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Exam 6: Variable Costing: a Tool for Management

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Question 41

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Gallipeau Inc. ,which produces a single product,has provided the following data for its most recent month of operations: There were no beginning or ending inventories.The absorption costing unit product cost was:

A) $219
B) $151
C) $150
D) $300

E) None of the above
F) A) and B)

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Question 42

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Sharko Corporation produces a single product and has the following cost structure: The variable costing unit product cost is:

A) $89
B) $86
C) $164
D) $87

E) B) and D)
F) A) and C)

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Question 43

Multiple Choice

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Abdol Company,which has only one product,has provided the following data concerning its most recent month of operations: -What is the unit product cost for the month under absorption costing?

Net operating income is affected by changes in production under both variable costing and absorption costing.

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the net operating income for the month under absorption costing?

Schrick Inc.manufactures a variety of products.Variable costing net operating income was $86,800 last year and ending inventory increased by 1,900 units.Fixed manufacturing overhead cost was $6 per unit.What was the absorption costing net operating income last year?

Under absorption costing,the carrying value on the balance sheet of the ending inventory for the year would be:

Bawcutt Company,which has only one product,has provided the following data concerning its most recent month of operations: -What is the unit product cost for the month under variable costing?

Profits move in the same direction as sales when variable costing is used if selling prices,the sales mix,and the cost structure remain the same.

Eagen Corporation manufactures a variety of products.The following data pertain to the company's operations over the last two years: Required: a.Determine the absorption costing net operating income for last year.Show your work! b.Determine the absorption costing net operating income for this year.Show your work!

Abdol Company,which has only one product,has provided the following data concerning its most recent month of operations: -What is the total period cost for the month under the absorption costing approach?

Walsh Company produces a single product.Last year,the company manufactured 25,000 units and sold 22,000 units.Production costs were as follows: Sales totaled $440,000,variable selling and administrative expenses were $110,000,and fixed selling and administrative expenses were $45,000.There was no beginning inventory.Assume that direct labor is a variable cost. -The contribution margin per unit would be:

O'Bannion Company,which has only one product,has provided the following data concerning its most recent month of operations: Required: a.Prepare a contribution format income statement for the month using variable costing. b.Prepare an income statement for the month using absorption costing.

Indiana Corporation produces a single product that it sells for $9 per unit.During the first year of operations,100,000 units were produced and 90,000 units were sold.Manufacturing costs and selling and administrative expenses for the year were as follows: What was Indiana Corporation's net operating income for the year using variable costing?

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the total period cost for the month under variable costing?

Suppose fewer units are sold in year 2 than in year 1.If production exceeds sales in year 2,net operating income under absorption costing could be higher in year 2 than in year 1.

Atlantic Company produces a single product.For the most recent year,the company's net operating income computed by the absorption costing method was $7,400,and its net operating income computed by the variable costing method was $10,100.The company's unit product cost was $17 under variable costing and $22 under absorption costing.If the ending inventory consisted of 1,460 units,the beginning inventory must have been:

Gallager Company,which has only one product,has provided the following data concerning its most recent month of operations: -The total contribution margin for the month under the variable costing approach is:

Walsh Company produces a single product.Last year,the company manufactured 25,000 units and sold 22,000 units.Production costs were as follows: Sales totaled $440,000,variable selling and administrative expenses were $110,000,and fixed selling and administrative expenses were $45,000.There was no beginning inventory.Assume that direct labor is a variable cost. -The net operating income under absorption costing would be:

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: The total gross margin for the month under absorption costing is: