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Exam 6: Variable Costing and Analysis

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Question 41

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Given the following data, total product cost per unit under variable costing is $7.09.

A) True
B) False

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Question 42

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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)

A) DL, DM, VSA, and VOH.
B) DL, DM, and VOH.
C) DL, DM, VOH, and FOH.
D) DL and DM.
E) DL, DM, FSA, and FOH.

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

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Question 43

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

Identify the treatment of each of the following costs under variable costing and absorption costing: $\begin{array} { | l | l | l | l | l | } \hline & \text { Variable Costing } & &\text { Absorption Costing } \\\hline & \text { Product Cost } & \text { Period Cost } & \text { Product Cost } & \text {Period Cost } \\\hline \text { 1. Direct materials } & & & & \\\hline \text { 2. Direct labor } & & & & \\\hline \text { 3. Variable manufacturing overhead } & & & & \\\hline \text { 4. Fixed manufacturing overhead } & & & & \\\hline \text { 5. Variable selling } & & & & \\\hline \text { 6. Fixed selling } & & & & \\\hline \text { 7. Variable administrative } & & & & \\\hline \text { 8. Fixed administrative } & & & & \\\hline\end{array}$

Toth, Inc. had net income of $950,000 based on variable costing. Beginning and ending inventories were 60,000 units and 56,000 units, respectively. Assume the fixed overhead cost per unit was $.85 for both the beginning and ending inventory. What is net income under absorption costing?

Given the following data, calculate product cost per unit under variable costing.

Chilly Chips, Inc., a producer of ice cream, began operations this year. During this year, the company produced 160,000 cartons of ice cream and sold 145,000. At year-end, the company reported the following income statement using absorption costing: Production costs per carton total $3.50, which consists of $2.30 in variable production costs and $1.20 in fixed production costs (based on the 160,000 units produced). Sixty percent of total selling and administrative expenses are variable. Compute net income under variable costing.

Stonehenge Inc., a manufacturer of landscaping blocks, began operations on April 1 of the current year. During this time, the company produced 750,000 units and sold 720,000 units at a sales price of $9 per unit. Cost information for this period is shown in the following table: $\begin{array} { | l | l | } \hline \text { Production costs } & \\\hline \text { Direct materials } & \$ 1.80 \text { per unit } \\\hline \text { Direct labor } & \$ .30 \text { per unit } \\\hline \text { Variable overhead } & \$ 495,000 \text { in total } \\\hline \text { Fixed overhead } & \$ 450,000 \text { in total } \\\hline \text { Non production costs } & \\\hline \text { Variable selling and administrative } & \$ 18,000 \text { in total } \\\hline \text { Fixed selling and administrative } & \$ 53,000 \text { in total } \\\hline\end{array}$ a. Prepare Stonehenge's December 31st income statement for the current year under absorption costing. b. Prepare Stonehenge's December 31st income statement for the current year under variable costing.

Jeter Corporation had net income of $212,000 based on variable costing. Beginning and ending inventories were 6,000 units and 10,000 units, respectively. Assume the fixed overhead per unit was $4 for both the beginning and ending inventory. What is net income under absorption costing?

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

Lukin Corporation reports the following first year production cost information. $\begin{array} { | l | l | } \hline \text { Units produced } & 62,000 \text { units } \\\hline \text { Units sold } & 59,000 \text { units } \\\hline \text { Direct labor } & \$ 41 \text { per unit } \\\hline \text { Direct materials } & \$ 15 \text { per unit } \\\hline \text { Variable overhead } & \$ 150 \text { per unit } \\\hline \text { Fixed overhead } & \$ 4,340,000 \text { in total } \\\hline\end{array}$ 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.

Given the following data, total product cost per unit under variable costing is $10.75.

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

Chance, Inc. sold 3,000 units of its product at a price of $72 per unit. Total variable cost per unit is $51, consisting of $32 in variable production cost and $19 in variable selling and administrative cost. Compute the manufacturing margin for the company under variable costing.

For short-term pricing decisions, absorption costing is an appropriate costing method to use.

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

Fanelli Company had net income of $678,000 based on variable costing. Beginning and ending inventories were 5,000 units and 4,200 units, respectively. Assume the fixed overhead cost per unit was $.50 for both the beginning and ending inventory. What is net income under absorption costing?

[The following information applies to the questions displayed below.] 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: -Given the Cool Pools Company data, what is net income using absorption costing?

________ is the amount remaining from sales revenues after cost of goods sold has been deducted.

A per unit cost that is constant at all production levels is a ________ cost per unit.