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Exam 6: Variable Costing for Management Analysis

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Question 61

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At XLT Inc, variable costs are $80 per unit, and fixed costs are $40,000. Sales are estimated to be 4,000 units. (a) How much would absorption costing income from operations differ between a plan to produce 8,000 units and a plan to produce 10,000 units? (b) How much would variable costing income from operations differ between the two production plans?

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(a)
(b) There would be no di...

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Question 62

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The taxes on the factory superintendent's salary would be included as part of the cost of products manufactured under the variable costing concept.

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B) False

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Question 63

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Edna's Chocolates had planned to sell chocolate-covered strawberries for $3.00 each. Due to various factors, the actual price was $2.75. Edna's was able to sell 1,000 more strawberries than the anticipated 4,000. What is (1) the quantity factor and (2) the price factor for sales?

In contribution margin analysis, the quantity factor is computed as the difference between actual quantity sold and the planned quantity sold, multiplied by the planned unit sales price or unit cost.

S&P Enterprises sold 10,000 units of inventory during a given period.  The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Which of the following statements is true?

If the variable cost of goods sold totaled $80,000 for the year (16,000 units at $5.00 each) and the planned variable cost of goods sold totaled $86,250 (15,000 units at $5.75 each) , the effect of the unit cost factor on the change in contribution margin is:

For a period during which the quantity of product manufactured was less than the quantity sold, income from operations reported under absorption costing will be smaller than income from operations reported under variable costing.

For a supervisor of a manufacturing department, which of the following costs is controllable?

For short-run production planning, information in the variable costing format is more useful to management than is information in the absorption costing concept format.

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and variable factory overhead cost?

The contribution margin ratio is computed as:

Service firms can only have one activity base for analyzing changes in costs.

In the long run, for a business to remain in operation, the revenues from products sold should normally cover all costs and expenses and provide a reasonable income.

Companies prepare contribution margin reports by market segments and product segments because products contribute to profitability in various ways.

The systematic examination of the differences between planned and actual contribution margin is

If the ability to sell and the amount of production facilities devoted to each of two products is equal, it is profitable to increase the sales of that product with the lowest contribution margin.

Which of the following statements is correct using the direct costing concept?

For a period during which the quantity of product manufactured exceeded the quantity sold, income from operations reported under absorption costing will be smaller than income from operations reported under variable costing.

Which of the following would be included in the cost of a product manufactured according to absorption costing?

A business operated at 100% of capacity during its first month, with the following results: What is the amount of the gross profit that would be reported on the absorption costing income statement?