Question 1

What was the total gross margin for the month?
A) $39,600.
B) $88,000.
C) $123,200.
D) $171,600.

Accepted Answer

To calculate the total gross margin for the month, we first need to determine the total revenue and the total cost of goods sold (COGS).Total revenue = Selling price per unit * Units sold = $117 * 4,400 = $514,800.Variable costs per unit = Direct materials + Direct labor + Variable manufacturing overhead = $36 + $38 + $4 = $78.Total variable cost = Variable costs per unit * Units produced = $78 * 4,700 = $366,600.Fixed manufacturing overhead = $89,300.Total COGS = Total variable cost + Fixed manufacturing overhead = $366,600 + $89,300 = $455,900.Gross margin = Total revenue - Total COGS = $514,800 - $455,900 = $58,900.However, none of the provided choices match the calculated gross margin. Given the choices, it seems there might have been a mistake in the calculation or interpretation of the provided data. Based on the provided choices and assuming a calculation error, the correct approach to find the gross margin would typically involve subtracting the cost of goods sold (including both variable and fixed costs directly associated with production) from the total revenue. If we reconsider the calculation with the correct approach to match the given options, we should focus on the variable costs related to units sold and the fixed manufacturing overhead, as these directly impact the gross margin. The error might be in the interpretation of how the costs are applied or in the calculation process itself. Given this, the correct answer according to the options provided should be based on the standard formula for gross margin, but without a clear match, an accurate recalculation based on the options is not directly feasible. The explanation aimed to correct the calculation process but given the mismatch, it's important to critically evaluate the steps to identify the correct gross margin based on standard accounting principles.

Question 2

What was the unit product cost for the month under variable costing?
A) $78.
B) $89.
C) $97.
D) $107.

Accepted Answer

Under variable costing, the unit product cost includes only the variable costs: direct materials, direct labor, and variable manufacturing overhead. Thus, $36 (direct materials) + $38 (direct labor) + $4 (variable manufacturing overhead) = $78.

Question 3

Under absorption costing,what was the cost of goods sold for the year?
A) $206,400.
B) $278,400.
C) $345,600.
D) $360,000.

Accepted Answer

The cost of goods sold under absorption costing includes all manufacturing costs (direct materials, direct labor, and both fixed and variable manufacturing overhead). 
COGS = Beginning inventory + Cost of goods manufactured - Ending inventory
COGS = $45,600 + $300,000 - $45,600 = $345,600.

Question 4

What was the operating income for the year under variable costing as opposed to absorption costing?
A) $28,000 lower than under absorption costing.
B) $28,000 higher than under absorption costing.
C) $50,000 lower than under absorption costing.
D) $50,000 higher than under absorption costing.

Accepted Answer

The answer of What was the operating income for the...

Question 5

What was the contribution margin per unit?
A) $12.10.
B) $16.60.
C) $17.70.
D) $22.10.CM = [850,000 (20,000 * 20.40)- 110,000]/20,000 = $16.60.

Accepted Answer

Choice B is the best choice because it has the highest contribution margin per unit of $16.60. This means that for every unit sold, the company can contribute $16.60 to covering its fixed costs and generating profit.

Question 6

What was the contribution margin per unit? Do not round intermediate calculations.
A) $17.50.
B) $25.70.
C) $27.50.
D) $32.50.CM/unit = [780,000 (13,000 * 27.50)- 88,400]/13,000 = $25.70.

Accepted Answer

The contribution margin per unit is calculated by subtracting total variable costs from total sales and then dividing by the number of units. The calculation provided shows this process, resulting in $25.70 per unit.

Question 7

For the month noted,what was the relationship between the operating income under variable costing as opposed to under absorption costing?
A) Higher than operating income under absorption costing.
B) Lower than operating income under absorption costing.
C) The same as operating income under absorption costing.
D) The relationship between variable costing and absorption costing operating income cannot be determined with the data provideD.

Accepted Answer

Under absorption costing, fixed manufacturing overhead is allocated to each unit produced, so if inventory levels increase, some of the fixed overhead costs are deferred in inventory, resulting in higher operating income compared to variable costing, where all fixed overhead is expensed in the period incurred.

Question 8

What was the total contribution margin for the month?
A) $39,600.
B) $88,000.
C) $123,200.
D) $171,600.

Accepted Answer

The contribution margin is calculated by subtracting the variable costs from the sales revenue. In this case, the total variable costs are $576,800 ($220,000 + $156,000 + $200,000), and the total sales revenue is $700,000. Therefore, the total contribution margin is $123,200 ($700,000 - $576,800). Option C is the correct answer.

Question 9

Which of the following would best describe the relationship between the carrying value of the finished goods inventory at the end of the year under variable costing as opposed to under absorption costing?
A) $8,800 less than under absorption costing.
B) The same as absorption costing.
C) $5,800 less than under absorption costing.
D) $5,800 more than under absorption costing

Accepted Answer

Under variable costing, only variable manufacturing costs are included in the cost of goods sold, while fixed manufacturing costs are expensed as period costs. This results in a lower cost of goods sold and therefore a lower carrying value of finished goods inventory at the end of the year compared to absorption costing, where both fixed and variable manufacturing costs are included in the cost of goods sold. The difference in carrying value between the two costing methods is equal to the amount of fixed manufacturing overhead costs included in the cost of goods sold under absorption costing but expensed as period costs under variable costing, which in this case is $5,800 less.

Question 10

What was the unit product cost under variable costing?
A) $15.
B) $18.
C) $20.
D) $22.

Accepted Answer

The answer of What was the unit product cost under...

Question 11

Under variable costing,what was the company's operating income for the year,as compared with under absorption costing?
A) $60,000 higher than under absorption costing.
B) $108,000 higher than under absorption costing.
C) $108,000 lower than under absorption costing.
D) $60,000 lower than under absorption costing.

Accepted Answer

Under variable costing, only variable manufacturing costs are included in the cost of goods sold, while fixed manufacturing costs are expensed in the period incurred. This results in a lower cost of goods sold and higher operating income compared to absorption costing, which includes both variable and fixed manufacturing costs in the cost of goods sold. Therefore, operating income under variable costing would be lower than under absorption costing, by the amount of fixed manufacturing overhead included in the cost of goods sold under absorption costing.

Question 12

What was the unit product cost for the month under absorption costing?
A) $78.
B) $89.
C) $97.
D) $108.

Accepted Answer

Under absorption costing, the unit product cost includes all variable manufacturing costs and a portion of the fixed manufacturing overhead. The variable costs per unit are Direct materials ($36), Direct labor ($38), and Variable manufacturing overhead ($4), totaling $78. The fixed manufacturing overhead ($89,300) is allocated to the units produced (4,700 units), which is $89,300 / 4,700 = $19 per unit. Therefore, the unit product cost under absorption costing is $78 (variable costs) + $19 (allocated fixed manufacturing overhead) = $97.

Question 13

Under absorption costing,what was the value of the ending inventory for the year?
A) $152,000.
B) $179,500.
C) $213,500.
D) $222,000.

Accepted Answer

The answer of Under absorption costing,what was the value of...

Question 14

Under absorption costing,what was the reported operating income (loss)for the month ending May 31?
A) ($30,000).
B) $0.
C) $30,000.
D) $60,000.

Accepted Answer

The answer of Under absorption costing,what was the reported operating...

Question 15

What was the dollar value of the company's inventory on May 31 under the absorption costing method?
A) $60,000.
B) $75,000.
C) $90,000.
D) $120,000.Units in ending inventory = $75,000/$5 = 15,000.EI = 15,000 * (3 + 5)= $120,000.

Accepted Answer

The ending inventory is calculated by multiplying the units in ending inventory (15,000) by the cost per unit under absorption costing ($8), resulting in $120,000.

Question 16

Under absorption costing,what was the carrying value on the balance sheet of the ending inventory for the year? Do not round intermediate calculations.
A) $0.
B) $170,000.
C) $190,800.
D) $230,800.

Accepted Answer

The answer of Under absorption costing,what was the carrying value...

Question 17

What was the carrying value on the balance sheet of the ending finished goods inventory under variable costing?
A) $10,000.
B) $12,000.
C) $16,000.
D) $19,000.

Accepted Answer

Under variable costing, only variable manufacturing costs are included in the cost of inventory. Fixed manufacturing overhead is treated as a period cost and expensed in the period incurred. Therefore, the carrying value of the ending finished goods inventory would include only variable costs, leading to the correct answer.

Question 18

For the period noted,which of the following statements best describes the relationship between the operating income under absorption costing and under variable costing?
A) Absorption costing operating income would be higher than the operating income under variable costing.
B) Absorption costing operating income would be lower than the operating income under variable costing.
C) Absorption costing operating income would be the same as the operating income under variable costing.
D) The relationship between absorption costing operating income and variable costing operating income cannot be determined without additional information.

Accepted Answer

The operating income under absorption costing would be higher than under variable costing when inventory levels increase. This is because absorption costing includes fixed manufacturing overhead as part of the product costs, which are then expensed as the inventory is sold, whereas variable costing expenses all fixed manufacturing overhead in the period it is incurred, regardless of sales.

Question 19

What was the unit product cost under absorption costing?
A) $15.
B) $18.
C) $20.
D) $25.

Accepted Answer

The unit product cost under absorption costing includes both variable and fixed manufacturing costs, which are divided by the number of units produced. Using the absorption costing formula, the unit product cost is (($60,000 + $40,000)/10,000 units) + ($2/unit x 10,000 units) = $18/unit. Therefore, the correct answer is B.

Question 20

What was the carrying value on the balance sheet of the ending finished goods inventory under absorption costing?
A) $10,000.
B) $12,000.
C) $16,000.
D) $21,000.

Accepted Answer

Absorption costing includes all manufacturing costs in the cost of a product, including fixed overhead costs. The ending finished goods inventory valuation under absorption costing formula is: Beginning finished goods inventory + Cost of goods manufactured - Cost of goods sold. Given the information in the question, the calculation would be: $8,000 + $20,000 - $16,000 = $12,000. Therefore, the carrying value on the balance sheet of the ending finished goods inventory under absorption costing is $12,000.

Quiz 8: Variable Costing: a Tool for Management

What was the total gross margin for the month?

What was the unit product cost for the month under variable costing?

Under absorption costing,what was the cost of goods sold for the year?

What was the operating income for the year under variable costing as opposed to absorption costing?

What was the contribution margin per unit?

What was the contribution margin per unit? Do not round intermediate calculations.

For the month noted,what was the relationship between the operating income under variable costing as opposed to under absorption costing?

What was the total contribution margin for the month?

Which of the following would best describe the relationship between the carrying value of the finished goods inventory at the end of the year under variable costing as opposed to under absorption costing?

What was the unit product cost under variable costing?

Under variable costing,what was the company's operating income for the year,as compared with under absorption costing?

What was the unit product cost for the month under absorption costing?

Under absorption costing,what was the value of the ending inventory for the year?

Under absorption costing,what was the reported operating income (loss) for the month ending May 31?

What was the dollar value of the company's inventory on May 31 under the absorption costing method?

Under absorption costing,what was the carrying value on the balance sheet of the ending inventory for the year? Do not round intermediate calculations.

What was the carrying value on the balance sheet of the ending finished goods inventory under variable costing?

For the period noted,which of the following statements best describes the relationship between the operating income under absorption costing and under variable costing?

What was the unit product cost under absorption costing?

What was the carrying value on the balance sheet of the ending finished goods inventory under absorption costing?