Deck 5: Variable Costing

Question 1

When the number of units produced exceeds the number of units sold, variable costing yields a lower net income than if full costing had been used.

Answer 1

True

Question 2

Variable costing income is more useful for decision making because costs are separated by function.

Answer 2

False

Question 3

The cost of goods sold is always greater using variable costing than when full costing is used.

Answer 3

False

Question 4

If a company has no fixed costs, variable costing income will equal full costing income, regardless of any increase or decrease in inventory levels during the period.

Question 5

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

Question 6

If the number of units sold is equal to the number of units produced, then contribution margin will equal gross margin.

Question 7

Contribution margin is reported on an absorption costing income statement.

Question 8

Absorption costing is required for external reporting under generally accepted accounting principles.

Question 9

Under variable costing, net income can be increased by increasing production without increasing sales.

Question 10

Under full costing, all fixed costs of production are included in Finished Goods Inventory and remain there until all inventory units are sold.

Question 11

The total amount reported on an income statement for selling and administrative expenseis the same amount regardless if variable of full costing is used..

Question 12

Absorption costing is another name for variable costing.

Question 13

Under variable costing, ending inventory reported on a company's balance sheet includes variable production costs and variable selling and administrative costs.

Question 14

The inventoriable cost per unit can be reduced, under variable costing, by decreasing the number of units produced.

Question 15

During periods in which inventory levels increase, sales revenue will be larger when using full costing than if variable costing is used.

Question 16

The cost of ending inventory using variable costing is always greater than or equal to full costing ending inventory.

Question 17

Full costing income can be increased by decreasing production even though the additional inventory items will not be sold during the current period.

Question 18

Income statements of manufacturing firms prepared for external purposes use variable costing because it provides higher profits for making decisions.

Question 19

Under full costing, ending inventory includes both fixed and variable manufacturing and nonmanufacturing costs.

Question 20

When the number of units produced is greater than the number of units sold, variable costing yields higher income than full costing.

Question 21

If a company increases production levels without increasing its units sold, both its full costing income and cash flows will be larger than if production were at a lower level.

Question 22

Rango Enterprises' manufacturing costs for 2017 are as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 65,000 \\\text { Direct labor } & 118,000 \\\text { Manufacturing supplies } & 9,000 \\\text { Depreciation of factory equipment } & 22,000 \\\text { Other fixed manufacturing overhead } & 43,000\end{array}$$ What amount should be considered as product costs for external reporting purposes?

A)$183,000
B)$192,000
C)$257,000
D)$248,000

Question 23

Full costing is

A)more useful for decision making than variable costing because it treats all costs of production as an inventory cost.
B)required for financial reporting under generally accepted accounting principles.
C)less likely to enable managers to manipulate income by increasing production.
D)based on cost behavior.

Question 24

In variable costing, which of the following will be included as part of inventory on a company's balance sheet?

A)Fixed production cost
B)Variable selling cost
C)Fixed selling costs
D)None of the answer choices will be part of inventory in variable costing.

Question 25

Diecast Tools' manufacturing costs for 2017 are as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 100,000 \\\text { Direct labor } & 120,000 \\\text { Depreciation of factory equipment } & 30,000 \\\text { Production supervisor's salary } & 72,000 \\\text { Other fixed manufacturing overhead } & 50,000\end{array}$$ What amount should be considered product costs for external reporting purposes?

A)$220,000
B)$293,000
C)$402,000
D)$372,000

Question 26

Which of the following items appears on a variable costing income statement but not on a full costing income statement?

A)Sales
B)Gross margin
C)Net income
D)Contribution margin

Question 27

Which of the following is accounted for as a product cost in variable costing?

A)Product delivery costs to customers
B)Variable manufacturing overhead
C)Fixed manufacturing overhead
D)Product advertising costs

Question 28

In full costing, which of the following will be included as part of inventory on a company's balance sheet?

A)Fixed production cost
B)Variable selling cost
C)Fixed selling costs
D)None of the answer choices will be in inventory in full costing.

Question 29

Just-in-time (JIT) inventory management systems cause the difference between variable costing income and full costing income to be much greater than if standard inventory levels had been maintained by the company.

Question 30

Which of the following is treated as a product cost in full costing?

A)Sales commissions
B)Product advertising
C)Depreciation on factory machines
D)Security at corporate headquarters

Question 31

A full costing income statement will display a higher net income than variable costing as long as inventory levels continue to increase.

Question 32

In variable costing, when does fixed manufacturing overhead become an expense?

A)Never
B)In the period when the product is sold
C)In the period when the expense is incurred
D)At the time when units are produced

Question 33

Which of the following is accounted for differently in full costing compared to variable costing?

A)Direct material
B)Fixed manufacturing overhead
C)Direct labor
D)Variable manufacturing overhead

Question 34

Full costing

A)is another name for variable costing.
B)considers fixed manufacturing overhead as an inventory cost.
C)often provides the information needed for CVP analysis.
D)considers fixed production cost as period cost.

Question 35

Robley Company's fixed manufacturing overhead costs totaled $235,000 and fixed corporate operating costs totaled $116,000.Under full costing, how should these costs be classified?

Question 36

Variable costing facilitates CVP analysis.

Question 37

In full costing, when does fixed manufacturing overhead become an expense?

A)In the period when all other fixed costs are expensed
B)In the period when the product is sold
C)In the period when the expense is incurred
D)At the time units when are produced

Question 38

The use of variable costing encourages management of earnings by adjusting production volume.

Question 39

Sticker Creations' fixed manufacturing overhead costs totaled $68,000 and its variable selling costs totaled $45,000.Under full costing, how should these costs be classified?

Question 40

Cold City Blowers produces snow blowers.The selling price per snow blower is $80.Costs involved in production are: $\begin{array}{lr}\text { Direct material per unit } & \$ 22 \\\text { Direct labor per unit } & 15 \\\text { Variable manufacturing overhead per unit } & 6 \\\text { Fixed manufacturing overhead per year } & 206,400\end{array}$ In addition, the company has fixed selling and administrative costs of $88,000 per year.During the year, Cold City Blowers produced 8,600 snow blowers and sold 8,000 snow blowers.There is no beginning inventory.Ignoring taxes, how much will full costing net income differ from variable costing net income?

A)$15,480
B)$14,400
C)$206,400
D)$192,000

Question 41

Variable costing income is a function of

A)only units sold.
B)only units produced.
C)both units sold and units produced.
D)neither units sold nor units produced.

Question 42

Anders Supply experienced the following costs in May: $\begin{array}{lr}\text { Direct materials } & \$ 6.50 \text { per unit } \\\text { Direct labor } & \$ 2.20 \text { per unit } \\\text { Manufacturing overhead costs } & \\\quad \text { Variable } & \$ 3.10 \text { per unit } \\\quad \text { Fixed } & \$ 44,000 \\\text { Selling \& administrative costs } & \\\quad \text { Variable selling costs } & \$ 1.50 \text { per unit } \\\quad \text { Fixed selling costs } & \$ 21,000 \\\text { Fixed administrative costs } & \$ 16,000\end{array}$ During May, the company manufactured 22,000 units and sold 24,000 units.Beginning inventory totaled 3,400 units.If the average selling price per unit was $28, how much is the company's contribution margin?

A)$327,400
B)$352,800
C)$323,400
D)$344,800

Question 43

Data from Rannier Metals for 2017 is as follows: $\begin{array}{lr}\text { Sales } & \$ 20 \text { per unit } \\\text { Variable cost of goods sold } & ? ? \\\text { Fixed manufacturing overhead } & \$ 85,000 \\\text { Variable selling \& administrative costs } & ? ? \\\text { Fixed selling \& administrative costs } & \$ 150,000\end{array}$ The company produced 145,000 units during the year and sold 130,000 units.Variable production costs per unit and fixed costs have remained constant all year.Net income for the year was $1,000,000.How much was the company's contribution margin?

A)$765,000
B)$1,235,000
C)$1,365,000
D)Not enough information is provided to determine the answer

Question 44

Cold City Blowers produces snow blowers.The selling price per snow blower is $100.Costs involved in production are: $\begin{array}{lr}\text { Direct material per unit } & \$ 22 \\\text { Direct labor per unit } & 15 \\\text { Variable manufacturing overhead per unit } & 6 \\\text { Fixed manufacturing overhead per year } & 23,400\end{array}$ In addition, the company has fixed selling and administrative costs of $9,360 per year.During the year, Cold City Blowers produced 780 snow blowers and sold 800 snow blowers.Beginning inventory consisted of 50 snow blowers.How much is net income using variable costing?

A)$11,700
B)$12,240
C)$12,840
D)$45,600

Question 45

When the number of units sold is equal to the number of units produced, the net income using absorption costing will be

A)greater than net income using variable costing.
B)equal to net income using variable costing.
C)less than net income using variable costing.
D)None of the answer choices is always correct.

Question 46

Sol Enterprises' contribution income statement utilizing variable costing appears below: Sol Enterprises
Income Statement
For the Year ended December 31, 2017
$\begin{array}{lr}\text { Sales ( } \$ 12 \text { per unit) }&&\$240,000\\\text { Less variable costs: }\\\text { Cost of goods sold } & \$ 100,000 \\\text { Selling \& administrative costs } & 18,000&118,000\\\text { Contribution margin }&&122,000\\\text { Less fixed costs: }\\\text { Manufacturing overhead } & 60,900 \\\text { Selling \& administrative costs } & 15,000 & 75,900 \\\text { Net income }&&\$48,100\end{array}$ Sol produced 21,000 units during the year.Variable costs per unit and fixed production costs have remained constant the entire year.There were no beginning inventories.How much is the dollar value of the ending inventory using variable costing?

A)$5,000
B)$7,900
C)$8,800
D)$2,900

Question 47

Macho Enterprises experienced the following costs in 2017: $\begin{array}{lr}\text { Direct materials } & \$ 2.65 \text { per unit } \\\text { Direct labor } & \$ 1.80 \text { per unit } \\\text { Variable manufacturing overhead } & \$ 3.25 \text { per unit } \\\text { Variable selling } & \$ 1.15 \text { per unit } \\\text { Fixed manufacturing overhead } & \$ 94,000 \\\text { Fixed selling } & \$ 35,000 \\\text { Fixed administrative } & \$ 10,000\end{array}$ During the year, the company manufactured 47,000 units and sold 40,000 units.How much is the unit product cost using full costing?

A)$7.70
B)$9.70
C)$8.85
D)$10.85

Question 48

Cold City Blowers produces snow blowers.The selling price per snow blower is $100.Costs involved in production are: $\begin{array}{lr}\text { Direct material per unit } & \$ 22 \\\text { Direct labor per unit } & 15 \\\text { Variable manufacturing overhead per unit } & 6 \\\text { Fixed manufacturing overhead per year } & 23,400\end{array}$ In addition, the company has fixed selling and administrative costs of $9,360 per year.During the year, Cold City Blowers produced 780 snow blowers and sold 800 snow blowers.Beginning inventory consisted of 50 snow blowers.How much is considered to be product cost under variable costing?

A)$34,400
B)$33,540
C)$29,600
D)None of these answer choices are correct.

Question 49

Beiber Boxers contribution income statement utilizing variable costing for 2017 variable costing appears below: $\begin{array}{lll}\text { Sales ( } \$ 12 \text { per unit) }&&\$78,000\\\text { Less variable costs: }\\\text { Cost of goods sold } & \$ 26,000 \\\text { Selling \& administrative } & 9,750 & 35,750\\\text { Contribution margin }&&42,250\\\text { Less fixed costs: }\\\text { Manufacturing overhead } & 12,600 \\\text { Selling } \& \text { administrative costs } & 14,950 & 27,550\\\text { Net income }&&\$14,700\end{array}$ The company produced 7,000 units during the year.Variable and fixed production costs have remained constant the entire year.There were no beginning inventories.How much is the dollar value of the ending inventory using full costing?

A)$2,000
B)$2,900
C)$3,850
D)None of these answer choices are correct.

Question 50

Roger Excavating Company experienced the following costs in 2017: $\begin{array}{lr}\text { Direct materials } & \$ 1.75 \text { per unit } \\\text { Direct labor } & \$ 2.00 \text { per unit } \\\text { Variable manufacturing overhead } & \$ 2.50 \text { per unit } \\\text { Variable selling } & \$ 0.75 \text { per unit } \\\text { Fixed manufacturing overhead } & \$ 50,000 \\\text { Fixed selling } & \$ 15,000 \\\text { Fixed administrative } & \$ 5,000\end{array}$ During 2017, the company manufactured 100,000 units and sold 80,000 units.If the average selling price per unit was $22.65, what is the amount of the company's contribution margin per unit?

A)$16.40
B)$15.65
C)$18.90
D)$13.65

Question 51

If the number of units sold is greater than the number of units produced,

A)full costing and variable costing will yield the same net income.
B)variable costing will assign some fixed manufacturing costs to the units in ending inventory.
C)net income will be higher under variable costing than under full costing.
D)inventory levels will increase.

Question 52

During the past year, Waxman Electronics manufactured 25,000 speakers during 2017 and sold 26,000 speakers.Production costs during the year were as follows: $$\begin{array} { l r } \text { Fixed manufacturing overhead } & \$ 546,000 \\\text { Variable manufacturing overhead } & 234,000 \\\text { Direct labor } & 312,000 \\\text { Direct materials } & 780,000\end{array}$$ Sales totaled $3,120,000, variable selling and administrative costs totaled $182,000, and fixed selling and administrative costs totaled $114,000.There were 2,200 speakers in beginning inventory.How much is the contribution margin per unit?

A)$48.00
B)$69.00
C)$62.00
D)None of these answer choices are correct.

Question 53

Meow Foods had 2,000 25-pound bags of cat food in beginning inventory.During 2017, the company manufactured 16,000 bags and sold 15,000 units.Each bag of food is sold for $17.Assume the same unit costs in all years.The company experienced the following costs: $\begin{array}{lr}\text { Direct materials } & \$ 4.50 \text { per unit } \\\text { Direct labor } & \$ 2.10 \text { per unit } \\\text { Variable manufacturing overhead } & \$ 1.90 \text { per unit } \\\text { Variable selling } & \$ 1.00 \text { per unit } \\\text { Fixed manufacturing overhead } & \$ 48,000 \\\text { Fixed selling } & \$ 24,000 \\\text { Fixed administrative } & \$ 30,000\end{array}$ If the company uses variable costing, at what amount is the ending inventory for the year valued?

A)$25,500
B)$28,500
C)$34,500
D)$9,000

Question 54

Acosta Supplies experienced the following costs in 2017: $\begin{array}{lr}\text { Direct materials } & \$ 1.50 \text { per unit } \\\text { Direct labor } & \$ 4.50 \text { per unit } \\\text { Variable manufacturing overhead } & \$ 2.00 \text { per unit } \\\text { Variable selling } & \$ 1.00 \text { per unit } \\\text { Fixed manufacturing overhead } & \$ 70,000 \\\text { Fixed selling and administrative } & \$ 80,000\end{array}$ During 2017, the company manufactured 4,000 units and sold 4,200 units.Assume the same unit costs in all years.Beginning inventory consists of 800 units.How much are total variable costs on the company's 2017 contribution margin income statement?

A)$37,800
B)$36,000
C)$33,600
D)$32,000

Question 55

Which of the following items on a variable costing income statement will change in direct proportion to a change in sales?

A)Sales, contribution margin, and net income
B)Sales, variable costs, and contribution margin
C)Sales, variable costs, contribution margin, fixed costs, and net income
D)Sales, variable costs, and fixed costs

Question 56

Ranger Roadsters experienced the following costs in 2017 (Assume the same unit costs in all years): $\begin{array}{ll}\text { Direct materials } & \$ 4.85 \text { per unit } \\\text { Direct labor } & \$ 2.10 \text { per unit } \\\text { Manufacturing overhead costs } &\\\text { Variable } & \$ 2.25 \text { per unit } \\\text { Fixed } & \$ 75,075\\\text { Selling \& administrative costs }\\\text { Variable selling } & \$ 0.95 \text { per unit } \\\text { Fixed selling } & \$ 8,000 \\\text { Fixed administrative } & \$ 2,000\end{array}$ There were 6,000 units in beginning inventory.During the year, the company manufactured 45,500 units and sold 48,000 units.If net income using variable costing was $82,500, how much is net income using full costing?

A)$78,375
B)$86,625
C)$76,725
D)$88,275

Question 57

Ranger Productions experienced the following costs in 2017: $\begin{array}{lr}\text { Direct materials } & \$ 1.50 \text { per unit } \\\text { Direct labor } & \$ 2.60 \text { per unit } \\\text { Variable manufacturing overhead } & \$ 1.20 \text { per unit } \\\text { Variable selling costs } & \$ 4.40 \text { per unit } \\\text { Fixed manufacturing overhead } & \$ 84,000 \\\text { Fixed selling costs } & \$ 32,000 \\\text { Fixed administrative costs } & \$ 15,000\end{array}$ During 2017, the company manufactured 65,000 units and sold 62,000 units.The unit cost is the same throughout the year.Beginning inventory is zero.How much will the company report as total variable product costs on its 2017 contribution income statement?

A)$328,600
B)$601,400
C)$344,500
D)$630,500

Question 58

The following information relates to Charlin Industries for the year ending December 31, 2017, the company's first year of operations: $$\begin{array} { l r } \text { Units produced } & 100,000 \\\text { Units sold } & 80,000 \\\text { Units in ending inventory } & 20,000 \\\text { Fixed manufacturing overhead } & \$ 650,000\end{array}$$ How much fixed manufacturing overhead would be expensed in 2017 using variable costing?

A)$520,000
B)$130,000
C)$650,000
D)$0

Question 59

Meow Foods had 2,000 25-pound bags of cat food in beginning inventory.During 2017, the company manufactured 16,000 bags and sold 15,000 units.Assume the same unit costs in all years.Each bag of food is sold for $17.The company experienced the following costs: $\begin{array}{lr}\text { Direct materials } & \$ 4.50 \text { per unit } \\\text { Direct labor } & \$ 2.10 \text { per unit } \\\text { Variable manufacturing overhead } & \$ 1.90 \text { per unit } \\\text { Variable selling } & \$ 1.00 \text { per unit } \\\text { Fixed manufacturing overhead } & \$ 48,000 \\\text { Fixed selling } & \$ 24,000 \\\text { Fixed administrative } & \$ 30,000\end{array}$ If the company uses full costing, how much will be reported as inventory on the December 31, 2017 balance sheet?

A)$9,000
B)$25,500
C)$28,500
D)$34,500

Question 60

If a company's income is positive and fixed costs exist, which of the following items will increase or decrease at a greater rate than the change in the amount of sales on a variable costing income statement?

A)Variable costs
B)Fixed costs
C)Contribution margin
D)Net income

Question 61

Radial Fuel Cells experienced the following costs in 2017 (Assume the same unit costs in all years): $$\begin{array} { l r } \text { Direct materials } & \$ 4 \text { per unit } \\\text { Direct labor } & \$ 8 \text { per unit } \\\text { Manufacturing Overhead Costs } & \\\quad \text { Variable } & \$ 2 \text { per unit } \\\quad \text { Fixed } & \$ 150,000 \\\text { Selling \& Administrative Costs } & \\\quad \text { Fixed selling } & \$ 30,000 \\\quad \text { Variable selling } & \$ 1 \text { per unit } \\\text { Fixed administrative } & \$ 20,000\end{array}$$ During the year, the company manufactured 50,000 units and sold 45,000 units.Beginning inventory is zero.If net income for the year was $265,000 using full costing, what would net income be if the company used variable costing?

A)$250,000
B)$265,000
C)$270,000
D)$450,000

Question 62

Affinity makes a single product, pool pumps.Information for 2017 appears below: $$\begin{array} { l r } \text { Sales in units } & 5,800 \\\text { Production in units } & 6,200 \\\text { Beginning inventory } & 1,500 \\\text { Variable production cost per unit } & \$ 46.00 \\\text { Variable selling cost per unit } & \$ 6.00 \\\text { Fixed production cost per year } & \$ 31,000 \\\text { Fixed selling and administrative cost per year } & \$ 24,000 \\\text { Selling price per unit } & \$ 75.00\end{array}$$ How much is the contribution margin per unit of inventory?

A)$29.00
B)$24.00
C)$23.00
D)$18.00

Question 63

Last month, Brand Products manufactured 25,000 calculators and sold 23,000 of these calculators at a price of $10.00 each.Manufacturing costs consisted of direct labor, $30,000; direct materials, $32,000; variable manufacturing overhead, $3,500; fixed manufacturing overhead, $21,500.Selling and administrative costs are all fixed and totaled $24,000.Beginning inventory consists of no units.What is Brand Products' net income using full costing?

A)$124,240
B)$125,960
C)$120,720
D)$149,960

Question 64

Affinity makes a single product, pool pumps.Information for 2017 appears below (Assume the same unit costs in all years): $$\begin{array} { l r } \text { Sales in units } & 5,800 \\\text { Production in units } & 6,200 \\\text { Beginning inventory } & 1,500 \\\text { Variable production cost per unit } & \$ 46.00 \\\text { Variable selling cost per unit } & \$ 6.00 \\\text { Fixed production cost per year } & \$ 31,000 \\\text { Fixed selling and administrative cost per year } & \$ 24,000 \\\text { Selling price per unit } & \$ 75.00\end{array}$$ Under which method will net income be larger?

A)Variable costing
B)Full costing
C)Net income under both the variable and full costing methods will be the same.
D)The answer cannot be determined from the information provided.

Question 65

Futon Delight experienced the following costs in 2017 (Assume the same unit costs in all years): $\begin{array}{ll}\text { Direct materials } & \$ 2.00 \text { per unit } \\\text { Direct labor } & \$ 1.00 \text { per unit }\\\text { Manufacturing Overhead Costs: }\\\text { Variable } &\$ 1.50 \text { per unit }\\\text { Fixed }&\$45,000\end{array}$ There were 600 units in beginning inventory.During the year, the company manufactured 18,000 units and sold 17,600 units.If net income for the year was $54,000 using full costing, how much will net income be if the company uses variable costing?

A)$53,000
B)$50,000
C)$55,000
D)More information is needed to determine the answer.

Question 66

Affinity makes a single product, pool pumps.Information for 2017 appears below (Assume the same unit costs in all years): $$\begin{array} { l r } \text { Sales in units } & 5,800 \\\text { Production in units } & 6,200 \\\text { Beginning inventory } & 1,500 \\\text { Variable production cost per unit } & \$ 46.00 \\\text { Variable selling cost per unit } & \$ 6.00 \\\text { Fixed production cost per year } & \$ 31,000 \\\text { Fixed selling and administrative cost per year } & \$ 24,000 \\\text { Selling price per unit } & \$ 75.00\end{array}$$ How much is net income for the year under full costing?

A)$78,400
B)$80,400
C)$87,600
D)None of these answer choices are correct.

Question 67

Last month, Brand Products manufactured 25,000 calculators and sold 23,000 of these calculators at a price of $10.00 each.Manufacturing costs consisted of direct labor, $30,000; direct materials, $32,000; variable manufacturing overhead, $3,500; fixed manufacturing overhead, $21,500.Selling and administrative costs are all fixed and totaled $24,000.Beginning inventory consists of no units.Brand Products uses variable costing.How much will the company's contribution margin increase if sales increase 10%?

A)$16,974
B)$23,000
C)$14,996
D)$12,420

Question 68

If a company employs JIT inventory techniques, which statement is true?

A)Variable and full costing income will differ very little since there is almost no inventory on hand.
B)Variable and full costing income will differ very little since there are almost no fixed costs incurred on production.
C)Variable and full costing income will differ greatly since actual costs are difficult to determine.
D)Variable and full costing income will differ greatly since there will be a large difference between gross margin and contribution margin.

Question 69

Last month, Brand Products manufactured 25,000 calculators and sold 23,000 of these calculators at a price of $10.00 each.Manufacturing costs consisted of direct labor, $30,000; direct materials, $32,000; variable manufacturing overhead, $3,500; fixed manufacturing overhead, $21,500.Selling and administrative costs are all fixed and totaled $24,000.Beginning inventory consists of no units.What is Brand Products' net income using variable costing?

A)$125,960
B)$149,960
C)$169,740
D)$124,240

Question 70

Last month, Brand Products manufactured 25,000 calculators and sold 23,000 of these calculators at a price of $10.00 each.Manufacturing costs consisted of direct labor, $30,000; direct materials, $32,000; variable manufacturing overhead, $3,500; fixed manufacturing overhead, $21,500.Selling and administrative costs are all fixed and totaled $24,000.Beginning inventory consists of no units.Brand Products uses full costing.How much will the company's gross margin increase if sales increase 10%?

A)Less than 10%
B)More than 10%
C)10%
D)It depends on other factors not given.

Question 71

Which is most consistent with cost-volume-profit analysis?

A)Variable costing
B)Full costing
C)Absorption costing
D)JIT

Question 72

Affinity makes a single product, pool pumps.Information for 2017 appears below (Assume the same unit costs in all years): $\begin{array}{lr}\text { Sales in units } & 5,800 \\\text { Production in units } & 6,200 \\\text { Beginning inventory } & 1,500 \\\text { Variable production cost per unit } & \$ 46.00 \\\text { Variable selling cost per unit } & \$ 6.00 \\\text { Fixed production cost per year } & \$ 31,000 \\\text { Fixed selling and administrative cost per year } & \$ 24,000 \\\text { Selling price per unit } & \$ 75.00\end{array}$ How much is the full cost per unit of inventory?

A)$46.00
B)$51.00
C)$57.00
D)$52.00

Question 73

If a company's levels of total fixed costs and unit variable costs remain unchanged from one year to the next, under which costing method is it possible for managers to manipulate net income through production?

A)Variable costing
B)Full costing
C)Both variable and full costing
D)Neither variable nor full costing

Question 74

Which method provides an incentive for managers to produce more units in order to increase income for performance evaluations?

A)Full costing
B)Variable costing
C)Both full costing and variable costing
D)Neither full costing nor variable costing

Question 75

Waterloo Skyline experienced the following costs in 2017: $\begin{array}{ll}\text { Direct materials } & \$ 3.15 \text { per unit } \\\text { Direct labor } & \$ 2.80 \text { per unit } \\\text { Variable manufacturing overhead } & \$ 1.45 \text { per unit }\\\text { Fixed manufacturing overhead }&\$ 12.60 \text { per unit }\end{array}$ There was no beginning inventory.During the year, the company sold 190,000 units.If net income using full and variable costing was $939,020 and $905,000, respectively, how many units did the company produce in 2017?

A)192,700
B)2,700
C)187,300
D)46,951

Question 76

Affinity makes a single product, pool pumps.Information for 2017 appears below (Assume the same unit costs in all years): $$\begin{array} { l r } \text { Sales in units } & 5,800 \\\text { Production in units } & 6,200 \\\text { Beginning inventory } & 1,500 \\\text { Variable production cost per unit } & \$ 46.00 \\\text { Variable selling cost per unit } & \$ 6.00 \\\text { Fixed production cost per year } & \$ 31,000 \\\text { Fixed selling and administrative cost per year } & \$ 24,000 \\\text { Selling price per unit } & \$ 75.00\end{array}$$ How much will be reported for inventory on the balance sheet if variable costing is used?

A)$87,400
B)$96,900
C)$108,300
D)$118,400

Question 77

Affinity makes a single product, pool pumps.Information for 2017 appears below (Assume the same unit costs in all years): $$\begin{array} { l r } \text { Sales in units } & 5,800 \\\text { Production in units } & 6,200 \\\text { Beginning inventory } & 1,500 \\\text { Variable production cost per unit } & \$ 46.00 \\\text { Variable selling cost per unit } & \$ 6.00 \\\text { Fixed production cost per year } & \$ 31,000 \\\text { Fixed selling and administrative cost per year } & \$ 24,000 \\\text { Selling price per unit } & \$ 75.00\end{array}$$ How much is net income for the year under variable costing?

A)$78,400
B)$87,600
C)$80,400
D)None of these answer choices are correct.

Question 78

Full costing income is a function of

A)units sold only.
B)units produced only.
C)both units sold and units produced.
D)neither units sold nor units produced.

Question 79

Which of the following is true when units produced exceed units sold?

A)Full costing and variable costing will yield the same net income.
B)Full costing assigns a portion of the fixed manufacturing costs to the units in ending inventory.
C)Net income will be higher under variable costing than under full costing.
D)Inventory levels will decrease.

Question 80

The Crab Shack experienced the following costs in 2017 (Assume the same unit costs in all years): $\begin{array}{lr}\text { Direct materials }&\$ 2.25 \text { per unit }\\\text { Direct labor }&\$ 1.50 \text { per unit }\\\text { Manufacturing overhead costs }\\\text { Variable } & \$ 1.10 \text { per unit } \\\text { Fixed } & \$ 60,000\\\text { Selling } \& \text { administrative costs }\\\text { Variable selling } & \$ 0.80 \text { per unit } \\\text { Fixed selling } & \$ 9,000 \\\text { Fixed administrative } & \$ 13,000\end{array}$ There were 1,800 units in beginning inventory.During the year, the company manufactured 24,000 units and sold 25,000 units.If net income using variable costing was $76,250, how much is net income using full costing?

A)$5,880
B)$79,250
C)$73,750
D)$74,350