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Exam 6: Variable Costing and Analysis

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Question 71

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

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Question 72

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The data needed for cost-volume-profit analysis is readily available if the income statement is prepared using a contribution format.

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Question 73

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Given the Galaxy Inc. data, what is net income using variable costing?

What are the limitations of using variable costing?

Fixed costs change in the short run depending upon management's decision to accept or reject special orders.

Home Base, Inc. reports the following production cost information: a. Compute production cost per unit under variable costing. b. Compute production cost per unit under absorption costing. c. Determine the cost of ending inventory using variable costing. d. Determine the cost of ending inventory using absorption costing.

Digby Company manufactured and sold 37,000 units of its product at a price of $93 per unit. Total variable cost per unit is $60, consisting of $58 in variable production cost and $2 in variable selling and administrative cost. Fixed costs of manufacturing are $350,000. a. Compute the manufacturing margin for the company under variable costing. b. Compute the contribution margin based on this data. c. Compute the gross margin under absorption costing.

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

Given the following data, total product cost per unit under absorption costing is $9.14.

Geneva Co. reports the following information for July: Calculate the contribution margin for July.

To convert variable costing net income to absorption costing net income, ________ the fixed production cost in ending inventory and ________ the fixed production cost in beginning inventory.

Decko Industries reported the following monthly data: What is the company's contribution margin for this month if 50,000 units were sold?

Cavalier Corporation sold 26,000 units of its product at a price of $225 per unit. Total variable cost per unit is $188, consisting of $103 in variable production cost and $85 in variable selling and administrative cost. Compute the manufacturing margin for the company under variable costing.

Reliance Corporation sold 4,000 units of its product at a price of $15 per unit. Total variable cost per unit is $8.50, consisting of $7.75 in variable production cost and $0.75 in variable selling and administrative cost. Compute the contribution margin for the company.

Which of the following is not included in the product cost under variable costing?

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

If a company has excess capacity, increases in production level will increase variable production costs but not fixed production costs.

To convert variable costing income to absorption costing income, management will need to add fixed overhead cost deferred in ending inventory and subtract fixed overhead cost recognized from beginning inventory.

Given the Cool Pools Company data, what is net income using absorption costing?

Evaluating and rewarding managers based on absorption basis income can lead to overproduction.