Question 1

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.

Accepted Answer

Under absorption costing, all manufacturing costs (direct materials, direct labor, and overhead) are assigned to units produced, regardless of whether they are sold or not. This means that when there are no beginning units in Finished Goods Inventory, all of the costs will be assigned to units produced, resulting in a higher value for ending inventory and lower cost of goods sold. As a result, operating income will be higher under absorption costing than variable costing if units produced are greater than units sold.

Question 2

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.

Accepted Answer

The level of inventory on hand at the end of the year does affect the amount of operating income calculated under variable costing and absorption costing. Under absorption costing, fixed manufacturing costs are included in the cost of goods sold and are therefore affected by the level of ending inventory. Under variable costing, fixed manufacturing costs are treated as a period expense and are not included in the cost of goods sold, therefore ending inventory has no impact on operating income.

Question 3

When all units produced are sold,there is no difference in operating income between absorption costing and variable costing.

Accepted Answer

When all units produced are sold, the difference in operating income between absorption costing and variable costing disappears as all manufacturing costs are absorbed into the cost of goods sold under absorption costing.

Question 4

Last year,Adara Company produced 11,000 units and sold 9000 units.The company had no beginning inventory.They incurred the following costs:

Adara's product cost per unit under variable costing is

Accepted Answer

B)Total unit cost = $18 + 15 + $7 = $40

Question 5

Amarantha Corp.has provided the following data for the current year.
  
Calculate the unit product cost using absorption costing and variable costing.

Accepted Answer

The answer of Amarantha Corp.has provided the following data for...

Question 6

Sequoyah,Inc.reports the following information:

What is the unit product cost using variable costing?

Accepted Answer

C)
Total unit product cost:
 11ea86ed_2b7e_e8e7_8b27_c102015b2b99_TB3056_00

Question 7

Last year,Adara Company produced 5000 units and sold 3000 units.The company had no beginning inventory.They incurred the following costs:

Adara's product cost per unit under absorption costing is

Accepted Answer

A)
Fixed cost per unit = 20,000/5000 = $4
Total unit cost = $13 + $7 + $4 + $4 = $28

Question 8

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

Accepted Answer

Unit product cost calculations using absorption costing include fixed manufacturing overhead, variable manufacturing overhead, and direct materials. However, they do not include variable selling and administrative costs, as those costs are considered period costs and are expensed in the period in which they are incurred.

Question 9

Petra,Inc.has collected the following data.(There are no beginning inventories. ):

What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

Accepted Answer

C)
 11ea86ed_2b7f_3709_8b27_e1af5a0f5cda_TB3056_00 Selling and Administrative Costs
Variable Selling and
 11ea86ed_2b7f_370a_8b27_91c1eac9bf67_TB3056_00 *Cost of Goods Sold,variable costs per unit: $40 + $35 +$30 = $105

Question 10

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

Accepted Answer

In variable costing, fixed manufacturing overhead costs are treated as period costs and are not included in the ending inventory balance.

Question 11

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.

Accepted Answer

When all units produced are sold and there is no beginning inventory, the operating income under absorption costing and variable costing will be the same because the fixed manufacturing overhead costs are fully allocated to the cost of goods sold in both costing methods.

Question 12

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

Accepted Answer

When there are no beginning or ending balances in Finished Goods Inventory, variable and absorption costing will result in the same operating income as there are no differences in the treatment of fixed manufacturing overhead costs between the two methods. However, there may be differences in the amounts attributed to cost of goods sold and ending work-in-process inventory between variable and absorption costing.

Question 13

Yancey,Inc.reports the following information:

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. )

Accepted Answer

D)
Total unit product cost:
 11ea86ed_2b7e_9ac5_8b27_59d3c6f9a2db_TB3056_00

Question 14

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?

Accepted Answer

When all of the units produced are sold, there is no inventory left to absorb any manufacturing overhead costs. Therefore, all manufacturing overhead costs (fixed and variable) are expensed in the period they are incurred, regardless of whether the absorption or variable costing method is used. As a result, the operating income will be the same under both methods as all costs incurred have been recorded as expenses.

Question 15

In the variable costing income statement,variable costs are reported separately from fixed costs.

Accepted Answer

This is the fundamental difference between variable and absorption costing methods. In variable costing, only variable costs are included in the product costs, while fixed costs are treated as period expenses and reported separately on the income statement.

Question 16

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

Accepted Answer

When there is no beginning Finished Goods Inventory and all the goods produced are sold, the operating income will be the same under both absorption costing and variable costing because all fixed manufacturing overhead costs would have been allocated to the cost of goods sold in both costing methods.

Question 17

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

Accepted Answer

The answer of In its first year of business,Talula,Inc.produced and...

Question 18

Emerald Pools,Inc.has provided the following information for the year.

What is the unit product cost using absorption costing? (Round any intermediate calculations and your final answer to the nearest dollar. )

Accepted Answer

B)
 11ea86ed_2b7c_ed0e_8b27_bb0e0d4d2b26_TB3056_00

Question 19

Mirabella Company assigns direct materials,direct labor and both variable and fixed overhead to its product costs.Mirabella Company is using ________.

Accepted Answer

Mirabella Company is assigning both direct materials and direct labor, as well as both variable and fixed overhead, to its product costs. This is indicative of absorption costing, which includes all manufacturing costs (direct materials, direct labor, variable overhead, and fixed overhead) in the inventory valuation and cost of goods sold.

Question 20

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

Accepted Answer

Variable costing only includes variable product costs, such as direct materials, direct labor, and variable manufacturing overhead. Fixed manufacturing overhead is not included as a product cost under variable costing, but is instead treated as a period cost and expensed in the period incurred.

Quiz 21: Variable Costing

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.

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.

When all units produced are sold,there is no difference in operating income between absorption costing and variable costing.

Last year,Adara Company produced 11,000 units and sold 9000 units.The company had no beginning inventory.They incurred the following costs: Adara's product cost per unit under variable costing is

Amarantha Corp.has provided the following data for the current year. Calculate the unit product cost using absorption costing and variable costing.

Sequoyah,Inc.reports the following information: What is the unit product cost using variable costing?

Last year,Adara Company produced 5000 units and sold 3000 units.The company had no beginning inventory.They incurred the following costs: Adara's product cost per unit under absorption costing is