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Exam 7: Variable Costing: a Tool for Management

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Question 51

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During its first year of operations, Holt Manufacturing Company incurred the following costs to produce 200,000 units of its only product: Holt also incurred the following costs in the sale of 180,000 units of product during its first year: Assume that direct labor is a variable cost. -If Holt's variable costing net operating income for this first year is $397,800, what would its absorption costing net operating income be for this first year?

A) $354,600
B) $441,000
C) $445,800
D) $473,800

E) A) and B)
F) A) and C)

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Question 52

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Walsh Company produces a single product. Last year, the company manufactured 25,000 units and sold 22,000 units. Production costs were as follows: Sales totaled $440,000, variable selling and administrative expenses were $110,000, and fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labor is a variable cost. -The net operating income under absorption costing would be:

A) $9,000
B) $12,000
C) $2,000
D) $21,000

E) A) and B)
F) None of the above

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Question 53

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A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: The total gross margin for the month under absorption costing is:

Last year, Gransky Corporation's variable costing net operating income was $52,100 and its ending inventory increased by 400 units. Fixed manufacturing overhead cost was $7 per unit. What was the absorption costing net operating income last year?

Abdol Company, which has only one product, has provided the following data concerning its most recent month of operations: -What is the unit product cost for the month under variable costing?

Last year, Jaquet Corporation's variable costing net operating income was $58,000. The fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $9,000. Required: Determine the absorption costing net operating income last year. Show your work!

Gallager Company, which has only one product, has provided the following data concerning its most recent month of operations: -The total gross margin for the month under the absorption costing approach is:

Dewiel Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years: -What was the absorption costing net operating income last year?

During its first year of operations, Holt Manufacturing Company incurred the following costs to produce 200,000 units of its only product: Holt also incurred the following costs in the sale of 180,000 units of product during its first year: Assume that direct labor is a variable cost. -What would be the cost per unit of Holt's finished goods inventory at the end of the first year of operations under the absorption costing method?

Abdol Company, which has only one product, has provided the following data concerning its most recent month of operations: -The total contribution margin for the month under the variable costing approach is:

The costs assigned to units in inventory are typically lower under absorption costing than under variable costing.

Kidwell Company, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. 107. What is the net operating income for the month under variable costing? A. $5,800 B. $5,400 <underLine>C.</underLine> $8,300 D. $16,000 -What is the net operating income for the month under absorption costing?

A cost that would be included in product costs under both absorption costing and variable costing would be:

Which of the following costs at a manufacturing company would be treated as a product cost under the absorption costing method?

Baylor Inc., which produces a single product, has provided the following data for its most recent month of operations: There were no beginning or ending inventories. The variable costing unit product cost was:

Weber Company computes net operating income under both the absorption costing approach and the variable costing approach. For a given year the absorption costing net operating income was greater than the variable costing net operating income. This fact suggests that:

Abdol Company, which has only one product, has provided the following data concerning its most recent month of operations: -What is the total period cost for the month under the absorption costing approach?

Leibson Company, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. Required: a. What is the unit product cost for the month under variable costing? b. What is the unit product cost for the month under absorption costing? c. Prepare a contribution format income statement for the month using variable costing. d. Prepare an income statement for the month using absorption costing. e. Reconcile the variable costing and absorption costing net operating incomes for the month.

Faxon Company, which has only one product, has provided the following data concerning its most recent month of operations: -What is the net operating income for the month under absorption costing?

Net operating income is not affected by changes in production when absorption costing is used.