CHAPTER 6 QUESTIONS
A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Selling price: $93 Units in beg inventory: 0 Units produced: 4500 Units sold: 4400 Units in ending inventory: 100 Direct materials: $20 Direct labor: $31 Variable OH: $2 Variable S/A: $10 Fixed OH: $45000 Fixed S/A: $79200 What is the total period cost for the month under variable costing? A) $168200 B) $123200 C) 124200 D) $45000
A) $168200
A company produces a single product. Variable production costs are $12 per unit and variable selling and administrative expenses are $3 per unit. Fixed manufacturing overhead totals $36,000 and fixed selling and administration expenses total $40,000. Assuming a beginning inventory of zero, production of 4,000 units and sales of 3,600 units, the dollar value of the ending inventory under variable costing would be: A) $4,800 B) $8,400 C) $6,000 D) $3,600
A) $4,800
Elgin Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price: $126 Units in beg inventory: 0 Units produced: 1400 Units sold: 1000 Units in ending inventory: 400 Direct materials: $27 Direct labor: $49 Variable OH: $6 Variable S/A: $9 Fixed OH: $28000 Fixed S/A: $3000 What is the net operating income for the month under variable costing? A) $8,000 B) $4,000 C) $12,000 D) ($28,800)
B) $4,000
A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Units in beg inventory: 0 Units produced: 2900 Units sold: 2500 Units in ending inventory: 400 Direct materials: $27 Direct labor: $20 Variable OH: $6 Variable S/A: $4 Fixed OH: $72500 Fixed S/A: $2500 What is the unit product cost for the month under variable costing? A) $57 B) $53 C) $78 D) $82
B) $53
Gadzuk Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price: $123 Units in beg inventory: 0 Units produced: 1900 Units sold: 1600 Units in ending inventory: 300 Direct materials: $32 Direct labor: $55 Variable OH: $1 Variable S/A: $6 Fixed OH: $43700 Fixed S/A: $1600 What is the total period cost for the month under the variable costing approach? A) $43,700 B) $54,900 C) $45,300 D) $11,200
B) $54,900
Gadzuk Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price: $123 Units in beg inventory: 0 Units produced: 1900 Units sold: 1600 Units in ending inventory: 300 Direct materials: $32 Direct labor: $55 Variable OH: $1 Variable S/A: $6 Fixed OH: $43700 Fixed S/A: $1600 What is the total period cost for the month under the absorption costing approach? A) $1,600 B) $43,700 C) $11,200 D) $54,900
C) $11,200
Elgin Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price: $126 Units in beg inventory: 0 Units produced: 1400 Units sold: 1000 Units in ending inventory: 400 Direct materials: $27 Direct labor: $49 Variable OH: $6 Variable S/A: $9 Fixed OH: $28000 Fixed S/A: $3000 What is the net operating income for the month under absorption costing? A) ($28,800) B) $4,000 C) $12,000 D) $8,000
C) $12,000
Aaker corporation, which only has one product, has provided the following data concerning its most recent month of operations: Selling price: $99 Units in beg inventory: 0 Units produced: 6300 Units sold: 6000 Units in ending inventory: 300 Direct materials: $12 Direct labor: $42 Variable OH: $6 Variable S/A: $6 Fixed OH: $170100 Fixed S/A: $24000 A) $170100 B) $60000 C) $230100 D) $194100
C) $230100
A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Selling price: $85 Units in beg inventory: 0 Units produced: 5000 Units sold: 4600 Units in ending inventory: 400 Direct materials $19 Direct labor: $15 Variable OH: $2 Variable S/A: $10 Fixed OH: $110000 Fixed S/A: $69000 What is the total period cost for the month under the variable costing approach? A) $179,000 B) $110,000 C) $115,000 D) $225,000
D) $225,000
A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Selling price: $85 Units in beg inventory: 0 Units produced: 5000 Units sold: 4600 Units in ending inventory: 400 Direct materials: $19 Direct labor: $15 Variable OH: $2 Variable S/A: $10 Fixed OH: $110000 Fixed S/A: $69000 What is the total period cost for the month under the variable costing approach? A) $179,000 B) $110,000 C) $115,000 D) $225,000
D) $225,000
Duntz Corporation, a manufacturing company, has provided the following financial data for March: Sales: $510000 Variable production expense: 61000 Variable selling expense: 11000 Variable admin expense: 46000 Fixed production expense: 96000 Fixed selling expense: 77000 Fixed admin expense: 147000 The company had no beginning or ending inventories. The contribution margin for March was: A) $353,000 B) $72,000 C) $190,000 D) $392,000
D) $392,000
A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Units in beg inventory: 0 Units produced: 7700 Units sold: 7500 Units in ending inventory: 200 Direct materials: 40 Direct labor: 34 Variable OH: 4 Variable S/A Fixed OH 146300 Fixed S/A: 60000 What is the unit product cost for the month under variable costing? A) $106 B) $87 C) $96 D) $77
D) $77
A traditional functional income statement organizes costs on the basis of behavior. T/F
FALSE
A variable cost is a cost that remains constant in total throughout wide ranges of activity. T/F
FALSE
Account analysis is a special form of least-squares regression in which more than one account is analyzed at the same time. T/F
FALSE
Calculation of fixed costs on a per unit basis is critical for internal reporting to managers. T/F
FALSE
Contribution margin and gross margin mean the same thing. T/F
FALSE
If the activity level increases, then one would expect the variable cost per unit to increase as well. T/F
FALSE
Most companies use the contribution approach in preparing financial statements for external reporting purposes. T/F
FALSE
Selling and administrative expenses are treated as product costs, regardless of the costing method. T/F
FALSE
Under absorption costing, the profit for a period is not affected by changes in inventory. T/F
FALSE
Under variable costing, inventoriable product costs consist of direct materials, direct labor, variable manufacturing overhead and variable selling and administration expenses. T/F
FALSE
Under variable costing, it is possible to defer a portion of the fixed manufacturing overhead costs of the current period to future periods through the inventory account. T/F
FALSE
When reconciling variable costing and absorption costing net operating income, fixed manufacturing overhead costs deferred in inventory under absorption costing should be deducted from variable costing net operating income to arrive at the absorption costing net operating income. T/F
FALSE
When the number of units in inventories decrease between the beginning and end of the period, absorption costing net operating income will typically be greater than variable costing net operating income. T/F
FALSE
When using the high-low method, if the high and low activity levels do not coincide with the high and low levels of cost, then the analyst should use the points with the high and low levels of cost. T/F
FALSE
Committed fixed costs cannot be reduced to zero without seriously impairing the company's long term goals. T/F
TRUE
Fixed costs expressed on a per unit basis vary inversely with changes in activity. T/F
TRUE
Management's strategy will determine to a large degree the classification of a fixed cost as discretionary or committed. T/F
TRUE
The contribution income statement organizes costs according to behavior.
TRUE
The contribution margin represents the amount available to contribute toward covering fixed expenses and toward profits for the period. T/F
TRUE
The inventory value shown on the balance sheet is generally higher under absorption costing than under variable costing. T/F
TRUE
The least-squares regression method computes the regression line that minimizes the sum of the squared deviations from the plotted points to the line. T/F
TRUE
Under absorption costing, a portion of fixed manufacturing overhead cost is released from inventory when sales volume exceeds production volume. T/F
TRUE
Under the absorption costing method, a portion of fixed manufacturing overhead cost is allocated to each unit of product. T/F
TRUE
Under variable costing, an increase in the fixed factory overhead will have no effect on the unit product cost. T/F
TRUE
Unless the behavior pattern of each cost of a company is understood, the impact of a company's activities on its costs will not be known until after the activity has occurred. T/F
TRUE
When the units produced & units sales are equal, no change in inventories occurs & absorption costing & variable costing net operating incomes are the same. T/F
TRUE
When viewed over the long term, accumulated net operating income will be the same for variable and absorption costing if there are no ending inventories at the end of the term. T/F
TRUE