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Information presented in a variable costing format can assist management when making short-term pricing decisions.

A) True
B) False

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What is a contribution margin report?

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A contribution margin report presents co...

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Brush Industries reports the following information for May: Brush Industries reports the following information for May: Calculate the gross margin for May under absorption costing. A) $650,000 B) $325,000 C) $525,000 D) $550,000 E) $575,000Calculate the gross margin for May under absorption costing.


A) $650,000
B) $325,000
C) $525,000
D) $550,000
E) $575,000

F) A) and E)
G) B) and E)

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When the number of units produced is equal to the number of units sold,net income reported under variable costing is identical to net income reported under absorption costing.

A) True
B) False

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32 Degrees,Inc.,a manufacturer of frozen food,began operations on July 1 of the current year.During this time,the company produced 140,000 units and sold 140,000 units at a sales price of $125 per unit.Cost information for this period is shown in the following table: 32 Degrees,Inc.,a manufacturer of frozen food,began operations on July 1 of the current year.During this time,the company produced 140,000 units and sold 140,000 units at a sales price of $125 per unit.Cost information for this period is shown in the following table: a.Prepare 32 Degree's December 31st income statement for the current year under absorption costing. b.Prepare 32 Degree's December 31st income statement for the current year under variable costing. a.Prepare 32 Degree's December 31st income statement for the current year under absorption costing. b.Prepare 32 Degree's December 31st income statement for the current year under variable costing.

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


A) Direct materials.
B) Fixed manufacturing overhead.
C) Direct labor.
D) Variable manufacturing overhead.
E) All variable manufacturing costs.

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

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The traditional income statement format used for financial reporting is called the contribution margin format.

A) True
B) False

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Gage Company reports the following information for its first year of operations: Gage Company reports the following information for its first year of operations: If the company's cost per unit of finished goods using variable costing is $63,what is total variable overhead? A) $21,000 B) $71,500 C) $77,000 D) $19,500 E) $16,590 If the company's cost per unit of finished goods using variable costing is $63,what is total variable overhead?


A) $21,000
B) $71,500
C) $77,000
D) $19,500
E) $16,590

F) A) and E)
G) A) and D)

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A company is currently operating at 70% capacity producing 8,000 units.Cost information relating to this current production is shown in the following table: A company is currently operating at 70% capacity producing 8,000 units.Cost information relating to this current production is shown in the following table: The company has been approached by a customer with a request for a special order for 1,500 units.The sales price per unit for this special order is $10.Should the company accept the special order? The company has been approached by a customer with a request for a special order for 1,500 units.The sales price per unit for this special order is $10.Should the company accept the special order?

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8,000/.7 - 8,000 = 3,428 unit ...

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

A) True
B) False

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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.

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Tim's Tools,a manufacturer of cordless drills,began operations this year.During this year,the company produced 20,000 units and sold 18,000 units.At year-end,the company reported the following income statement using absorption costing: Tim's Tools,a manufacturer of cordless drills,began operations this year.During this year,the company produced 20,000 units and sold 18,000 units.At year-end,the company reported the following income statement using absorption costing: Production costs per unit total $14,which consists of $12.90 in variable production costs and $1.10 in fixed production costs (based on the 20,000 units produced) .60% of total selling and administrative expenses are variable.Compute net income under variable costing. A) $307,800 B) $198,000 C) $195,800 D) $288,000 E) $220,000 Production costs per unit total $14,which consists of $12.90 in variable production costs and $1.10 in fixed production costs (based on the 20,000 units produced) .60% of total selling and administrative expenses are variable.Compute net income under variable costing.


A) $307,800
B) $198,000
C) $195,800
D) $288,000
E) $220,000

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

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Geneva Company manufactures dolls that are sold to various customers.The company works at full capacity for half the year to meet peak demand,and operates at 80% capacity for the other half of the year.The following information is provided: Geneva Company manufactures dolls that are sold to various customers.The company works at full capacity for half the year to meet peak demand,and operates at 80% capacity for the other half of the year.The following information is provided: Geneva receives a purchase order to make 5,000 dolls as a one-time event.The good news is that this order is during a period when Geneva does have sufficient excess capacity.What is the lowest selling price Geneva should accept for this purchase order? A) $35.00 B) $26.00 C) $29.50 D) $23.50 E) $25.00 Geneva receives a purchase order to make 5,000 dolls as a one-time event.The good news is that this order is during a period when Geneva does have sufficient excess capacity.What is the lowest selling price Geneva should accept for this purchase order?


A) $35.00
B) $26.00
C) $29.50
D) $23.50
E) $25.00

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

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Special order decisions should be made using variable costing because:


A) Special order decisions usually focus on fixed costs
B) Variable costing includes all overhead costs in the calculation of product costs.
C) Only variable costs will increase as a result of the special order.
D) All costs,including variable and fixed costs,must be covered by the special order pricing.
E) Fixed overhead costs will change as a result of the special order.

F) A) and C)
G) C) and D)

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


A) $11,275,000
B) $17,400,000
C) $16,360,000
D) $16,800,000
E) $16,220,000

F) C) and E)
G) C) and D)

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Given the following data,calculate the total product cost per unit under absorption costing. Given the following data,calculate the total product cost per unit under absorption costing. A) $4.75 per unit B) $7.05 per unit C) $13.08 per unit D) $15.38 per unit E) $16 per unit


A) $4.75 per unit
B) $7.05 per unit
C) $13.08 per unit
D) $15.38 per unit
E) $16 per unit

F) All of the above
G) C) and E)

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Swola Company reports the following annual cost data for its single product. Swola Company reports the following annual cost data for its single product. This product is normally sold for $25 per unit.If Swola increases its production to 200,000 units,while sales remain at the current 75,000 unit level,by how much would the company's income increase or decrease under absorption costing? A) $187,500 increase. B) $112,500 increase. C) There will be no change in income. D) $112,500 decrease. E) $187,500 decrease. This product is normally sold for $25 per unit.If Swola increases its production to 200,000 units,while sales remain at the current 75,000 unit level,by how much would the company's income increase or decrease under absorption costing?


A) $187,500 increase.
B) $112,500 increase.
C) There will be no change in income.
D) $112,500 decrease.
E) $187,500 decrease.

F) C) and D)
G) A) and B)

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Geneva Co.reports the following information for July: Geneva Co.reports the following information for July: Calculate the contribution margin for July. A) $525,000 B) $425,000 C) $650,000 D) $750,000Calculate the contribution margin for July.


A) $525,000
B) $425,000
C) $650,000
D) $750,000

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

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________ costing treats fixed overhead as a period cost.

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

A) True
B) False

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