Exam 9: Inventory Costing and Capacity Analysis

Time Again LLC produces and sells a mantel clock for $100 per unit.In 2017,41,000 clocks were produced and 37,000 were sold.Other information for the year includes: What is the inventoriable cost per unit using absorption costing?

The gross-margin format is used for ________.

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?

Advocates of throughput costing maintain that ________.

The unit cost of a product is always higher in variable costing than in absorption costing.

Evaluating performance of managers over a long period,say over three-to five-years,helps to reduce undesirable buildup of inventories.

Variable costing only includes direct manufacturing costs in inventoriable costs.

Freetown Corporation incurred fixed manufacturing costs of $26,000 during 2017.Other information for 2017 includes: The budgeted denominator level is 2,800 units. Units produced total 1,500 units. Units sold total 1,300 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. Fixed manufacturing costs expensed on the income statement (excluding adjustments for variances)total ________.(Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar. )

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

Explain the difference between the gross margin format and the contribution margin format for the income statement.What information is highlighted with each?

Jenkins Corporation sells one product.The following information is available for the current month: Selling price per unit \ 110 Standard fixed manufacturing costs per unit \ 49 Variable selling and administrative costs per unit \ B Standard variable manufacturing costs per unit \ 3 Fixed selling and administrative costs \ 42,000 Wnits produced 16,800 units Units sold 9,600 units What is the absorption costing breakeven point in units? (Round your final answer up to the next whole unit. )

One possible means of determining the difference between operating incomes for absorption costing and variable costing is by ________.

Which of the following is a reason for companies adopting variable costing for internal reporting purposes?

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

Answer the following question using the information below: Jason Novelty Company produces a specialty item.Management has provided the following information: What is the total throughput contribution?

Kennywood Inc. ,a manufacturing firm,is able to produce 1,300 pairs of pants per hour,at maximum efficiency.There are three eight-hour shifts each day.Due to unavoidable operating interruptions,production averages 850 units per hour.The plant actually operates only 28 days per month.Based on the current budget,Kennywood estimates that it will be able to sell only 500,000 units due to the entry of a competitor with aggressive marketing capabilities.But the demand is unlikely to be affected in future and will be around 519,000.Assume the month has 30 days.What is the master-budget capacity utilization level for this budget period?

Using practical capacity as the denominator level sets the cost of capacity at the cost of supplying the capacity,regardless of the demand for the capacity.

If activity based cost accounting is used to allocate capacity related costs,normal capacity measures should be used.

Which of the following measures capacity levels in terms of demand for the output of the plant?

Absorption costing is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs.