FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 6: Variable Costing and Performance Reporting

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 21

Essay

Review LaterAdd Note

Review Later

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 contribution margin for the company.

Correct Answer

verified

$67.00 - $54.94 = $1...

View Answer

Show Answer

Question 22

True/False

Review LaterAdd Note

Review Later

Contribution margin is another way to refer to gross margin.

A) True
B) False

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

Which of the following statements is true?

Under absorption costing, the product unit cost consists of direct labor, direct materials, variable overhead, and _______________________.

Given the following data, calculate the total product cost per unit under variable costing. $\begin{array}{|l|c|}\hline \text { Direct labor } & \$ 3.50 \text { per unit } \\\hline \text { Direct materials } & \$ 1.25 \text { per unit } \\\hline \text { Overhead } & \\\hline \text { Total variable overhead } & \$ 41,400 \\\hline \text { Total fixed overhead } & \$ 150,000 \\\hline & \\\hline \text { Expected units to be produced } & 18,000 \text { units } \\\hline\end{array}$

Given Advanced Company's data, compute cost per unit of finished goods under absorption costing.

How does contribution margin differ from gross margin?

Front Company had net income of $72,500 based on variable costing.Beginning and ending inventories were 800 units and 1,200 units, respectively.Assume the fixed overhead per unit was $7.90 for both the beginning and ending inventory.What is net income under absorption costing?

Peapod Company, a manufacturer of slippers, began operations on May 1 of the current year.During this time, the company produced 200,000 units and sold 180,000 units at a sales price of $36 per unit.Cost information for this period is shown in the following table: $\begin{array}{l}\text { Production costs }\\\begin{array}{ll}\text { Direct materials } & \$ 4.00 \text { per unit } \\\text { Direct labor } & \$ 5.75 \text { per unit } \\\text { Variable overhead } & \$ 286,000 \text { in tota. } \\\text { Fixed overhead } & \$ 420,000 \text { in tota. } \\\text { Non-production costs } & \\\text { Variable selling and administrative } & \$ 8,000 \text { in total } \\\text { Fixed selling and administrative } & \$ 30,000 \text { in total }\end{array}\end{array}$ a.Prepare Peapod's December 31 income statement for the current year under absorption costing. b.Prepare Peapod's December 31 income statement for the current year under variable costing.

Cool Pools, a manufacturer of above ground pools, began operations on January 1 of the current year. During this time, the company produced 45,000 units and sold 44,000 units at a sales price of $60 per unit. Cost information for this year is shown in the following table: $\begin{array}{l}\text { Production costs }\\\begin{array}{ll}\text { Direct materials } & \$ 11.25 \text { per unit } \\\text { Direct labor } & \$ 3.20 \text { per unit } \\\text { Variable overhead } & \$ 315,000 \text { in total } \\\text { Fixed overhead } & \$ 39,600 \text { in total } \\\text { Nonproduction costs } & \\\text { Variable selling and administrative } & \$ 2,000 \text { in total } \\\text { Fixed selling and administrative } & \$ 6,000 \text { in total }\end{array}\end{array}$ -Given the Cool Pools Company data, what is net income using absorption costing?

Sindler Corporation sold 3,000 units of its product at a price of $13 per unit.Total variable cost per unit is $7.50, consisting of $6.80 in variable production cost and $.70 in variable selling and administrative cost.Compute contribution margin for the company.

_______________________ is the amount remaining from sales revenues after all variable expenses have been deducted.

Manufacturing overhead costs are those that can be traced directly to the product.

Home Base, Inc.reports the following production cost information: $\begin{array}{ll}\text { Beginning inventory } & 10,000 \text { units } \\\text { Units produced } & 97,000 \text { units } \\\text { Units sold } & 92,000 \text { units } \\\text { Direct labor } & \$ 17 \text { per unit } \\\text { Direct materials } & \$ 34 \text { per unit } \\\text { Variable overhead } & \$ 2,522,000 \text { in total } \\\text { Fixed overhead } & \$ 1,940,000 \text { in tota } \\\text { Operating costs } & \$ 2,000,000 \text { in total }\end{array}$ Assume that productions costs have remained the same since the previous period and all units are sold for $137.00 per unit. a.Compute production cost per unit under variable costing. b.Compute production cost per unit under absorption costing. c.Determine net income using variable costing. d.Determine net income using absorption costing.

Absorption costing is useful because it reflects the full costs that sales must exceed for the company to be profitable.

Gage Company reports the following information for its first year of operations: $\begin{array}{ll}\text { Units produced this year } & 7,000 \text { units } \\\text { Units sold this year } & 6,500 \text { units } \\\text { Direct materials } & \$ 22 \text { per unit } \\\text { Direct labor } & \$ 30 \text { per unit } \\\text { Variable overhead } & ? \text { in total } \\\text { Fixed overhead } & \$ 56,000 \text { in total }\end{array}$ If the company's cost per unit of finished goods using variable costing is $63, what is total variable overhead?

Under absorption costing, a company had the following unit costs when 10,000 units were produced: $\begin{array}{lr}\text { Direct labor } & \$ 2 \text { per unit } \\\text { Direct material } & \$ 3 \text { per unit } \\\text { Variable overhead } &\underline { \$ 4 \text { per unit }} \\\text { Total variable } & \$ 9 \text { per unit } \\\text { Fixed overhead }(\$ 50,000 / 10,000 \text { units }) & \underline {\$ 5 \text { per unit }} \\\text { Total production cost } & \underline {\$ 14 \text { per unit }}\end{array}$ The total production cost per unit under absorption costing if 25,000 units had been produced would be $11.

Given the following data, calculate product cost per unit under absorption costing. $\begin{array} { | l | c | } \hline \text { Direct labor } & \$ 7 \text { per urit } \\\hline \text { Direct rmaterials } & \$ 1 \text { per urit } \\\hline \text { Overhead } & \\\hline \text { Total variable overhead } & \$ 20,000 \\\hline \text { Total fixed overhead } & \$ 90,000 \\\hline & \\\hline \text { Expected urits to be produced } & 40,000 \text { urits } \\\hline\end{array}$

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

Under absorption costing, a company had the following unit costs when 8,000 units were produced. $\begin{array}{lr}\text { Direct labor } & \$ 8.50 \text { per unit } \\\text { Direct material } & \$ 9.00 \text { per unit } \\\text { Variable overhead } & \$ 6.75 \text { per unit } \\\text { Fixed overhead }(\$ 60,000 / 8,000 \text { units }) &\underline{ \$ 7.50 \text { per unit }} \\\text { Total production cost } & \underline{\$ 31.75 \text { per unit }}\end{array}$ Compute the total production cost per unit under variable costing if 25,000 units had been produced.