Question 1

Super-variable costing is a costing method mat treats direct labor and manufacturing overhead costs as product costs.

Accepted Answer

Super-variable costing is not a recognized costing method in managerial accounting. However, variable costing treats direct labor and manufacturing overhead costs as period costs, rather than product costs.

Question 2

Buckbee Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 37,000 units and sold 32,000 units. The company's only product is sold for $261 per unit.
Assume that the company uses a variable costing system that assigns $17 of direct labor cost to each unit that is produced. The unit product cost under this costing system is:
A) $114 per unit
B) $191 per unit
C) $97 per unit
D) $224 per unit

Accepted Answer

Variable costing unit product cost:
 11eacbfc_c888_15cd_8ffe_1741c9bd727f_TB7552_00

Question 3

Letcher Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 56,000 units and sold 54,000 units. The company's only product is sold for $227 per unit.
The company is considering using either super-variable costing or a variable costing system that assigns $11 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?
A) Variable costing net operating income exceeds super-variable costing net operating income by $124,000.
B) Super-variable costing net operating income exceeds variable costing net operating income by $124,000.
C) Variable costing net operating income exceeds super-variable costing net operating income by $22,000.
D) Super-variable costing net operating income exceeds variable costing net operating income by $22,000.

Accepted Answer

Ending inventory = Beginning inventory + Units produced − Units sold = 0 + 56,000 units − 54,000 units = 2,000 units
Direct labor cost deferred in (released from) inventory = Direct labor cost in ending inventory − Direct labor cost in beginning inventory = ($11 per unit × 2,000 units) − $0 = $22,000
Because inventory increased, direct labor cost is deferred in inventory under the variable costing system described above. This increases the net operating income under variable costing by $22,000 relative to the net operating income under super-variable costing.

Question 4

Leheny Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 55,000 units and sold 50,000 units. The company's only product is sold for $238 per unit.
Assume that the company uses an absorption costing system that assigns $21 of direct labor cost and $58 of fixed manufacturing overhead to each unit that is produced. The net operating income under this costing system is:
A) $580,000
B) $1,400,000
C) $1,005,000
D) $1,110,000

Accepted Answer

Absorption costing unit product cost:
 11eacbfc_c88a_11a7_8ffe_37027e547d98_TB7552_00 Absorption costing income statement:
 11eacbfc_c88a_11a8_8ffe_afc451bade5e_TB7552_00

Question 5

Under super-variable costing, which of the following is treated as a period cost? 
A) Choice A
B) Choice B
C) Choice C
D) Choice D

Accepted Answer

The answer of Under super-variable costing, which of the following...

Question 6

Union Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 24,000 units and sold 17,000 units. The company's only product is sold for $232 per unit.
Assume that the company uses an absorption costing system that assigns $22 of direct labor cost and $68 of fixed manufacturing overhead to each unit that is produced. The net operating income under this costing system is:
A) $(102,000)
B) $374,000
C) $(830,000)
D) $(256,000)

Accepted Answer

Absorption costing unit product cost:
 11eacbfc_c88a_adec_8ffe_09c3cc9243cf_TB7552_00 Absorption costing income statement:
 11eacbfc_c88a_aded_8ffe_77dcaf6b8d7f_TB7552_00

Question 7

Michelman Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 34,000 units and sold 31,000 units. The company's only product is sold for $254 per unit.
The company is considering using either super-variable costing or an absorption costing system that assigns $28 of direct labor cost and $75 of fixed manufacturing overhead to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?
A) Absorption costing net operating income exceeds super-variable costing net operating income by $309,000.
B) Absorption costing net operating income exceeds super-variable costing net operating income by $225,000.
C) Super-variable costing net operating income exceeds absorption costing net operating income by $309,000.
D) Super-variable costing net operating income exceeds absorption costing net operating income by $225,000.

Accepted Answer

Ending inventory = Beginning inventory + Units produced − Units sold = 0 + 34,000 units − 31,000 units = 3,000 units
Direct labor and fixed manufacturing overhead cost deferred in (released from) inventory = Direct labor and fixed manufacturing overhead cost in ending inventory − Direct labor and fixed manufacturing overhead cost in beginning inventory = [($28 per unit + $75 per unit) × 3,000 units] − $0 = $309,000
Because inventory increased, direct labor and fixed manufacturing overhead cost is deferred in inventory under the absorption costing system. This increases the net operating income under absorption costing by $309,000 relative to the net operating income under super-variable costing.

Question 8

Buckbee Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 37,000 units and sold 32,000 units. The company's only product is sold for $261 per unit.
Assume that the company uses a variable costing system that assigns $17 of direct labor cost to each unit that is produced. The net operating income under this costing system is:
A) $1,184,000
B) $229,000
C) $714,000
D) $799,000

Accepted Answer

Variable costing unit product cost:
 11eacbfc_c888_8aff_8ffe_9529cb61efec_TB7552_00 Variable costing income statement:
 11eacbfc_c888_b210_8ffe_cd2bbbfc6061_TB7552_00

Question 9

Leheny Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 55,000 units and sold 50,000 units. The company's only product is sold for $238 per unit.
Assume that the company uses a variable costing system that assigns $21 of direct labor cost to each unit that is produced. The net operating income under this costing system is:
A) $1,400,000
B) $1,005,000
C) $1,110,000
D) $580,000

Accepted Answer

Variable costing unit product cost:
 11eacbfc_c889_9c74_8ffe_ef7a7286e951_TB7552_00 Variable costing income statement:
 11eacbfc_c889_c385_8ffe_712da5e444bc_TB7552_00

Question 10

Souffront Corporation manufactures and sells one product. In the company's first year of operations, the variable cost consisted solely of direct materials of $97 per unit. The annual fixed costs were $1,416,000 of direct labor cost, $3,776,000 of fixed manufacturing overhead expense, and $1,650,000 of fixed selling and administrative expense. The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 59,000 units and sold 55,000 units. The company's only product is sold for $251 per unit. The net operating income for the year under super-variable costing is:
A) $1,628,000
B) $1,724,000
C) $1,240,000
D) $1,980,000

Accepted Answer

11eacbfc_c887_0457_8ffe_a3ef1b87f162_TB7552_00

Question 11

Union Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 24,000 units and sold 17,000 units. The company's only product is sold for $232 per unit.
The net operating income for the year under super-variable costing is:
A) $(256,000)
B) $(830,000)
C) $(102,000)
D) $374,000

Accepted Answer

Super-variable costing income statement:
 11eacbfc_c88a_5fca_8ffe_a35a49e49aa1_TB7552_00

Question 12

Super-variable costing is most appropriate where:
A) direct labor is a fixed cost.
B) it is easy to accurately separate the variable and fixed components of manufacturing overhead.
C) direct labor is a variable cost.
D) manufacturing overhead consists entirely of variable cost.

Accepted Answer

The answer of Super-variable costing is most appropriate where:
A) direct...

Question 13

Buckbee Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 37,000 units and sold 32,000 units. The company's only product is sold for $261 per unit.
The unit product cost under super-variable costing is:
A) $97 per unit
B) $191 per unit
C) $224 per unit
D) $114 per unit

Accepted Answer

Under super-variable costing, the unit product cost is just the direct materials cost of $97 per unit.

Question 14

Paparelli Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 40,000 units and sold 33,000 units. The company's only product is sold for $240 per unit.
The net operating income for the year under super-variable costing is:
A) $308,000
B) $(252,000)
C) $924,000
D) $448,000

Accepted Answer

11eacbfc_c886_dd46_8ffe_a9617edd2f1b_TB7552_00

Question 15

All differences between super-variable costing and variable costing net operating income are explained by the accounting for manufacturing overhead costs.

Accepted Answer

Variable costing and absorption costing (sometimes referred to as "super-variable costing" in the question, though this term is not standard) differ in how they treat fixed manufacturing overhead costs. Variable costing includes only variable manufacturing costs in product costs, while absorption costing includes both variable and fixed manufacturing costs. The differences in net operating income between the two methods arise because of how fixed manufacturing overhead is treated: expensed in the period incurred under variable costing, but allocated to units produced and possibly inventoried under absorption costing.

Question 16

Grandin Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 44,000 units and sold 41,000 units. The company's only product is sold for $242 per unit.
The company is considering using either super-variable costing or a variable costing system that assigns $24 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?
A) Super-variable costing net operating income exceeds variable costing net operating income by $72,000.
B) Variable costing net operating income exceeds super-variable costing net operating income by $156,000.
C) Super-variable costing net operating income exceeds variable costing net operating income by $156,000.
D) Variable costing net operating income exceeds super-variable costing net operating income by $72,000.

Accepted Answer

Ending inventory = Beginning inventory + Units produced − Units sold = 0 + 44,000 units − 41,000 units = 3,000 units
Direct labor cost deferred in (released from) inventory = Direct labor cost in ending inventory − Direct labor cost in beginning inventory = ($24 per unit × 3,000 units) − $0 = $72,000
Because inventory increased, direct labor cost is deferred in inventory under the variable costing system described above. This increases the net operating income under variable costing by $72,000 relative to the net operating income under super-variable costing.

Question 17

Buckbee Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 37,000 units and sold 32,000 units. The company's only product is sold for $261 per unit.
The net operating income for the year under super-variable costing is:
A) $799,000
B) $229,000
C) $714,000
D) $1,184,000

Accepted Answer

Super-variable costing income statement:
 11eacbfc_c887_c7ab_8ffe_cbe87d38628f_TB7552_00

Question 18

Leheny Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 55,000 units and sold 50,000 units. The company's only product is sold for $238 per unit.
The net operating income for the year under super-variable costing is:
A) $1,400,000
B) $1,110,000
C) $1,005,000
D) $580,000

Accepted Answer

Super-variable costing income statement:
 11eacbfc_c889_2742_8ffe_3594c10b6757_TB7552_00

Question 19

The super-variable costing net operating income period can be computed by multiplying the number of units sold by the gross margin per unit.

Accepted Answer

Super-variable costing net operating income is computed by subtracting total variable costs and fixed costs from total sales; it does not involve multiplying the number of units sold by the gross margin per unit.

Question 20

Letcher Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 56,000 units and sold 54,000 units. The company's only product is sold for $227 per unit.
The net operating income for the year under super-variable costing is:
A) $1,604,000
B) $1,404,000
C) $1,582,000
D) $1,728,000

Accepted Answer

Super-variable costing income statement:
 11eacbfc_c88a_fc0f_8ffe_67238e0d0a60_TB7552_00

Quiz 16: Super-Variable Costing

Super-variable costing is a costing method mat treats direct labor and manufacturing overhead costs as product costs.

Under super-variable costing, which of the following is treated as a period cost?

Super-variable costing is most appropriate where:

All differences between super-variable costing and variable costing net operating income are explained by the accounting for manufacturing overhead costs.

The super-variable costing net operating income period can be computed by multiplying the number of units sold by the gross margin per unit.