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Exam 6: Variable Costing and Analysis

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Question 91

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Urban Company reports the following information regarding its production cost: Compute production cost per unit under variable costing.

A) $18.00
B) $36.50
C) $42.00
D) $13.00
E) $31.00

F) A) and E)
G) A) and C)

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Question 92

Multiple Choice

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[The following information applies to the questions displayed below.] Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year. -Given Advanced Company's data, compute cost of finished goods in inventory under variable costing.

A) $285,000
B) $712,500
C) $427,500
D) $230,000
E) $345,000

F) All of the above
G) B) and E)

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Question 93

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Fixed costs change in the short run depending upon management's decision to accept or reject special orders.

State Industries has the following information for 20X1: There are no beginning inventories. Prepare an income statement for the year under absorption costing.

Which of the following is not a product cost under variable costing?

Income under absorption costing will always be different than income under variable costing.

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

Income ________ when there is zero beginning inventory and all inventory units produced are sold.

Aces, Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,000 rackets and sold 4,900. At year-end, the company reported the following income statement using absorption costing. Production costs per tennis racket total $38, which consists of $25 in variable production costs and $13 in fixed production costs (based on the 6,000 units produced) . Ten percent of total selling and administrative expenses are variable. Compute net income under variable costing.

Triton Industries reports the following information regarding its production cost: $\begin{array} { | l | l | } \hline \text { Units produced } & 77,000 \text { units } \\\hline \text { Direct labor } & \$ 27 \text { per unit } \\\hline \text { Direct materials } & \$ 12 \text { per unit } \\\hline \text { Variable overhead } & \$ 33 \text { per unit } \\\hline \text { Fixed overhead } & \$ 3,311,000 \text { in total } \\\hline\end{array}$ a. Compute product cost per unit under variable costing. b. Compute product cost per unit under absorption costing.

When the number of units produced exceeds the number of units sold, absorption costing defers some of the fixed costs incurred.

The absorption costing approach assigns all manufacturing costs to products.

Which of the following statements is true?

Variable costing is the only acceptable basis for both external reporting and tax reporting.

Clear Company reports the following information for its first year of operations: If the company's cost per unit of finished goods using absorption costing is $19.30, what is total fixed overhead?

To convert variable costing net income to absorption costing net income, ________ the fixed production cost in ending inventory and ________ the fixed production cost in beginning inventory.

Tim's Tools, a manufacturer of cordless drills, began operations this year. During this year, the company produced 20,000 units and sold 18,000 units. At year-end, the company reported the following income statement using absorption costing: Production costs per unit total $14, which consists of $12.90 in variable production costs and $1.10 in fixed production costs (based on the 20,000 units produced) . 60% of total selling and administrative expenses are variable. Compute net income under variable costing.

Which of the following statements is true regarding variable 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 $2.02, what is the amount of total fixed overhead?

Variable costing separates variable costs from fixed costs and therefore makes it easier to identify and assign control over costs.