Managerial Accounting Chapter 3
Using variable costing, if the sales price for the toy truck is $6, and the variable manufacturing overhead cost per unit is $1, what are the primary costs if the contribution margin is $2?
$3
Sales are $600,000. Variable costs are $30/unit. Fixed costs are $240,000. The selling price is $60/unit. Net income is ____ % of sales.
10
How many units does a company have to sell at $2 per unit to yield a target net income of 20% sales? The variable cost per unit is $.40. The fixed costs are $12,000.
10,000
If the fixed costs are $200,000 annually and variable cost per unit is $9.00, what is the total cost in an annual production run of 1000 units?
209,000
If the contribution margin per unit is $4.00 and the fixed costs are $360000 how many units do we need to breakeven?
90000
Breakeven indicates that the sales dollars cover only fixed costs.
False
Which of the following will be found on an absorption costing income statement but not on a variable costing income statement? gross margin, cost of goods sold, a and b, contribution margin
a and b
Which costing approach is in accordance with generally accepted accounting principles? absorption costing, variable costing, direct costing, none of the above
absorption costing
If the quantity produced is greater than the quantity sold, absorption costing gives _______ than variable costing. less net income, more net income, same net income, cannot be determined
more
To find the breakeven point graphically, we assume the depiction of costs and revenues are:
straight lines
If the breakeven is 5000 units and fixed costs are $50,000, what is the contribution margin?
$10
If the fixed costs are $300,000 and the contribution margin per unit is $3.00, the breakeven in sales dollars is
cannot be determined
Papier, Inc. uses a factory process to make boxes. Papier, Inc. has 200 units in finished goods ending inventory. Each unit contained $6.00 of materials, $4.00 of labor and $3.00 of variable overhead. Cost the inventory using absorption costing.
cannot be determined
Sweater, Inc. manufactures hunting sweaters. At the end of the year there were 300 units of finished goods ending inventory. The variable costing inventory value was $1,800. The absorption costing inventory value was:
cannot be determined
Which of the following will not be found on an absorption costing income statement? Gross margin, contribution margin, net income, cost of goods sold
contribution margin
Absorption costing clearly separates fixed costs from variable costs.
false
Absorption costing is not only useful for external reporting, it is essential for internal reporting because it shows a clear picture of cost behavior.
false
Contribution margin and contribution margin per unit are the same.
false
If the sales mix changes, the composition of the composite unit changes, but the breakeven point does not.
false
The slope of the variable cost per unit line changes as the production level rises.
false
Variable costing and absorption costing are two costing methods accepted as GAAP
false
If the quantity sold is greater than the quantity produced, there has to be: finished goods inventory, finished goods beginning inventory, no inventory, none of the above
finished goods beginning inventory
Absorption costing is in accordance with GAAP
true
Absorption costing is preferred for external reporting purposes.
true
Absorption costing yields a higher net income if the units produced exceed the units sold
true
Breakeven indicates that the sales dollars cover all fixed and variable costs of manufacturing
true
If Elli, Inc. sells 20,000 units of x and 60,000 units of y, the composite unit consists of .25x and .75y.
true
If a company has no beginning or ending inventories, produces and sells the same amount of units, the net income will be the same using variable costing and absorption costing
true
Sales- variable costs are equal to the contribution margin.
true
Variable costing differs from absorption costing in that:
variable does not include fixed overhead
