } \\ \hline \text { Direct labor } & \$ 14 \text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$ 19 \text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 19,900 \text { per year } \\ \hline \text { Variable selling and administrative costs } & \$ 7 \text { per unit } \\ \hline \text { Fixed selling and administrative costs } & \$ 12,500 \text { per year } \\ \hline \end{array}\] What is the unit product cost using variable costing? (Round your answer to the nearest cent.)

A) $96.31 B) $62.00 C) $67.31 D) $124.86 A) $96.31 B) $62.00 C) $67.31 D) $124.86

Eric was a professional classical guitar player until his motorcycle accident that left him disabled.After long months of therapy,he hired an experienced luthier (maker of stringed instruments)and started a small shop to make and sell Spanish guitars.The guitars sell for $750 and the fixed monthly operating costs are as follows: \[\begin{array} { | l | r | } \hline \text { Rent and utilities } & \$ 1,200 \\ \hline \text { Wages and benefits to luthier } & 2,600 \\ \hline \text { Other expenses } & 500 \\ \hline \end{array}\] Eric's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales,$0.60 went to cover his fixed costs,and that anything past that point was pure profit. What is the amount of revenue Eric should earn each month to break even?

A) $10,750 B) $7,167 C) $5,167 D) $6,334 A) $10,750 B) $7,167 C) $5,167 D) $6,334

Medbam,Inc.has collected the following data.(There are no beginning inventories.): \[\begin{array} { | l | r | } \hline \text { Units produced } & 500 \text { units } \\ \hline \text { Units sold } & 500 \text { units } \\ \hline \text { Sales price } & \$ 170 \text { per unit } \\ \hline \text { Direct materials } & \$ 20 \text { per unit } \\ \hline \text { Direct labor } & \$ 25 \text { per unit } \\ \hline \text { Variable manufacturing overhead } & \$ 40 \text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 14,000 \text { per year } \\ \hline \text { Variable selling and administrative costs } & \$ 15 \text { per unit } \\ \hline \text { Fixed selling and administrative costs } & \$ 15,000 \text { per year } \\ \hline \end{array}\] What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

A) $28,500 B) $21,000 C) $6,000 D) $13,500 A) $28,500 B) $21,000 C) $6,000 D) $13,500

Exam 21: Cost-Volume-Profit Analysis

Dayton Company has fixed costs of $350,000.Total costs,both fixed and variable,are $450,000 when 40,000 units are produced.Calculate the total costs if the volume increases to 65,000 units.Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.

(Multiple Choice)

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Question 101

Patel Company incurs both fixed and variable production costs.Assuming the production is within the relevant range,if volume goes up by 15%,then the total variable costs would ________.

(Multiple Choice)

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Question 102

Fixed costs divided by contribution margin per unit equals breakeven point in unit sales.

(True/False)

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Question 103

Swanson,Inc.has collected the following data.(There are no beginning inventories.) Units produced 700 units Sales price \ 130 per unit Direct materials \ 40 per unit Direct labor \ 11 per unit Variable manufacturing overhead \ 7 per unit Fixed manufacturing overhead \ 17,100 per year Variable selling and administrative costs \ 4 per unit Fixed selling and administrative costs \ 14,000 per year What is the ending balance in Finished Goods Inventory using absorption costing if 400 units are sold? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

(Multiple Choice)

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Question 104

A 10% increase in production volume will result in a ________.

(Multiple Choice)

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Question 105

Patel Company incurs both fixed and variable production costs.Assuming the production is within the relevant range,if volume goes up by 15%,then the total fixed costs would ________.

(Multiple Choice)

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Question 106

Candy Man,Inc.reports the following information: Beginning Finished Goods Inventory 50 units Units produced 580 units Units sold 630 units Sales price \ 180 per unit Direct materials \ 29 per unit Direct labor \ 14 per unit Variable manufacturing overhead \ 19 per unit Fixed manufacturing overhead \ 19,900 per year Variable selling and administrative costs \ 7 per unit Fixed selling and administrative costs \ 12,500 per year What is the unit product cost using variable costing? (Round your answer to the nearest cent.)

(Multiple Choice)

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Question 107

Morrell Company's Model A generator sells for $569,and Model B sells for $499.The variable cost of Model A is $514 and of Model B is $416.If Morrell sells more of Model B than Model A,it will generate lower revenues,but higher net income.

(True/False)

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Question 108

The contribution margin format of the income statement categorizes costs by their behavior.

(True/False)

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Question 109

The breakeven point is the point where the sales revenues are equal to the total variable costs plus the total fixed costs.

(True/False)

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Question 110

From the graph given below,identify the fixed costs line.

(Multiple Choice)

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Question 111

The fixed costs per unit will ________.

(Multiple Choice)

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Question 112

Eric was a professional classical guitar player until his motorcycle accident that left him disabled.After long months of therapy,he hired an experienced luthier (maker of stringed instruments)and started a small shop to make and sell Spanish guitars.The guitars sell for $750 and the fixed monthly operating costs are as follows: Rent and utilities \ 1,200 Wages and benefits to luthier 2,600 Other expenses 500 Eric's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales,$0.60 went to cover his fixed costs,and that anything past that point was pure profit. What is the amount of revenue Eric should earn each month to break even?

(Multiple Choice)

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Question 113

When units produced is less than units sold,how does operating income differ between variable costing and absorption costing? Explain your answer.

(Essay)

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Question 114

Medbam,Inc.has collected the following data.(There are no beginning inventories.): Units produced 500 units Units sold 500 units Sales price \ 170 per unit Direct materials \ 20 per unit Direct labor \ 25 per unit Variable manufacturing overhead \ 40 per unit Fixed manufacturing overhead \ 14,000 per year Variable selling and administrative costs \ 15 per unit Fixed selling and administrative costs \ 15,000 per year What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

(Multiple Choice)

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Question 115

Which of the following statements is true of variable costing?

(Multiple Choice)

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Question 116

Bertrand Enterprises sells computer disks for $1.70 per disk.Unit variable expenses total $0.80.The breakeven point in units is 4,000 and expected sales in units are 4,500.What is the margin of safety in dollars?

(Multiple Choice)

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Question 117

Contribution margin is calculated by deducting the total cost of goods sold from sales revenue.

(True/False)

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Question 118

Cost-volume-profit (CVP)analysis assumes that the selling price per unit does not change as volume changes.

(True/False)

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Question 119

Aspen Manufacturers produces flooring material.The monthly fixed costs are $12,000 per month.The unit selling price is $85 and variable cost per unit is $45.Aspen wishes to earn an operating income of $25,000.Using the contribution martin ratio,calculate the total revenue.(Round your intermediate calculations to five decimal places.)

(Essay)

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Question 120

Dayton Company has fixed costs of $350,000.Total costs,both fixed and variable,are $450,000 when 40,000 units are produced.Calculate the total costs if the volume increases to 65,000 units.Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.

Patel Company incurs both fixed and variable production costs.Assuming the production is within the relevant range,if volume goes up by 15%,then the total variable costs would ________.

Fixed costs divided by contribution margin per unit equals breakeven point in unit sales.

A 10% increase in production volume will result in a ________.

Patel Company incurs both fixed and variable production costs.Assuming the production is within the relevant range,if volume goes up by 15%,then the total fixed costs would ________.

Morrell Company's Model A generator sells for $569,and Model B sells for $499.The variable cost of Model A is $514 and of Model B is $416.If Morrell sells more of Model B than Model A,it will generate lower revenues,but higher net income.

The contribution margin format of the income statement categorizes costs by their behavior.

The breakeven point is the point where the sales revenues are equal to the total variable costs plus the total fixed costs.

From the graph given below,identify the fixed costs line.

The fixed costs per unit will ________.

When units produced is less than units sold,how does operating income differ between variable costing and absorption costing? Explain your answer.

Which of the following statements is true of variable costing?

Bertrand Enterprises sells computer disks for $1.70 per disk.Unit variable expenses total $0.80.The breakeven point in units is 4,000 and expected sales in units are 4,500.What is the margin of safety in dollars?

Contribution margin is calculated by deducting the total cost of goods sold from sales revenue.

Cost-volume-profit (CVP)analysis assumes that the selling price per unit does not change as volume changes.

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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