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Exam 19: Variable Costing and Analysis

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Question 1

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Home Base,Inc.reports the following production cost information: a.Compute production cost per unit under variable costing. b.Compute production cost per unit under absorption costing. c.Determine the cost of ending inventory using variable costing. d.Determine the cost of ending inventory using absorption costing.

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a.$17 DL + $34 DM + $26 VOH = $77 per un...

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Question 2

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Assuming fixed costs remain constant,and a company produces and sells the same number of units,then income under absorption costing is less than income under variable costing.

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B) False

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Question 3

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Which of the following statements is true regarding variable costing?

Wind Fall,a manufacturer of leaf blowers,began operations this year.During this year,the company produced 10,000 leaf blowers and sold 8,500.At year-end,the company reported the following income statement using absorption costing: Production costs per leaf blower total $20,which consists of $16 in variable production costs and $4 in fixed production costs (based on the 10,000 units produced) .Fifteen percent of total selling and administrative expenses are variable.Compute net income under variable costing.

Assuming fixed costs remain constant,and a company produces more units than it sells,then income under absorption costing is less than income under variable costing.

Dataport Company reports the following annual cost data for its single product: This product is normally sold for $230 per unit.If Dataport increases its production to 100,000 units,while sales remain at the current 89,000 unit level,by how much would the company's gross margin increase or decrease under absorption costing? Assume the company has idle capacity to increase current production.

Given the Scavenger Company data,what is net income using absorption costing?

Given the following data,total product cost per unit under absorption costing is $11.40.

When excess capacity exists,what is the minimum special order price a manager should accept to increase net income?

A per unit cost that is constant at all production levels is a ________ cost per unit.

When units produced are less than units sold,income under absorption costing is higher than income under variable costing.

What are the limitations of using variable costing?

Managers should accept special orders provided the special order price exceeds the product cost per unit under absorption costing.

Which of the following would be reported on a variable costing income statement?

Castaway Company reports the following first year production cost information: a.Compute production cost per unit under variable costing. b.Compute production cost per unit under absorption costing. c.Determine the cost of ending inventory using variable costing. d.Determine the cost of ending inventory using absorption costing.

A company reports the following information for its first year of operations: If the company's cost per unit of finished goods using variable costing is $2,375,what is total variable overhead?

Cavalier Corporation sold 26,000 units of its product at a price of $225 per unit.Total variable cost per unit is $188,consisting of $103 in variable production cost and $85 in variable selling and administrative cost.Compute the manufacturing margin for the company under variable costing.

________ and ________ are product costs that can be directly traced to the product.

What is the benefit of using variable costing in short-term pricing decisions? Is this benefit available under absorption costing?

The data needed for cost-volume-profit analysis is readily available if the income statement is prepared using a contribution format.