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Exam 19: Variable Costing and Analysis

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Question 91

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

A) $7 per unit
B) $13.30 per unit
C) $11.00 per unit
D) $11.60 per unit
E) $16.50 per unit

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

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Question 92

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When setting long-term sales prices for products,the sales price must cover all costs,including fixed costs.

A) True
B) False

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Question 93

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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: 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.

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

Castaway Company reports the following first year production cost information: a.Determine the net income using variable costing. b.Determine the net income using absorption costing.

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?

________ is the amount remaining from sales revenues after all variable expenses have been deducted.

Variable costing treats fixed overhead cost as a period cost.

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

Decko Industries reported the following monthly data: What is the company's contribution margin for this month if 50,000 units were sold?

Reported income is identical under absorption costing and variable costing when the units produced ________ the units sold.

Reporting contribution margin by market segment is useful in assessing the profitability of each segment.

Which of the following costing methods charges all manufacturing costs to its products?

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

Given Advanced Company's data,compute cost of finished goods in inventory under absorption costing.

Under absorption costing,a company had the following unit costs when 10,000 units were produced: The total product cost per unit under absorption costing if 25,000 units had been produced would be $11.

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 variable costing?

Wrap-It Company,a manufacturer of wrapping paper,began operations on June 1 of the current year.During this time,the company produced 370,000 units and sold 310,000 units at a sales price of $50 per unit.Cost information for this period is shown in the following table: a.Prepare Wrap-It's December 31st income statement for the current year under absorption costing. b.Prepare Wrap-It's December 31st income statement for the current year under variable costing.

The data needed for cost-volume-profit analysis is readily available if the income statement is prepared under absorption costing.

Contribution margin is also known as gross margin.