Question 1

How will net income under variable costing compare to net income under absorption costing in the following three situations? Explain briefly the cause of any differences.
(a)Units produced equal units sold
(b)Units produced exceed units sold
(c)Units produced are less than units sold

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Question 2

How does contribution margin differ from gross margin?

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Question 3

A company is currently operating at 60% capacity producing 10,000 units.Cost information relating to this current production is shown in the following table:
  The company has been approached by a customer with a request for a special order for 5,000 units.What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

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Question 4

A company is currently operating at 65% capacity producing 12,000 units.Cost information relating to this current production is shown in the following table:
  The company has been approached by a customer with a request for a special order for 2,000 units.What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

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Question 5

Assume a company sells a given product for $95 per unit.Variable selling costs are $24.25 per unit and variable production costs are $53.50 per unit.If the company breaks even when selling 260,000 units,what are total fixed costs?

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Question 6

How can the use of absorption costing result in overproduction?

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Question 7

What are the limitations of using variable costing?

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Question 8

Assume a company sells a given product for $33.28 per unit.How many units must the company sell to break-even if variable selling costs are $1.40 per unit,variable production costs are $23.56 per unit,and total fixed costs are $2,080,000?

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Question 9

Triton Industries reports the following information regarding its production cost:
 a.Compute product cost per unit under variable costing.
b.Compute product cost per unit under absorption costing.

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Question 10

Blackbird,Incorporated reports the following information regarding its production cost:
  a.Compute production cost per unit under variable costing.
b.Compute production cost per unit under absorption costing.

Accepted Answer

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Question 11

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

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Question 12

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

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Question 13

What is the general procedure for converting variable costing net income to absorption costing net income?

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Question 14

Assume a company sells a given product for $18 per unit.Variable selling costs are $0.70 per unit and variable production costs are $5.30 per unit.If the company breaks even when selling 4,000,000 units,what are total fixed costs?

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Question 15

What costs are treated as product costs under the absorption costing method?

Accepted Answer

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Question 16

What costs are treated as product costs under the variable costing method?

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Question 17

What is a contribution margin report?

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Question 18

What is the formula to compute manufacturing margin?

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Question 19

Identify the treatment of each of the following costs under variable costing and absorption costing:

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Question 20

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.

Accepted Answer

The answer of Home Base,Inc.reports the following production cost information:
...

Quiz 19: Variable Costing and Analysis

How will net income under variable costing compare to net income under absorption costing in the following three situations? Explain briefly the cause of any differences. (a)Units produced equal units sold (b)Units produced exceed units sold (c)Units produced are less than units sold

How does contribution margin differ from gross margin?

Assume a company sells a given product for $95 per unit.Variable selling costs are $24.25 per unit and variable production costs are $53.50 per unit.If the company breaks even when selling 260,000 units,what are total fixed costs?

How can the use of absorption costing result in overproduction?

What are the limitations of using variable costing?

Assume a company sells a given product for $33.28 per unit.How many units must the company sell to break-even if variable selling costs are $1.40 per unit,variable production costs are $23.56 per unit,and total fixed costs are $2,080,000?

Triton Industries reports the following information regarding its production cost: a.Compute product cost per unit under variable costing. b.Compute product cost per unit under absorption costing.

Blackbird,Incorporated reports the following information regarding its production cost: a.Compute production cost per unit under variable costing. b.Compute production cost per unit under absorption costing.

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

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

What is the general procedure for converting variable costing net income to absorption costing net income?

Assume a company sells a given product for $18 per unit.Variable selling costs are $0.70 per unit and variable production costs are $5.30 per unit.If the company breaks even when selling 4,000,000 units,what are total fixed costs?

What costs are treated as product costs under the absorption costing method?

What costs are treated as product costs under the variable costing method?

What is a contribution margin report?

What is the formula to compute manufacturing margin?

Identify the treatment of each of the following costs under variable costing and absorption costing: