Question 1

The variable costing income statement for Vamonos Company for 2014 is as follows:
  Required:
Prepare an absorption costing income statement for 2014.

Accepted Answer

The answer of The variable costing income statement for Vamonos...

Question 2

The Crested Butte Company recorded the following data for a product line:  What is the segment margin of the product line?

Accepted Answer

A)  $107,500 
B)  $162,500 
C)  $75,000 
D)  $175,000

Question 3

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2014, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's sales volume variance?

Accepted Answer

A)  $8,000 (U) 
B)  $20,000 (U) 
C)  $18,000 (F) 
D)  $2,000 (U)

Question 4

Which of the following statements is FALSE?

Accepted Answer

A)  The markup is a percentage applied to base cost. 
B)  The markup is an absolute rule. 
C)  A major advantage of markup pricing is that standard markups are easy to apply. 
D)  The markup can be calculated using a variety of bases.

Question 5

Which of the following markets is characterized by the following: many buyers and sellers, a homogeneous product, easy entry into and exit from the industry, and all firms are price takers?

Accepted Answer

A)  perfectly competitive market 
B)  monopolistic competition 
C)  monopoly 
D)  oligopoly

Question 6

The Robinson-Patman Act allows price discrimination under which of the following circumstances?

Accepted Answer

A)  if revenues justify it 
B)  if the competitive situation demands it 
C)  if the costs remain the same for all customers 
D)  The Robinson-Patman Act does not allow price discrimination under any situation.

Question 7

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2014, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's sales price variance?

Accepted Answer

A)  $18,000 (F) 
B)  $20,000 (U) 
C)  $8,000 (U) 
D)  $2,000 (U)

Question 8

Octagonal Company has the following information for 2014:  There were no beginning inventories.
What is the net income for Octagonal using the variable costing method?

Accepted Answer

A)  $480,000 
B)  $412,000 
C)  $1,200,000 
D)  $600,000

Question 9

Inventory values calculated using variable costing as opposed to absorption costing will generally be

Accepted Answer

A)  equal. 
B)  less. 
C)  greater. 
D)  twice as much.

Question 10

Kasawaki Company incurred the following costs in manufacturing digital cameras:  During the period, the company produced and sold 1,000 units.
What is the inventory cost per unit using absorption costing?

Accepted Answer

A)  $104 
B)  $70 
C)  $84 
D)  $32

Question 11

The budgeted quantity sold of a product is 200 units. The actual quantity sold is 100 units. The budgeted average unit contribution margin is $3.00. What is the contribution margin volume variance?

Accepted Answer

A)  $600(F) 
B)  $600(U) 
C)  $300(U) 
D)  $300(F)

Question 12

Market structure affects price as well as the costs necessary to support that price.

Accepted Answer

A) True 
 B)False

Question 13

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2014, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's total sales variance?

Accepted Answer

A)  $8,000 (U) 
B)  $20,000 (U) 
C)  $18,000 (F) 
D)  $2,000 (U)

Question 14

Consolidated Corporation had the following information:  What would be the price for a product that has a cost of $500, assuming that the markup is based on cost of goods sold?

Accepted Answer

A)  $625 
B)  $708 
C)  $834 
D)  $2,000

Question 15

Consider the following portion of a segmented income statement for the year just ended. Assume that the fixed expenses of Division X include $30,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments nor reduce the common expenses.  What is X's divisional segment margin?

Accepted Answer

A)  $(10,000) 
B)  $40,000 
C)  $10,000 
D)  $100,000

Question 16

Firms enjoy greater success when they include the impact of profits on their employees and the community.

Accepted Answer

A) True 
 B)False

Question 17

Which type of expenses does a monopoly usually incur that are different from the other types of market structures?

Accepted Answer

A)  marketing costs such as advertising, positioning, discounting, and coupons 
B)  costs of differentiation such as advertising, rebates, coupons 
C)  no special expenses 
D)  legal and lobbying expenditures

Question 18

Which of the following is NOT an example of a market structure?

Accepted Answer

A)  oligopoly 
B)  monopoly 
C)  barrier market 
D)  perfectly competitive

Question 19

Price skimming occurs in which of the following life-cycle stages?

Accepted Answer

A)  Introduction 
B)  Growth 
C)  Maturity 
D)  Decline

Question 20

The income measurement required for external financial reporting is called __________ costing.

Accepted Answer

The answer of The income measurement required for external financial...

Exam 18: Pricing and Profitability Analysis

The variable costing income statement for Vamonos Company for 2014 is as follows: Required: Prepare an absorption costing income statement for 2014.

The Crested Butte Company recorded the following data for a product line: What is the segment margin of the product line?