Deck 21: Variable Costing

Question 1

Which of the following statements is true of variable costing?

A)It considers variable manufacturing overhead as period costs.
B)It considers fixed manufacturing overhead as product costs.
C)It considers variable selling and administrative costs as product costs.
D)It considers fixed selling and administrative costs as period costs.

Answer 1

D

Question 2

Absorption costing considers fixed selling and administrative costs as product costs.

Answer 2

False

Question 3

Which of the following is true of the traditional format of the income statement?

A)It is prepared under the variable costing method.
B)It shows contribution margin as a line item.
C)It is not allowed under GAAP.
D)It is prepared under the absorption method.

Answer 3

D

Question 4

Fixed manufacturing overhead is considered a product cost under variable costing.

Question 5

The fixed manufacturing overhead is considered a product cost in variable costing and a period cost in absorption costing.

Question 6

Which of the following is considered a period cost under variable costing but not under absorption costing?

A)fixed selling and administrative costs
B)variable manufacturing costs
C)fixed manufacturing overhead
D)variable selling and administrative costs

Question 7

Absorption costing considers direct materials,direct labor,variable manufacturing overhead,and fixed manufacturing overhead as product costs.

Question 8

Which of the following statements is true of absorption costing?

A)It considers variable selling and administrative costs as product costs.
B)It considers fixed selling and administrative costs as product costs.
C)It considers fixed manufacturing overhead cost as product costs.
D)It considers variable manufacturing overhead cost as period costs.

Question 9

Variable costing is used for external reporting purposes,and absorption costing is used for internal decision-making purposes.

Question 10

Variable costing prepares the income statement using the traditional format.

Question 11

In absorption costing,all product costs are recorded first as assets in the inventory accounts.

Question 12

Contribution margin is calculated by deducting the total cost of goods sold from sales revenue.

Question 13

Following GAAP,the income statement issued to investors and creditors must ________.

A)be prepared in the traditional format
B)be prepared using variable costing
C)be prepared in the contribution margin format
D)show the value of contribution margin

Question 14

The traditional income statement format calculates operating income as gross profit minus selling and administrative expenses.

Question 15

The traditional income statement format is prepared under absorption costing.

Question 16

Absorption costing is required by the Generally Accepted Accounting Principles (GAAP)for financial statements issued to investors,creditors,and other external users.

Question 17

Period costs under the variable costing method include ________.

A)variable manufacturing overhead
B)variable selling and administrative costs
C)direct materials
D)direct labor

Question 18

Answer the following absorption costing questions:
$$\begin{array} { | l | l | } \hline \text { Question } & \text { Absorption Costing } \\\hline \text { Which costs are included as } & \\\text { product costs? } & \\\hline \text { Which costs are included as } & \\\text { period costs? } & \\\hline\end{array}$$

Question 19

The contribution margin format of the income statement categorizes costs by their behavior.

Question 20

Variable costing considers only ________ costs when determining product costs.

A)fixed manufacturing
B)variable manufacturing
C)variable selling and administrative
D)fixed selling and administrative

Question 21

Which of the following is considered a period cost in absorption costing?

A)variable manufacturing overhead costs
B)fixed selling and administrative costs
C)fixed manufacturing overhead costs
D)semi-variable manufacturing overhead costs

Question 22

Contribution margin is calculated by deducting ________ from sales revenue.

A)total product costs
B)total selling and administrative costs
C)total fixed costs
D)total variable costs

Question 23

Variable costing considers direct materials,direct labor,variable manufacturing overhead,and fixed manufacturing overhead as product costs.

Question 24

Crystal Pools,Inc.has provided the following information for the year. $$\begin{array} { | l | r | r|} \hline \text { Units produced } & 6,000& \text { units } \\\hline \text { Sales price } & \$ 600& \text { per unit } \\\hline \text { Direct materials } & \$ 35 &\text { per unit } \\\hline \text { Direct labor } & \$ 40 &\text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 25& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 470,000& \text { per year } \\\hline \text { Variable selling and administration costs } & \$ 60& \text { per unit } \\\hline \text { Fixed selling and administration costs } & \$ 250,000 &\text { per year } \\\hline\end{array}$$ What is the unit product cost using absorption costing?

A)$75
B)$178
C)$135
D)$100

Question 25

Keys Spas,Inc.reports the following information for August: $$\begin{array} { | l | r | } \hline \text { Sales Revenue } & \$ 780,000 \\\hline \text { Variable Costs } & 150,000 \\\hline \text { Fixed Costs } & 80,000 \\\hline\end{array}$$ Calculate the contribution margin for August.

A)$70,000
B)$630,000
C)$550,000
D)$700,000

Question 26

The following data has been provided by Zimtex,Inc.for the year.
$$\begin{array} { | l | r | r|} \hline \text { Units produced and sold } & 5,500 &\text { units } \\\hline \text { Sales price } & \$ 300& \text { per unit } \\\hline \text { Direct materials } & \$ 90& \text { per unit } \\\hline \text { Direct labor } & \$ 50& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 40& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 110,000 &\text { per year } \\\hline \text { Fixed selling and administrative costs } & \$ 150,000& \text { per year } \\\hline\end{array}$$ There are no beginning inventories.Prepare an income statement using the contribution margin format.

Question 27

Allentown Aqua,Inc.has provided the following information for the year. $$\begin{array} { | l | r | r|} \hline \text { Units produced } & 11,000 &\text { units } \\\hline \text { Sales price } & \$ 400 &\text { per unit } \\\hline \text { Direct materials } & \$ 20 &\text { per unit } \\\hline \text { Direct labor } & \$ 35& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 70& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 470,000& \text { per year } \\\hline \text { Variable selling and administration costs } & \$ 90& \text { per unit } \\\hline \text { Fixed selling and administration costs } & \$ 240,000 &\text { per year } \\\hline\end{array}$$ What is the unit product cost using variable costing?

A)$55
B)$105
C)$125
D)$168

Question 28

In variable costing,fixed manufacturing overhead is considered a period cost because ________.

A)these costs are indirectly related to production
B)these are not incurred in the period in which the units are produced
C)these costs are incurred whether or not the company manufactures any goods
D)these costs are direct costs incurred for production

Question 29

Dentofax,Inc.reports the following information for August: $$\begin{array} { | l | r | } \hline \text { Sales Revenue } & \$ 800,000 \\\hline \text { Variable Cost of Goods Sold } & 110,000 \\\hline \text { Fixed Cost of Goods Sold } & 65,000 \\\hline \text { Variable Selling and Administrative Costs } & 130,000 \\\hline \text { Fixed Selling and Administrative Costs } & 65,000 \\\hline\end{array}$$ Calculate the operating income for August using absorption costing.

A)$430,000
B)$240,000
C)$995,000
D)$370,000

Question 30

Gross profit is calculated by deducting ________ from sales revenue.

A)total fixed costs
B)cost of goods sold
C)total variable costs
D)selling and administrative costs

Question 31

A variable costing income statement is used for ________.

A)filing income tax returns
B)external reporting purposes
C)determining the amount of gross profit
D)internal decision-making purposes

Question 32

Isphase,Inc.has provided the following financial data for the year:
$$\begin{array} { | l | r |r| } \hline \text { Units produced and sold } & 3,500& \text { units } \\\hline \text { Sales price } & \$ 220& \text { per unit } \\\hline \text { Direct materials } & \$ 25 &\text { per unit } \\\hline \text { Direct labor } & \$ 45& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 30& \text { per unit } \\\hline \text { Variable selling and administrative costs } & \$ 20& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 105,000& \text { per year } \\\hline \text { Fixed selling and administrative costs } & \$ 140,000 &\text { per year } \\\hline\end{array}$$ There are no beginning inventories.Prepare an income statement for the year using the traditional format.

Question 33

Which of the following will appear as a line item in the traditional format of an income statement?

A)contribution margin
B)total variable costs (manufacturing and non-manufacturing)
C)total fixed costs (manufacturing and non-manufacturing)
D)gross profit

Question 34

Zertrax,Inc.reports the following information for July: $$\begin{array} { | l | r | } \hline \text { Sales Revenue } & \$ 950,000 \\\hline \text { Variable Costs } & 150,000 \\\hline \text { Operating Income } & 410,000 \\\hline\end{array}$$ What is the total fixed cost using variable costing?

A)$800,000
B)$390,000
C)$260,000
D)$560,000

Question 35

Unit product cost calculations using absorption costing do not include ________.

A)fixed manufacturing overhead
B)variable manufacturing overhead
C)variable selling and administrative costs
D)direct materials

Question 36

Which of the following will appear as a line item in the income statement prepared under variable costing?

A)Contribution Margin
B)Total Cost of Goods Sold
C)Work-in-Process Inventory
D)Gross Profit

Question 37

Nimtrans,Inc.reports the following information for August: $$\begin{array} { | l | r | } \hline \text { Sales Revenue } & \$ 900,000 \\\hline \text { Variable Cost of Goods Sold } & 200,000 \\\hline \text { Fixed Cost of Goods Sold } & 45,000 \\\hline \text { Variable Selling and Administrative Costs } & 160,000 \\\hline \text { Fixed Selling and Administrative Costs } & 55,000 \\\hline\end{array}$$ Calculate the gross profit for August using absorption costing.

A)$845,000
B)$740,000
C)$700,000
D)$655,000

Question 38

Which of the following statements is true of absorption and variable costing methods?

A)Both costing methods consider selling and administrative costs to be period costs.
B)Variable costing considers variable selling and administrative costs to be product costs.
C)Absorption costing considers fixed manufacturing overhead to be period costs.
D)Both costing methods consider fixed manufacturing overhead to be product costs.

Question 39

Answer the following variable costing questions:
$$\begin{array} { | l | l | } \hline \text { Question } & \text { Variable Costing } \\\hline \text { Which costs are included as } & \\\text { product costs? } & \\\hline \text { Which costs are included as } & \\\text { period costs? } & \\\hline\end{array}$$

Question 40

Indiana Hot Tubs,Inc.reports the following information for August: $$\begin{array} { | l | r | } \hline \text { Sales Revenue } & \$ 650,000 \\\hline \text { Variable Costs } & 270,000 \\\hline \text { Fixed Costs } & 73,000 \\\hline\end{array}$$ Calculate the operating income for August using variable costing.

A)$380,000
B)$577,000
C)$307,000
D)$650,000

Question 41

The level of inventory on hand at the end of the year does not affect the amount of operating income calculated under variable costing and absorption costing.

Question 42

In its first year of business,Smith,Inc.produced and sold 600 units.If Smith uses variable costing,________.

A)its operating income for the period will be higher than under absorption costing
B)its operating income for the period will be lower than under absorption costing
C)its value of ending Finished Goods Inventory reported in the balance sheet will be higher than under absorption costing
D)its operating income will be the same as under absorption costing

Question 43

When there are no beginning or ending balances in Finished Goods Inventory,variable and absorption costing will result in ________.

A)different amounts for ending Finished Goods Inventory
B)the same operating income
C)different sales revenue
D)different amounts for cost of goods sold

Question 44

In variable costing,all fixed manufacturing overhead costs are expensed in the period incurred.

Question 45

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

A)variable costing
B)direct costing
C)absorption costing
D)contribution costing

Question 46

When there are no units in the beginning Finished Goods Inventory and the units produced are more than the units sold,the operating income will be higher under absorption costing than variable costing.

Question 47

When production is greater than sales,the operating income will be higher under absorption costing than variable costing.Assume zero beginning and ending inventories.Which of the following gives the correct reason for the above statement?

A)All costs incurred have been recorded as expenses.
B)A portion of the fixed manufacturing overhead is still in the ending Finished Goods Inventory account.
C)All selling and administrative expenses have been recorded as period costs.
D)Fixed manufacturing costs have not been considered when calculating the operating profits.

Question 48

When all the units produced are sold,the operating income calculated under absorption costing is higher when compared to the operating income calculated under variable costing.Assume that there is no beginning Finished Goods Inventory.

Question 49

Zot-Ice Corp.has provided the following data for the current year.
$$\begin{array} { | l | r | r|} \hline \text { Units produced } & 2,500 &\text { units } \\\hline \text { Sales price } & \$ 200& \text { per unit } \\\hline \text { Direct materials } & \$ 75 &\text { per unit } \\\hline \text { Direct labor } & \$ 65& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 25& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 225,000 &\text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 30& \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 150,000 &\text { per year } \\\hline\end{array}$$ Calculate the unit product cost using absorption costing and variable costing.

Question 50

Medbam,Inc.has collected the following data.(There are no beginning inventories. ): $$\begin{array} { | l | r | r|} \hline \text { Units produced } & 560 &\text { units } \\\hline \text { Units sold } & 560& \text { units } \\\hline \text { Sales price } & \$ 180& \text { per unit } \\\hline \text { Direct materials } & \$ 10 &\text { per unit } \\\hline \text { Direct labor } & \$ 35 &\text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 20 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 20,000 &\text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 15 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 20,000 &\text { per year } \\\hline\end{array}$$ What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

A)$44,402
B)$36,002
C)$16,002
D)$24,402

Question 51

When there is no beginning Finished Goods Inventory and all the goods that are produced are sold,the operating income ________.

A)will be higher under absorption costing than variable costing
B)will be lower under absorption costing than variable costing
C)will be higher than the gross profit under variable costing
D)will be the same for both absorption costing and variable costing

Question 52

Flexlux,Inc.reports the following information: $$\begin{array} { | l | r |r| } \hline \text { Units produced } & 520 &\text { units } \\\hline \text { Units sold } & 520& \text { units } \\\hline \text { Sales price } & \$ 110 &\text { per unit } \\\hline \text { Direct materials } & \$ 40& \text { per unit } \\\hline \text { Direct labor } & \$ 25& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$30 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 14,000& \text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 15& \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 25,000& \text { per year } \\\hline\end{array}$$ What is the unit product cost using variable costing?

A)$110
B)$92
C)$95
D)$15

Question 53

When all of the units produced are sold,the operating income is the same under both the absorption and variable costing methods.Assume no beginning and ending inventories.Which of the following gives the correct reason for the above statement?

A)All costs incurred have been recorded as expenses.
B)A portion of the fixed manufacturing overhead is still in the Finished Goods Inventory account.
C)All selling and administrative expenses have been recorded as period costs.
D)Fixed manufacturing costs have not been considered when calculating the operating incomes.

Question 54

In its first year of business,Greenlam,Inc.produced 600 units and sold 400 units.If Greenlam uses variable costing,________.

A)its operating income for the period will be higher than under absorption costing
B)its operating income for the period will be lower than under absorption costing
C)its value of ending Finished Goods Inventory reported in the balance sheet will be higher than under absorption costing
D)its operating income will be the same as under absorption costing

Question 55

When there are no units in the beginning Finished Goods Inventory and the units produced are more than the units sold,the operating income will be higher under variable costing than absorption costing.

Question 56

Fasetech,Inc.has collected the following data.(There are no beginning inventories. ) $$\begin{array} { | l | r | r|} \hline \text { Units produced } &510& \text { units } \\\hline \text { Sales price } & \$ 150 &\text { per unit } \\\hline \text { Direct materials } & \$ 16 &\text { per unit } \\\hline \text { Direct labor } & \$ 10& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 10 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 16,000& \text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 9& \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 10,500 &\text { per year } \\\hline\end{array}$$ What is the operating income using absorption costing if 500 units are sold? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

A)$27,500
B)$26,315
C)$31,641
D)$38,315

Question 57

SailFind,Inc.has collected the following data.(There are no beginning inventories. ) $$\begin{array} { | l | r |r| } \hline \text { Units produced } & 600 &\text { units } \\\hline \text { Sales price } & \$ 120 &\text { per unit } \\\hline \text { Direct materials } & \$ 10& \text { per unit } \\\hline \text { Direct labor } & \$ 10& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 7 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 16,400 &\text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 7 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 11,700& \text { per year } \\\hline\end{array}$$ What is the operating income using variable costing if 500 units are sold?

A)$14,900
B)$43,000
C)$48,300
D)$11,100

Question 58

In variable costing,the balance of ending Finished Goods Inventory includes fixed manufacturing overhead.

Question 59

Under variable costing,the units in the beginning Finished Goods Inventory contain fixed manufacturing overhead costs.

Question 60

Kaycom,Inc.reports the following information: $$\begin{array} { | l | r |r| } \hline \text { Units produced } & 520 &\text { units } \\\hline \text { Units sold } & 520& \text { units } \\\hline \text { Sales price } & \$ 180 &\text { per unit } \\\hline \text { Direct materials } & \$ 40& \text { per unit } \\\hline \text { Direct labor } & \$ 15& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 20 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 13,000& \text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 10& \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 15,000& \text { per year } \\\hline\end{array}$$ What is the amount of unit product cost that will be considered for external reporting purposes? (Round any intermediate calculations and your final answer to the nearest cent. )

A)$40.00
B)$80.00
C)$125.00
D)$100.00

Question 61

Oxygen,Inc.reports the following information:
$$\begin{array} { | l | r | r|} \hline \text { Units produced } & 2,500& \text { units } \\\hline \text { Units sold } & 2,000& \text { units } \\\hline \text { Sales price } & \$ 200& \text { per unit } \\\hline \text { Direct materials } & \$ 40 &\text { per unit } \\\hline \text { Direct labor } & \$ 25 &\text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 20& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 90,000 &\text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 15& \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 75,000 &\text { per year } \\\hline\end{array}$$ Assume that the production costs and sales prices were the same in the previous year.Assume no beginning inventories.
Requirements:
a)Calculate unit product cost using absorption costing and variable costing.
b)Calculate the operating income using absorption costing and variable costing.

Question 62

In absorption costing,the manufacturing costs expensed are greater than the amount expensed in variable costing when units produced are less than sold because the units in beginning inventory under absorption costing were assigned a greater cost in the previous accounting period.

Question 63

Missan,Inc.reports the following information: $$\begin{array} { | l | r |r| } \hline \text { Units produced } & 640 &\text { units } \\\hline \text { Units sold } & 440 &\text { units } \\\hline \text { Sales price } & \$ 200& \text { per unit } \\\hline \text { Direct materials } & \$ 29& \text { per unit } \\\hline \text { Direct labor } & \$ 12 &\text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 18& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 18,500& \text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 4 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 13,500 &\text { per year } \\\hline\end{array}$$ There are no beginning inventories.What is the ending balance in Finished Goods Inventory using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

A)$13,981
B)$5,781
C)$11,800
D)$17,582

Question 64

Frittata,Inc.started the year with 200 units in the Finished Goods Inventory account.It produced 600 units during the year and sold 800 units.If Frittata uses variable costing,________.

A)its operating income for the period will be higher than under absorption costing
B)its operating income for the period will be lower than under absorption costing
C)its value of ending Finished Goods Inventory reported in the balance sheet will be higher than under absorption costing
D)its operating income will be the same as under absorption costing

Question 65

When more units are sold than produced,operating income is less under absorption costing.

Question 66

When more units are sold than produced,operating income is higher under absorption costing.

Question 67

When units produced exceeds units sold,how does operating income differ between variable costing and absorption costing? Explain your answer.

Question 68

Joe's Tires,Inc.reports the following information for the year ended December 31: $$\begin{array} { | l | r | r|} \hline \text { Units sold } &650& \text { units } \\\hline \text { Sales price } & \$ 130 &\text { per unit } \\\hline \text { Direct materials } & \$ 25 &\text { per unit } \\\hline \text { Direct labor } & \$ 8& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 15 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 15& \text { per unit } \\\hline \text { Variable selling and administrative costs } & \$ 6 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 14,000& \text { per year } \\\hline\end{array}$$ The operating income calculated using variable costing and absorption costing amounted to $9,100 and $11,200,respectively.There were no beginning inventories.Determine the total fixed manufacturing overhead that will be expensed under absorption costing for the year.

A)$11,850
B)$9,750
C)$26,000
D)$31,200

Question 69

Silver Rex,Inc.has provided the following data for the year:
$$\begin{array} { | l | r |l| } \hline \text { Direct materials } & \$ 10& \text { per unit } \\\hline \text { Direct labor } & \$ 15& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 20 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 25,000 &\text { per year } \\\hline \text { Fixed selling and administrative costs } & \$ 15,000 &\text { per year } \\\hline \text { Sales price } & \$ 75 &\text { per unit } \\\hline \text { Beginning Finished Goods Inventory } & 500& \text { units } \\\hline \text { Units produced } & 5,000& \text { units } \\\hline \text { Units sold } & 4,500& \text { units } \\\hline\end{array}$$ Requirements:
a)Compute Silver Rex's unit product cost under absorption costing and variable costing.
b)Prepare income statements for Silver Rex using absorption costing and variable costing.
c)Calculate the balance in Finished Goods Inventory using absorption costing and variable costing.
Assume that the production level,costs,and sales prices were the same in the previous year.

Question 70

Rickman,Inc.reports the following information: $$\begin{array} { | l | r |r| } \hline \text { Units produced } & 590& \text { units } \\\hline \text { Units sold } & 490& \text { units } \\\hline \text { Sales price } & \$ 120& \text { per unit } \\\hline \text { Direct materials } & \$ 26 &\text { per unit } \\\hline \text { Direct labor } & \$ 9& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 14& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 16,500& \text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 6 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 12,200 &\text { per year } \\\hline\end{array}$$ There are no beginning inventories.What is the ending balance in Finished Goods Inventory using variable costing?

A)$4,900
B)$3,500
C)$5,500
D)$7,697

Question 71

Watson,Inc.has collected the following data for the current year: $$\begin{array} { | l | r |l| } \hline \text { Beginning Finished Goods Inventory } & 50& \text { units } \\\hline \text { Units produced } & 560 &\text { units } \\\hline \text { Units sold } & 610 &\text { units } \\\hline \text { Sales price } & \$ 180 &\text { per unit } \\\hline \text { Direct materials } & \$ 27& \text { per unit } \\\hline \text { Direct labor } & \$ 16& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 15 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 16,900 &\text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 7 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 13,500& \text { per year } \\\hline\end{array}$$ The beginning Finished Goods Inventory costs were $3,800 under absorption costing and $2,000 under variable costing.
What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

A)$56,619
B)$38,849
C)$52,349
D)$3,800

Question 72

Penny's Pies,Inc.has provided the following financial information for the year: $$\begin{array} { | l | r | } \hline \text { Finished Goods Inventory: } & \\\hline \text { Beginning balance, in units } & 640 \\\hline \text { Units produced } & 2,100 \\\hline \text { Units sold } & \underline { 2,200 } \\\hline \text { Ending balance, in units } & \underline { 540 } \\\hline \text { Production Costs: } \\\hline \begin{array} { l } \text { Nariable manufacturing costs per } \\\text { unit }\end{array} & \$ 60 \\\hline \text { Total fixed manufacturing costs } & \$ 33,600 \\\hline\end{array}$$ What is the unit product cost for the year using variable costing?

A)$76
B)$15
C)$60
D)$62

Question 73

Dessa,Inc.reports the following information for the year ended December 31: $\begin{array}{|l|r|l|}\hline \text { Beginning Finished Goods Inventory } & 50& \text { units } \\\hline \text { Units produced } & 410& \text { units } \\\hline \text { Units sold } & 460 &\text { units } \\\hline \text { Sales price } & \$ 150&\text { per unit } \\\hline \text { Direct materials } & \$ 30& \text { per unit } \\\hline \text { Direct labor } & \$ 10& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 16& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 15,300& \text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 10 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 13,500 &\text { per year }\\\hline\end{array}$ The beginning Finished Goods Inventory costs were $3,500 under absorption costing and $2,800 under variable costing.
What is the operating income using variable costing?

A)$38,640
B)$40,200
C)$9,840
D)$2,340

Question 74

Candy Man,Inc.reports the following information: $$\begin{array} { | l | r |l| } \hline \text { Beginning Finished Goods Inventory } & 60 &\text { units } \\\hline \text { Units produced } & 560& \text { units } \\\hline \text { Units sold } & 620 &\text { units } \\\hline \text { Sales price } & \$ 170& \text { per unit } \\\hline \text { Direct materials } & \$ 40 &\text { per unit } \\\hline \text { Direct labor } & \$ 13 &\text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 14 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 19,500 &\text { per unit } \\\hline \text { Variable selling and administrative costs } & \$ 6 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 12,500 &\text { per unit } \\\hline\end{array}$$ What is the unit product cost using variable costing? (Round your answer to the nearest cent. )

A)$69.45
B)$44.00
C)$52.45
D)$98.18

Question 75

Swanson,Inc.has collected the following data.(There are no beginning inventories. ) $$\begin{array} { | l | r | r|} \hline \text { Units produced } &600& \text { units } \\\hline \text { Sales price } & \$ 120& \text { per unit } \\\hline \text { Direct materials } & \$ 20 &\text { per unit } \\\hline \text { Direct labor } & \$ 12 &\text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 6& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 17,400& \text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 5& \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 13,700& \text { per year } \\\hline\end{array}$$ What is the ending balance in Finished Goods Inventory using absorption costing if 550 units are sold? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

A)$1,450
B)$1,900
C)$4,742
D)$3,350

Question 76

Heung,Inc.reports the following information for the year ended December 31: $$\begin{array} { | l | r |r| } \hline \text { Units sold } & 590& \text { units } \\\hline \text { Sales price } & \$ 170 &\text { per unit } \\\hline \text { Direct materials } & \$ 28& \text { per unit } \\\hline \text { Direct labor } & \$ 12 &\text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 18& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 20 &\text { per unit } \\\hline \text { Variable selling and administrative costs } & \$ 4 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 12,200 &\text { per year } \\\hline\end{array}$$ The operating income calculated using variable costing and absorption costing amounted to $9,800 and $11,000,respectively.There were no beginning inventories.Determine the total fixed manufacturing overhead that will be expensed under variable costing for the year 2016.

A)$13,000
B)$11,800
C)$28,320
D)$34,220

Question 77

Badlands,Inc.reports the following information for the year ended December 31: $$\begin{array} { | l | r | r| } \hline \text { Units sold } & 640 &\text { units }\\\hline \text { Sales price } & \$ 120 &\text { per unit } \\\hline \text { Direct materials } & \$ 28 &\text { per unit } \\\hline \text { Direct labor } & \$9 & \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 15 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 12 &\text { per unit } \\\hline \text { Variable selling and administrative costs } & \$ 4& \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 12,700& \text { per year } \\\hline\end{array}$$ The operating income calculated using variable costing and absorption costing amounted to $9,400 and $11,200,respectively.There were no beginning inventories.Determine the total number of units produced during the year.

A)640 units
B)790 units
C)15 units
D)150 units

Question 78

Groovelex,Inc.has collected the following data for the current year: $$\begin{array} { | l | r |l| } \hline \text { Beginning Finished Goods Inventory } & 60 &\text { units } \\\hline \text { Units produced } & 560& \text { units } \\\hline \text { Units sold } & 620 &\text { units } \\\hline \text { Sales price } & \$ 170& \text { per unit } \\\hline \text { Direct materials } & \$ 40 &\text { per unit } \\\hline \text { Direct labor } & \$ 13 &\text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 14 &\text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 19,500 &\text { per unit } \\\hline \text { Variable selling and administrative costs } & \$ 6 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 12,500 &\text { per unit } \\\hline\end{array}$$ What is the unit product cost using absorption costing? (Round your answer to the nearest cent. )

A)$130.14
B)$67.00
C)$101.82
D)$61.82

Question 79

E-trax,Inc.has provided the following financial information for the year: $$\begin{array} { | l | r | } \hline \text { Finished Goods Inventory: } & \\\hline \text { Beginning balance, in units } & 610 \\\hline \text { Units produced } & 2,800 \\\hline \text { Units sold } & \underline { 2,900 } \\\hline \text { Ending balance, in units } & \underline { 510 } \\\hline \text { Production costs: } \\\hline \begin{array} { l } \text { Nariable manufacturing costs per } \\\text { unit }\end{array} & \$ 50 \\\hline \text { Total fixed manufacturing costs } & \$ 42,000 \\\hline\end{array}$$ What is the unit product cost for the year using absorption costing?

A)$65
B)$82
C)$119
D)$64

Question 80

McFadden,Inc.has collected the following data.(There are no beginning inventories. ) $$\begin{array} { | l | r | r|} \hline \text { Units produced } &700 &{ \text { units } } \\\hline \text { Sales price } & \$ 150 &\text { per unit } \\\hline \text { Direct materials } & \$ 30& \text { per unit } \\\hline \text { Direct labor } & \$ 10 &\text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 10& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 17,300 &\text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 6 &\text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 17,200& \text { per year } \\\hline\end{array}$$ What is the ending balance in Finished Goods Inventory using variable costing if 600 units are sold?

A)$4,000
B)$5,000
C)$2,000
D)$3,000