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Exam 19: Variable Costing and Analysis

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Question 41

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Quaker Corporation sold 6,600 units of its product at a price of $42.40 per unit.Total variable cost per unit is $19.25,consisting of $10.15 in variable production cost and $9.10 in variable selling and administrative cost.Compute contribution margin for the company.

A) $279,840
B) $119,130
C) $66,990
D) $152,790
E) $60,060

F) A) and E)
G) A) and C)

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Question 42

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The variable costing income statement classifies costs based on cost behavior rather than function.

A) True
B) False

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Question 43

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Sales less total variable costs equals manufacturing margin.

Assume a company sells a given product for $95 per unit.Variable selling costs are $24.25 per unit and variable production costs are $53.50 per unit.If the company breaks even when selling 260,000 units,what are total fixed costs?

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

Vision Tester,Inc.,a manufacturer of optical glass,began operations on February 1 of the current year.During this time,the company produced 900,000 units and sold 800,000 units at a sales price of $12 per unit.Cost information for this year is shown in the following table: Given this information,which of the following is true?

Urban Company reports the following information regarding its production cost: Compute production cost per unit under variable costing.

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

During its first year of operations,the McCormick Company incurred the following manufacturing costs: Direct materials,$5 per unit,Direct labor,$3 per unit,Variable overhead,$4 per unit,and Fixed overhead,$250,000.The company produced 25,000 units,and sold 20,000 units,leaving 5,000 units in inventory at year-end.Income calculated under variable costing is determined to be $315,000.How much income is reported under absorption costing?

Under absorption costing,a company had the following unit costs when 8,000 units were produced. Compute the total production cost per unit under variable costing if 25,000 units had been produced.

The biggest problems with producing too much are lost sales and customer dissatisfaction.

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

Kluber,Inc.had net income of $900,000 based on variable costing.Beginning and ending inventories were 55,000 units and 52,000 units,respectively.Assume the fixed overhead per unit was $1.25 for both the beginning and ending inventory.What is net income under absorption costing?

State Industries has the following information for 20X1: There are no beginning inventories.Prepare an income statement for the year under absorption costing.

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

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

A company is currently operating at 75% capacity and producing 3,000 units.Current cost information relating to this production is shown in the table below: The company has been approached by a customer with a request for a 200-unit special order.What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

The absorption costing approach assigns all manufacturing costs to products.

Anchovy,Inc.,a producer of frozen pizzas,began operations this year.During this year,the company produced 16,000 cases of pizza and sold 15,000.At year-end,the company reported the following income statement using absorption costing: Production costs per case total $19,which consists of $15.50 in variable production costs and $3.50 in fixed production costs (based on the 16,000 units produced).Eight percent of total selling and administrative expenses are variable.Compute net income under variable costing.

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