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Exam 20: Variable Costing for Management Analysis

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Question 51

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The level of inventory of a manufactured product has increased by 4,000 units during a period.The following data are also available: ​ What would be the effect on income from operations if absorption costing is used rather than variable costing?

A) $44,000 decrease
B) $44,000 increase
C) $64,000 increase
D) $64,000 decrease

E) None of the above
F) A) and D)

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Question 52

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A business operated at 100% of capacity during its first month and incurred the following costs: ​ If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month,what is the amount of the manufacturing margin that would be reported on the variable costing income statement?

A) $104,000
B) $106,000
C) $140,000
D) not reported

E) A) and B)
F) A) and C)

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Question 53

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Under absorption costing,which of the following costs would not be included in finished goods inventory?

If variable cost of goods sold totaled $90,000 for the year (18,000 units at $5.00 each) and the planned variable cost of goods sold totaled $86,400 (16,000 units at $5.40 each) ,the effect of the unit cost factor on the change in contribution margin is:

Philadelphia Company has the following information for March: ​ Determine the March (a)manufacturing margin,(b)contribution margin,and (c)income from operations for Philadelphia Company.

The contribution margin and the manufacturing margin are usually equal.

In evaluating the performance of salespersons,the salesperson with the highest level of sales should be evaluated as the best performer.

Which of the following would be included in the cost of a product manufactured according to variable costing?

Which of the following would not be an appropriate activity base for cost analysis in a service firm?

In the absorption costing income statement,deduction of the cost of goods sold from sales yields gross profit.

In the variable costing income statement,deduction of variable selling and administrative expenses from manufacturing margin yields:

On the variable costing income statement,variable costs are deducted from contribution margin to yield manufacturing margin.

A business operated at 100% of capacity during its first month and incurred the following costs: ​ If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month,what would be the amount of income from operations reported on the absorption costing income statement?

In contribution margin analysis,the effect of a difference in the number of units sold,assuming no change in unit sales price or cost,is termed the quantity factor.

The level of inventory of a manufactured product has increased by 8,000 units during a period.The following data are also available: ​ What would be the effect on income from operations if variable costing is used rather than absorption costing?

Based upon the following data taken from the records of Bruce Inc.,prepare a contribution margin analysis report for the year ended December 31.

Fixed costs are $10 per unit and variable costs are $25 per unit.Production was 13,000 units,while sales were 12,000 units.Determine (a)whether variable costing income from operations is less than or greater than absorption costing income from operations,and (b)the difference in variable costing and absorption costing income from operations.

The level of inventory of a manufactured product has increased by 5,000 units during a period.The following data are also available: ​ What would be the effect on income from operations if variable costing is used rather than absorption costing?

For a period during which the quantity of inventory at the end was larger than that at the beginning,income from operations reported under variable costing will be smaller than income from operations reported under absorption costing.

The absorption costing income statement does not distinguish between variable and fixed costs.