ACC 216 chapter six (exam one)

When allocating fixed manufacturing overhead cost to units under absorption costing, the total fixed overhead costs must be divided by the number of units _____:

produced

Under absorption costing, fixed manufacturing overhead costs flow to the income statement when:

units are sold

Product costs under absorption costing are:

variable manufacturing overhead, direct labor, direct materials, fixed manufacturing overhead

Under variable costing the cost of a unit inventory does not contain:

fixed manufacturing overhead

Chairs makes/sells rockers. Each one requires $45 of direct materials and $37 of direct labor. Variable manufacturing overhead amounts to $8 per unit, and fixed manufacturing overhead totals $58,000. Variable selling/administrative costs amount to $15 per unit, and fixed selling/administrative costs total $102,000. During the period, 2,000 chairs were produced and 1,640 were sold. The unit product cost using absorption costing is:

$119 45 + 37 + 8 + (58,000/2,000)=119

Pearls! manufactures and sells jewelry. The total variable COGS this month is $72,490. Variable selling and administrative cost is $22 per unit sold. If 350 units are produced and 314 units are sold this month, the total variable cost reported on the income statement this month is:

$79,398 72,490 + ($22 x 314)

BB manufactures and sells ceiling fans. Each fan has a unit product cost of $112 and a unit selling price of $190. If BB produces 900 fans and sells 842 fans this month, the total cost of goods sold will be $_____:

$94,304 842 x 112

When preparing a contribution margin income statement:

1. cost of goods sold consists of only variable manufacturing costs 2. variable and fixed costs are listed in separate sections of the statement

Variable costing:

deducts all variable expenses from sales to determine contribution margin and all fixed expenses from contribution margin to determine income or loss

B's Inc. operates retail stores. Segmented income statements are prepared for each store and for each product line in each store. The property tax for the store is a ______ fixed cost for the store, and a _______ fixed cost for each product line sold in the store:

traceable, common

Blink sells manufacturing frames for eyeglasses. The unit product cost for frame #48327 is $76.35. Last period, Blink produced 200 frames and sold 155 of them. The total cost of goods sold equals:

$11,834.25 $76.35 x 155

The two general costing approaches used by manufacturing companies to value inventory and cost of goods sold are _____ costing and _____ costing:

variable, absorption

Costs are separated between variable and fixed expenses when using ______ costing, whereas ______ costing separates costs between product and period:

variable;absorption

A variable costing income statement:

1. calculates contribution margin while the absorption costing income statement calculates gross margin 2. focuses on fixed and variable expenses, while an absorption costing income statement focuses on period and product costs

What makes up the manufacturing cost per unit of a product under variable costing:

1. direct labor 2. direct materials 3. variable manufacturing overhead

Income statement using absorption costing:

1. sales 2. - total costs of goods sold 3. = gross margin 4. - total selling/administrative costs 5. = net operating income

Order of items on a contribution format income statement:

1. sales 2. variable expenses 3. contribution margin 4. fixed expenses 5. net operating income

Under variable costing the cost of a unit of inventory does not contain:

fixed manufacturing overhead

Under both variable costing and absorption costing, variable and fixed selling and administrative costs are treated as ____ costs:

period

Absorption costing:

separates product (manufacturing) costs from period (selling and administrative) costs