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Exam 19: Variable Costing and Analysis

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Question 51

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A company normally sells a product for $25 per unit.Variable per unit costs for this product are: $3 direct materials,$5 direct labor,and $2 variable overhead.The company is currently operating at 100% of capacity producing 30,000 units per year.Total fixed costs are $75,000 per year.The company should accept a special order for 1,000 units which would be sold for $13 per unit because the special order price exceeds variable costs.

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Question 52

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Materials Corporation sold 12,000 units of its product at a price of $67 per unit.Total variable cost per unit is $54.94,consisting of $45.05 in variable production cost and $9.89 in variable selling and administrative cost.Compute the total contribution margin.

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$67.00 - $54.94 = $1...

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Question 53

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Given Advanced Company's data,compute cost of finished goods in inventory under variable costing.

Alexis Co.reported the following information for May: -What is the manufacturing margin for Part A?

Which of the following best describes costs assigned to the product under the variable costing method? Direct labor (DL) Direct materials (DM) Variable selling and administrative (VSA) Variable manufacturing overhead (VOH) Fixed selling and administrative (FSA) Fixed manufacturing overhead (FOH)

When the number of units sold exceed the number of units produced,income reported under absorption costing will be lower than variable costing.Which of the following gives the best justification of the above statement?

The product costing approach required by GAAP is referred to as ________.

Assume a company sells a given product for $18 per unit.Variable selling costs are $0.70 per unit and variable production costs are $5.30 per unit.If the company breaks even when selling 4,000,000 units,what are total fixed costs?

Given the following data,total product cost per unit under absorption costing will be $400 greater than total product cost per unit under variable costing.

Under variable costing,product costs consist of direct labor,direct materials,and fixed overhead.

Under absorption costing,fixed manufacturing overhead is expensed at the time the units are produced.Under variable costing,fixed manufacturing overhead is expensed at the time the units are sold.

When units produced exceed the units sold,income under absorption costing is higher than income under variable costing.

Given the following data,total product cost per unit under variable costing will be greater than total product cost under absorption costing.

Brush Industries reports the following information for May: Calculate the operating income for May under absorption costing.

What is the general procedure for converting variable costing net income to absorption costing net income?

________ costing is the only acceptable basis for both external reporting and tax reporting.

When excess capacity exists,managers should accept a special order if the special order price exceeds the ________.

Mentor Corp.has provided the following information for the current year: -Calculate the unit product cost using absorption costing.

Aces,Inc.,a manufacturer of tennis rackets,began operations this year.The company produced 6,000 rackets and sold 4,900.At year-end,the company reported the following income statement using absorption costing. Production costs per tennis racket total $38,which consists of $25 in variable production costs and $13 in fixed production costs (based on the 6,000 units produced) .Ten percent of total selling and administrative expenses are variable.Compute net income under variable costing.

A company normally sells a product for $20 per unit.Variable per unit costs for this product are: $2 direct materials,$4 direct labor,and $1.50 variable overhead.The company is currently operating at 70% of capacity producing 14,000 units per year.Total fixed costs are $42,000 per year.The company should not accept a special order for 2,000 units which would be sold for $10 per unit because there would be an incremental loss on the order.