Quiz 3: Predetermined Overhead Rates,Flexible Budgets,and Absorptionvariable Costing

Absorption costing is commonly used for external reporting.

Absorption costing is commonly used for internal reporting.

Variable costing is commonly used for internal reporting.

Variable costing is commonly used for external reporting.

In an actual cost system,factory overhead is assigned directly to products and services.

In a normal cost system,factory overhead is assigned directly to products and services.

In a normal cost system,factory overhead is assigned to an overhead control account and then allocated to products and services.

In an actual cost system,factory overhead is assigned to an overhead control account and then allocated to products and services.

A debit to the Factory Overhead account represents actual overhead costs.

A debit to the Factory Overhead account represents applied overhead costs.

A credit to the Factory Overhead account represents actual overhead costs.

A credit to the Factory Overhead account represents applied overhead costs.

If actual overhead exceeds applied overhead,factory overhead is said to be overapplied.

If actual overhead exceeds applied overhead,factory overhead is said to be underapplied.

If overapplied factory overhead is immaterial,the account is closed by a credit to Cost of Goods Sold.

If overapplied factory overhead is material,the account is closed by a credit to Cost of Goods Sold.

If overapplied factory overhead is immaterial,the account is closed by a debit to Cost of Goods Sold.

If underapplied factory overhead is immaterial,the account is closed by a debit to Cost of Goods Sold.

If underapplied factory overhead is immaterial,the account is closed by a credit to Cost of Goods Sold.

If underapplied factory overhead is material,it is prorated among Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold.

The estimated maximum potential activity for a specified time is known as theoretical capacity.

Practical capacity does not adjust for routine downtime in a production process.

Normal capacity considers present and future production levels and cyclical fluctuations.

Expected capacity is a long-run measure of activity.

Practical capacity is the capacity that can be achieved during normal working hours.

The regression equation y = a+ bX assumes that the function is curvilinear in nature.

The regression equation y = a+ bX assumes that the function is linear in nature.

The slope of a regression line is determined by dividing the change in activity level by the change in total cost.

The slope of a regression line is determined by dividing the change in total cost by the change in activity level.

The high-low method excludes outliers from the calculation of the slope of a regression line.

When using the high-low method,fixed costs are computed before the variable component is computed.

When using the high-low method,the variable component is computed before computing the fixed component.

A flexible budget is a planning document that presents expected variable and fixed overhead costs at different activity levels.

A master budget is a planning document that presents expected variable and fixed overhead costs at different activity levels.

Plantwide overhead rates provide a more accurate computation of factory overhead than departmental overhead rates

Plantwide overhead rates provide a less accurate computation of factory overhead than departmental overhead rates

Absorption costing conforms with generally accepted accounting principles.

Direct costing conforms with generally accepted accounting principles.

The Internal Revenue Service allows the use of both variable and absorption costing.

Sales minus cost of goods sold is referred to as variable contribution margin.

Phantom profits result when absorption costing is used and sales exceed production.

Phantom profits result when absorption costing is used and production exceeds sales.

If production exceeds sales,absorption costing net income exceeds variable costing net income.

If production exceeds sales,absorption costing net income is less than variable costing net income.

If sales exceed production,absorption costing net income is less than variable costing net income.

If sales exceed production,absorption costing net income exceeds variable costing net income.

In a(n)____________________ cost system,factory overhead is assigned directly to products and services.

In a(n)____________________ cost system,factory overhead is assigned to an overhead control account and then allocated to products and services.

The dollar amount of overhead assigned to work-in-process inventory using a predetermined rate is known as ____________________ overhead.

If actual overhead exceeds applied overhead,factory overhead is said to be ____________________.

If actual overhead is less than applied overhead,factory overhead is said to be ____________________.

If underapplied or overapplied factory overhead is material,it is prorated among ________________________________________,________________________________________,and ___________________________________.

If underapplied or overapplied factory overhead is immaterial,it is charged to ______________________________.

The performance measure that considers routine interruptions is known as ____________________ capacity.

A performance measure that encompasses a firm's long-run average activity is referred to as ____________________ capacity.

A performance measure that assumes all production factors are operating perfectly is referred to as ____________________ capacity.

A performance measure that is short-run in nature and represents a firm's anticipated activity level for the upcoming period is ____________________ capacity.

Consider the regression equation y = a + bX.The portion of the equation that represents fixed costs is __________.

Consider the regression equation y = a + bX.The portion of the equation that represents the variable rate is __________.

Consider the regression equation y = a + bX.The portion of the equation that represents the activity base is __________.

An observation that is found outside the relevant range is referred to as a(n)____________________.

When a relationship between several independent variables and one dependent variable is analyzed,the regression is referred to as ____________________.

When a relationship between one independent variable and one dependent variable is analyzed,the regression is referred to as ____________________.

A ______________________________ is a planning document that presents expected variable and fixed overhead costs at different activity levels.

The costing technique that treats fixed manufacturing overhead as a period cost is referred to as ______________ or ____________ costing. or

The costing technique that treats all manufacturing costs as inventoriable is referred to as _________________ or ___________ costing. or

Sales less variable cost of goods sold is referred to as ________________________________________.

Temporary profits that result when absorption costing is used and production exceeds sales are referred to as _________________________.

Since overhead costs are indirect costs, A)they require some process of allocation. B)they can be easily traced to production. C)a predetermined overhead rate is not advantageous. D)they cannot be allocateD.

Cost allocation is the assignment of ____ costs to one or more products using a reasonable basis. A)yes yes B)yes no C)no no D)no yes

An actual cost system differs from a normal cost system in that an actual cost system A)assigns overhead as it occurs during the manufacturing cycle. B)assigns overhead at the end of the manufacturing process. C)does not assign overhead at all. D)does not use an Overhead Control account.

In a normal cost system,which of the following is used? A)yes no yes B)yes yes yes C)yes yes no D)no yes no

Predetermined overhead rates are computed based on A)yes yes B)yes no C)no yes D)no no

One reason annual overhead application rates are used is A)because of seasonal variability of overhead costs. B)to help budget overhead costs. C)to minimize the overhead cost assigned to products. D)to maximize the overhead cost assigned to products.

Which of the following is not a reason to use predetermined overhead rates? A)to overcome the problems of assigning overhead to diverse types of products B)to compensate for fluctuations in monthly overhead costs C)to provide a means for assigning overhead during the period rather than at the end of the period D)to smooth out the amount of overhead cost assigned to products when monthly production activity differs

When a manufacturing company has a highly automated manufacturing plant producing many different products,which of the following is the more appropriate basis of applying manufacturing overhead costs to work in process? A)direct labor hours B)direct labor dollars C)machine hours D)cost of materials used

A mixed cost has which of the following components? A)yes no B)yes yes C)no no D)no yes

In the formula y = a + bX,y represents A)fixed costs. B)total cost. C)variable costs. D)mixed costs.

In the formula y = a + bX,a represents A)mixed cost. B)variable cost. C)total cost. D)fixed cost.

In relationship to changes in activity,variable overhead changes A)no no B)no yes C)yes yes D)yes no

In relationship to changes in activity,fixed overhead changes A)yes yes B)no no C)no yes D)yes no

If the level of activity increases, A)variable cost per unit and total fixed costs increase. B)fixed cost per unit and total variable cost increase. C)total cost will increase and fixed cost per unit will decrease. D)variable cost per unit and total cost increase.

Weaknesses of the high-low method include all of the following except A)only two observations are used to develop the cost function. B)the high and low activity levels may not be representative. C)the method does not detect if the cost behavior is nonlinear. D)the mathematical calculations are relatively complex.

If there is no "a" value in a linear cost equation,this is an indication that the cost is A)fixed. B)mixed. C)variable. D)either fixed or mixeD.

An outlier is A)something that happens outside the organization that does not affect production. B)always used in analyzing a mixed cost. C)something that happens inside the organization that does not affect production. D)typically not used in analyzing a mixed cost.

Applied overhead consists of which of the following? A)actual activity times predetermined overhead rate B)estimated activity times predetermined overhead rate C)actual activity times actual overhead rate D)estimated activity times actual overhead rate

If a company used two overhead accounts (actual overhead and applied overhead),the one that would receive the most debits would be A)actual overhead. B)applied overhead. C)both would receive an equal number of debits. D)impossible to determine without additional information.

If underapplied overhead is considered to be immaterial,it is closed to which of the following accounts? A)yes yes yes B)no yes yes C)yes no no D)no no yes

Overapplied overhead will result if A)the plant is operated at less than expected capacity. B)overhead costs incurred were greater than estimated overhead costs. C)overhead costs incurred were less than overhead costs charged to production. D)overhead costs incurred were greater than overhead charged to production.

Actual overhead exceeds applied overhead and the amount is immaterial.Which of the following will be true? Upon closing, A)underapplied increase B)overapplied decrease C)overapplied increase D)underapplied decrease

If actual overhead is less than applied overhead,which of the following will be true? Upon closing, A)underapplied credited B)underapplied debited C)overapplied debited D)overapplied credited

The estimated maximum potential activity for a specified time is: A)theoretical capacity B)practical capacity C)normal capacity D)expected capacity

The measure of activity that allows for routine variations in manufacturing activity is: A)theoretical capacity B)practical capacity C)normal capacity D)expected capacity

The measure of production that considers historical and estimated future production levels and cyclical fluctuations is referred to as: A)theoretical capacity B)practical capacity C)normal capacity D)expected capacity

A short-run measure of activity that represents a firm's anticipated activity level for an upcoming period based upon expected demand is referred to as: A)theoretical capacity B)practical capacity C)normal capacity D)expected capacity

An item or event that has a cause-effect relationship with the incurrence of a variable cost is called a A)mixed cost. B)predictor. C)direct cost. D)cost driver.

Thibodeaux Tailors has gathered information on utility costs for the past year.The controller has decided that utilities are a function of the hours worked during the month.The following information is available and representative of the company's utility costs: If 1,425 hours are worked in a month,total utility cost (rounded to the nearest dollar)using the high-low method should be A)$947. B)$954. C)$959. D)$976.

Welch Corporation uses a predetermined overhead application rate of $.30 per direct labor hour.During the year it incurred $345,000 dollars of actual overhead,but it planned to incur $360,000 of overhead.The company applied $363,000 of overhead during the year.How many direct labor hours did the company plan to incur? A)1,150,000 B)1,190,000 C)1,200,000 D)1,210,000

Machine Master,Inc.had the following data regarding monthly power costs: Assume that management expects 500 machine hours in May.Using the high-low method,calculate May's power cost using machine hours as the basis for prediction. A)$700 B)$705 C)$710 D)$1,320

Davis Corporation has developed the following flexible budget formula for monthly overhead: How much overhead should Davis expect if the firm plans to produce 200,000 units? A)$52,600 B)$59,000 C)$196,600 D)$203,000

Landon Corporation wishes to develop a single predetermined overhead rate.The company's expected annual fixed overhead is $340,000 and its variable overhead cost per machine hour is $2.The company's relevant range is from 200,000 to 600,000 machine hours.Landon expects to operate at 425,000 machine hours for the coming year.The plant's theoretical capacity is 850,000.The predetermined overhead rate per machine hour should be A)$2.40. B)$2.57. C)$2.80. D)$2.85.

Lawson Corporation Lawson Corporation has the following data for use of its machinery Refer to Lawson Corporation.Using the high-low method,compute the variable cost element. A)$1.02 B)$.98 C)$1.31 D)$1.19

Lawson Corporation Lawson Corporation has the following data for use of its machinery Refer to Lawson Corporation.Using the high-low method,compute the fixed cost element (to the nearest whole dollar). A)$225 B)$138 C)$411 D)$364

Phoenix Corporation The records of Phoenix Corporation revealed the following data for the current year. Refer to Phoenix Corporation.Assume,for this question only,actual overhead is $98,700 and applied overhead is $93,250.Manufacturing overhead is: A)overapplied by $12,900. B)underapplied by $18,350. C)overapplied by $5,450. D)underapplied by $5,450.

Phoenix Corporation The records of Phoenix Corporation revealed the following data for the current year. Refer to Phoenix Corporation.Assume that Phoenix has underapplied overhead of $37,200 and that this amount is material.What journal entry is needed to close the overhead account? (Round decimals to nearest whole percent. ) A)Debit Work in Process $8,456;Finished Goods $13,294;Cost of Goods Sold $15,450 and credit Overhead $37,200 B)Debit Overhead $37,200 and credit Work in Process $8,456;Finished Goods $13,294;Cost of Goods Sold $15,450 C)Debit Work in Process $37,200 and credit Overhead $37,200 D)Debit Cost of Goods Sold $37,200 and credit Overhead $37,200

Phoenix Corporation The records of Phoenix Corporation revealed the following data for the current year. Refer to Phoenix Corporation.Assume that Phoenix has underapplied overhead of $10,000 and that this amount is immaterial.What is the balance in Cost of Goods Sold after the underapplied overhead is closed? A)$133,650 B)$123,650 C)$143,650 D)$137,803

Phoenix Corporation The records of Phoenix Corporation revealed the following data for the current year. Refer to Phoenix Corporation.Assume that Phoenix has overapplied overhead of $25,000 and that this amount is material.What is the balance in Cost of Goods Sold after the overapplied overhead is closed? A)$123,267 B)$144,033 C)$158,650 D)$108,650

Ryan Corporation is relocating its facilities.The company estimates that it will take three trucks to move office contents.If the per truck rental charge is $1,000 plus 25 cents per mile,what is the expected cost to move 800 miles? A)$1,000 B)$1,200 C)$2,400 D)$3,600

Texoma Trucking Company is exploring different prediction models that can be used to forecast indirect labor costs.One independent variable under consideration is machine hours.Following are matching observations on indirect labor costs and machine hours for the past six months: In a high-low model,which months' observations would be used to compute the model's parameters? A)2 and 5 B)1 and 6 C)2 and 6 D)4 and 5

Consider the following three product costing alternatives: process costing,job order costing,and standard costing.Which of these can be used in conjunction with absorption costing? A)job order costing B)standard costing C)process costing D)all of the above

Another name for absorption costing is A)full costing. B)direct costing. C)job order costing. D)fixed costing.

If a firm produces more units than it sells,absorption costing,relative to variable costing,will result in A)higher income and assets. B)higher income but lower assets. C)lower income but higher assets. D)lower income and assets.

Under absorption costing,fixed manufacturing overhead could be found in all of the following except the A)work-in-process account. B)finished goods inventory account. C)Cost of Goods Sold. D)period costs.

If a firm uses absorption costing,fixed manufacturing overhead will be included A)only on the balance sheet. B)only on the income statement. C)on both the balance sheet and income statement. D)on neither the balance sheet nor income statement.

Under absorption costing,if sales remain constant from period 1 to period 2,the company will report a larger income in period 2 when A)period 2 production exceeds period 1 production. B)period 1 production exceeds period 2 production. C)variable production costs are larger in period 2 than period 1. D)fixed production costs are larger in period 2 than period 1.

The FASB requires which of the following to be used in preparation of external financial statements? A)variable costing B)standard costing C)activity-based costing D)absorption costing

An ending inventory valuation on an absorption costing balance sheet would A)sometimes be less than the ending inventory valuation under variable costing. B)always be less than the ending inventory valuation under variable costing. C)always be the same as the ending inventory valuation under variable costing. D)always be greater than or equal to the ending inventory valuation under variable costing.

Absorption costing differs from variable costing in all of the following except A)treatment of fixed manufacturing overhead. B)treatment of variable production costs. C)acceptability for external reporting. D)arrangement of the income statement.

Which of the following is not associated with absorption costing? A)functional format B)gross margin C)period costs D)contribution margin

Unabsorbed fixed overhead costs in an absorption costing system are A)fixed manufacturing costs not allocated to units produced. B)variable overhead costs not allocated to units produced. C)excess variable overhead costs. D)costs that cannot be controlleD.

Profit under absorption costing may differ from profit determined under variable costing.How is this difference calculated? A)Change in the quantity of all units in inventory times the relevant fixed costs per unit. B)Change in the quantity of all units produced times the relevant fixed costs per unit. C)Change in the quantity of all units in inventory times the relevant variable cost per unit. D)Change in the quantity of all units produced times the relevant variable cost per unit.

What factor,related to manufacturing costs,causes the difference in net earnings computed using absorption costing and net earnings computed using variable costing? A)Absorption costing considers all costs in the determination of net earnings,whereas variable costing considers fixed costs to be period costs. B)Absorption costing allocates fixed overhead costs between cost of goods sold and inventories,and variable costing considers all fixed costs to be period costs. C)Absorption costing "inventories" all direct costs,but variable costing considers direct costs to be period costs. D)Absorption costing "inventories" all fixed costs for the period in ending finished goods inventory,but variable costing expenses all fixed costs.

The costing system that classifies costs by functional group only is A)standard costing. B)job order costing. C)variable costing. D)absorption costing.

A functional classification of costs would classify "depreciation on office equipment" as a A)product cost. B)general and administrative expense. C)selling expense. D)variable cost.

The costing system that classifies costs by both functional group and behavior is A)process costing. B)job order costing. C)variable costing. D)absorption costing.

Under variable costing,which of the following are costs that can be inventoried? A)variable selling and administrative expense B)variable manufacturing overhead C)fixed manufacturing overhead D)fixed selling and administrative expense

Consider the following three product costing alternatives: process costing,job order costing,and standard costing.Which of these can be used in conjunction with variable costing? A)job order costing B)standard costing C)process costing D)all of them

Another name for variable costing is A)full costing. B)direct costing. C)standard costing. D)adjustable costing.

If a firm uses variable costing,fixed manufacturing overhead will be included A)only on the balance sheet. B)only on the income statement. C)on both the balance sheet and income statement. D)on neither the balance sheet nor income statement.

When variable costing is used, A)all product costs are considered to be variable. B)all period costs are considered to be variable. C)all product costs are considered to be fixed. D)product costs are separated into fixed and variable components.

How will a favorable volume variance affect net income under each of the following methods? A)reduce no effect B)reduce increase C)increase no effect D)increase reduce

Variable costing considers which of the following to be product costs? A)yes no yes no B)yes no yes yes C)no no yes yes D)no no yes no

The variable costing format is often more useful to managers than the absorption costing format because A)costs are classified by their behavior. B)costs are always lower. C)it is required for external reporting. D)it justifies higher product prices.

The difference between the reported income under absorption and variable costing is attributable to the difference in the A)income statement formats. B)treatment of fixed manufacturing overhead. C)treatment of variable manufacturing overhead. D)treatment of variable selling,general,and administrative expenses.

Which of the following costs will vary directly with the level of production? A)total manufacturing costs B)total period costs C)variable period costs D)variable product costs

On the variable costing income statement,the difference between the "contribution margin" and "income before income taxes" is equal to A)the total variable costs. B)the Cost of Goods Sold. C)total fixed costs. D)the gross margin.

For financial reporting to the IRS and other external users,manufacturing overhead costs are A)deducted in the period that they are incurred. B)inventoried until the related products are sold. C)treated like period costs. D)inventoried until the related products have been completeD.

In the application of "variable costing" as a cost-allocation process in manufacturing, A)variable direct costs are treated as period costs. B)nonvariable indirect manufacturing costs are treated as product costs. C)variable indirect manufacturing costs are treated as product costs. D)nonvariable direct costs are treated as product costs.

A basic concept of variable costing is that period costs should be currently expensed.What is the rationale behind this procedure? A)Period costs are uncontrollable and should not be charged to a specific product. B)Period costs are generally immaterial in amount and the cost of assigning the amounts to specific products would outweigh the benefits. C)Allocation of period costs is arbitrary at best and could lead to erroneous decision by management. D)Because period costs will occur whether production occurs,it is improper to allocate these costs to production and defer a current cost of doing business.

Which of the following is a term more descriptive of the term "direct costing"? A)out-of-pocket costing B)variable costing C)relevant costing D)prime costing

What costs are treated as product costs under variable (direct)costing? A)only direct costs B)only variable production costs C)all variable costs D)all variable and fixed manufacturing costs

Which of the following must be known about a production process in order to institute a variable costing system? A)the variable and fixed components of all costs related to production B)the controllable and non-controllable components of all costs related to production C)standard production rates and times for all elements of production D)contribution margin and break-even point for all goods in production

Why is variable costing not in accordance with generally accepted accounting principles? A)Fixed manufacturing costs are treated as period costs under variable costing. B)Variable costing procedures are not well known in industry. C)Net earnings are always overstated when using variable costing procedures. D)Variable costing ignores the concept of lower of cost or market when valuing inventory.

Which of the following is an argument against the use of direct (variable)costing? A)Absorption costing overstates the balance sheet value of inventories. B)Variable factory overhead is a period cost. C)Fixed manufacturing overhead is difficult to allocate properly. D)Fixed manufacturing overhead is necessary for the production of a product.

Which of the following statements is true for a firm that uses variable costing? A)The cost of a unit of product changes because of changes in the number of units manufactured. B)Profits fluctuate with sales. C)An idle facility variation is calculated. D)None of the above.

An income statement is prepared as an internal report.Under which of the following methods would the term contribution margin appear? A)no no B)no yes C)yes no D)yes yes

In an income statement prepared as an internal report using the variable costing method,fixed manufacturing overhead would A)not be used. B)be used in the computation of operating income but not in the computation of the contribution margin. C)be used in the computation of the contribution margin. D)be treated the same as variable manufacturing overheaD.

Variable costing has an advantage over absorption costing for which of the following purposes? A)analysis of profitability of products,territories,and other segments of a business B)determining the CVP relationship among the major factors of selling price,sales mix,and sales volume C)minimizing the effects of inventory changes on net income D)all of the above

In the variable costing income statement,which line separates the variable and fixed costs? A)selling expenses B)general and administrative expense C)product contribution margin D)total contribution margin

A firm presently has total sales of $100,000.If its sales rise,its A)net income based on variable costing will go up more than its net income based on absorption costing. B)net income based on absorption costing will go up more than its net income based on variable costing. C)fixed costs will also rise. D)per unit variable costs will rise.

Wyatt Corporation Wyatt Corporation has the following standard costs associated with the manufacture and sale of one of its products: Refer to Wyatt Corporation.Under absorption costing,the standard production cost per unit for the current year was A)$ 7.30. B)$11.30. C)$11.55. D)$13.05.

Wyatt Corporation Wyatt Corporation has the following standard costs associated with the manufacture and sale of one of its products: Refer to Wyatt Corporation.The volume variance under absorption costing is A)$8,000 F. B)$4,000 F. C)$4,000 U. D)$8,000 U.

Wyatt Corporation Wyatt Corporation has the following standard costs associated with the manufacture and sale of one of its products: Refer to Wyatt Corporation.Under variable costing,the standard production cost per unit for the current year was A)$11.30. B)$7.30. C)$7.55. D)$11.55.

Wyatt Corporation Wyatt Corporation has the following standard costs associated with the manufacture and sale of one of its products: Refer to Wyatt Corporation.Based on variable costing,the income before income taxes for the year was A)$570,600. B)$560,000. C)$562,600. D)$547,500.

Richardson Company The following information is available for Richardson Company for its first year of operations: Refer to Richardson Company.If Richardson Company had used variable costing,what amount of income before income taxes would it have reported? A)$30,000 B)($7,500) C)$67,500 D)cannot be determined from the information given

Richardson Company The following information is available for Richardson Company for its first year of operations: Refer to Richardson Company.What was the total amount of Selling,General and Administrative expense incurred by Richardson Company? A)$30,000 B)$62,500 C)$6,000 D)can't be determined from the information given

Richardson Company The following information is available for Richardson Company for its first year of operations: Refer to Richardson Company.If Richardson Company were using variable costing,what would it show as the value of ending inventory? A)$120,000 B)$64,500 C)$27,000 D)$24,000

Truman Corporation The following information has been extracted from the financial records of Truman Corporation for its first year of operations: Refer to Truman Corporation.Based on absorption costing,Truman Corporation's income in its first year of operations will be A)$21,000 higher than it would be under variable costing. B)$70,000 higher than it would be under variable costing. C)$30,000 higher than it would be under variable costing. D)higher than it would be under variable costing,but the exact difference cannot be determined from the information given.

Truman Corporation The following information has been extracted from the financial records of Truman Corporation for its first year of operations: Refer to Truman Corporation.Based on absorption costing,the Cost of Goods Manufactured for Truman Corporation's first year would be A)$200,000. B)$270,000. C)$300,000. D)$210,000.

Truman Corporation The following information has been extracted from the financial records of Truman Corporation for its first year of operations: Refer to Truman Corporation.Based on absorption costing,what amount of period costs will Truman Corporation deduct? A)$70,000 B)$79,000 C)$30,000 D)$58,000

For its most recent fiscal year,a firm reported that its contribution margin was equal to 40 percent of sales and that its net income amounted to 10 percent of sales.If its fixed costs for the year were $60,000,how much were sales? A)$150,000 B)$200,000 C)$600,000 D)can't be determined from the information given

At its present level of operations,a small manufacturing firm has total variable costs equal to 75 percent of sales and total fixed costs equal to 15 percent of sales.Based on variable costing,if sales change by $1.00,income will change by A)$0.25. B)$0.10. C)$0.75. D)can't be determined from the information given.

The following information regarding fixed production costs from a manufacturing firm is available for the current year: Which of the following statements is not true? A)The maximum amount of fixed production costs that this firm could deduct using absorption costs in the current year is $116,000. B)The maximum difference between this firm's the current year income based on absorption costing and its income based on variable costing is $16,000. C)Using variable costing,this firm will deduct no more than $16,000 for fixed production costs. D)If this firm produced substantially more units than it sold in the current year,variable costing will probably yield a lower income than absorption costing.

Ellis Corporation The following information was extracted from the first year absorption-based accounting records of Ellis Corporation Refer to Ellis Corporation.What is Cost of Goods Sold for Ellis Corporation's first year? A)$80,000 B)$90,000 C)$48,000 D)can't be determined from the information given

Ellis Corporation The following information was extracted from the first year absorption-based accounting records of Ellis Corporation Refer to Ellis Corporation.If Ellis Corporation had used variable costing in its first year of operations,how much income (loss)before income taxes would it have reported? A)($6,000) B)$54,000 C)$26,000 D)$ 2,000

Ellis Corporation The following information was extracted from the first year absorption-based accounting records of Ellis Corporation Refer to Ellis Corporation.Based on variable costing,if Ellis had sold 12,001 units instead of 12,000,its income before income taxes would have been A)$9.50 higher. B)$11.00 higher. C)$8.50 higher. D)$8.33 higher.

Rosewood Corporation Rosewood Corporation produces a single product.The following cost structure applied to its first year of operations: Refer to Rosewood Corporation.Assume for this question only that during the current year Rosewood Corporation manufactured 5,000 units and sold 3,800.There was no beginning or ending work-in-process inventory.How much larger or smaller would Rosewood Corporation's income be if it uses absorption rather than variable costing? A)The absorption costing income would be $6,000 larger. B)The absorption costing income would be $6,000 smaller. C)The absorption costing income would be $4,800 larger. D)The absorption costing income would be $4,000 smaller.

Rosewood Corporation Rosewood Corporation produces a single product.The following cost structure applied to its first year of operations: Refer to Rosewood Corporation.Assume for this question only that Rosewood Corporation manufactured and sold 5,000 units in the current year.At this level of activity it had an income of $30,000 using variable costing.What was the sales price per unit? A)$16.00 B)$18.80 C)$12.80 D)$14.80

Rosewood Corporation Rosewood Corporation produces a single product.The following cost structure applied to its first year of operations: Refer to Rosewood Corporation.Assume for this question only that Rosewood Corporation produced 5,000 units and sold 4,500 units in the current year.If Rosewood uses absorption costing,it would deduct period costs of A)$24,000. B)$34,000. C)$27,000. D)$23,000.

Rosewood Corporation Rosewood Corporation produces a single product.The following cost structure applied to its first year of operations: Refer to Rosewood Corporation.Assume for this question only that Rosewood Corporation manufactured 5,000 units and sold 4,000 in the current year.If Rosewood employs a costing system based on variable costs,the company would end the current year with a finished goods inventory of A)$4,000. B)$8,000. C)$6,000. D)$5,000.

Delta,Epilson,and Sigma Companies Three new companies (Delta,Epilson,and Sigma)began operations on January 1 of the current year.Consider the following operating costs that were incurred by these companies during the complete calendar year: Refer to Delta,Epilson,and Sigma Companies.Based on sales of 7,000 units,which company will report the greater income before income taxes if absorption costing is used? A)Delta Company B)Epsilon Company C)Sigma Company D)All of the companies will report the same income.

Delta,Epilson,and Sigma Companies Three new companies (Delta,Epilson,and Sigma)began operations on January 1 of the current year.Consider the following operating costs that were incurred by these companies during the complete calendar year: Refer to Delta,Epilson,and Sigma Companies.Based on sales of 7,000 units,which company will report the greater income before income taxes if variable costing is used? A)Delta Company B)Epsilon Company C)Sigma Company D)All of the companies will report the same income.

Delta,Epilson,and Sigma Companies Three new companies (Delta,Epilson,and Sigma)began operations on January 1 of the current year.Consider the following operating costs that were incurred by these companies during the complete calendar year: Refer to Delta,Epilson,and Sigma Companies.Based on sales of 10,000 units,which company will report the greater income before income taxes if variable costing is used? A)Delta Company B)Epsilon Company C)Sigma Company D)All of the companies will report the same income before income taxes.

A firm has fixed costs of $200,000 and variable costs per unit of $6.It plans on selling 40,000 units in the coming year.To realize a profit of $20,000,the firm must have a sales price per unit of at least A)$11.00. B)$11.50. C)$10.00. D)$10.50.

Hahn Corporation Hahn Corporation produces a single product that sells for $7.00 per unit.Standard capacity is 100,000 units per year;100,000 units were produced and 80,000 units were sold during the year.Manufacturing costs and selling and administrative expenses are presented below. There were no variances from the standard variable costs.Any under- or overapplied overhead is written off directly at year-end as an adjustment to cost of goods sold. Hahn Corporation had no inventory at the beginning of the year. Refer to Hahn Corporation.In presenting inventory on the balance sheet at December 31,the unit cost under absorption costing is A)$2.50. B)$3.00. C)$3.50. D)$4.50.

Hahn Corporation Hahn Corporation produces a single product that sells for $7.00 per unit.Standard capacity is 100,000 units per year;100,000 units were produced and 80,000 units were sold during the year.Manufacturing costs and selling and administrative expenses are presented below. There were no variances from the standard variable costs.Any under- or overapplied overhead is written off directly at year-end as an adjustment to cost of goods sold. Hahn Corporation had no inventory at the beginning of the year. Refer to Hahn Corporation.What is the net income under variable costing? A)$50,000 B)$80,000 C)$90,000 D)$120,000

Hahn Corporation Hahn Corporation produces a single product that sells for $7.00 per unit.Standard capacity is 100,000 units per year;100,000 units were produced and 80,000 units were sold during the year.Manufacturing costs and selling and administrative expenses are presented below. There were no variances from the standard variable costs.Any under- or overapplied overhead is written off directly at year-end as an adjustment to cost of goods sold. Hahn Corporation had no inventory at the beginning of the year. Refer to Hahn Corporation.What is the net income under absorption costing? A)$50,000 B)$80,000 C)$90,000 D)$120,000

What are three reasons that overhead must be allocated to products?

Why should predetermined overhead rates be used?

What are the primary reasons for using a predetermined overhead rate?

Discuss underapplied and overapplied overhead and its disposition at the end of the period.

List and explain the four alternative measures of capacity.

Discuss the application of the high-low method.

Why do managers frequently prefer variable costing to absorption costing for internal use?

Why is variable costing not used extensively in external reporting?

How can a company produce both variable and absorption costing information from a single accounting system?

What are the major differences between variable and absorption costing?

Why is absorption costing not used for CVP analysis?

How do differences in sales and production level affect net income computed under absorption costing and variable costing?

Cooper Industries has the following data for the current year: What is the amount of under- or overapplied overhead? Prepare the necessary journal entry to dispose of under- or overapplied overhead.

Terrell Corporation has the following data relating to its power usage for the first six months of the current year.

Crafton Corporation applies overhead at the rate of 70 percent of direct labor.Crafton incurred $450,000 of direct labor during the current year.Crafton incurred actual overhead of $367,000. (a)Compute the amount of under- or overapplied overhead for Crafton Corporation for the current year (b)Prepare the necessary journal entry to dispose of the under- or overapplied overhead (assuming that the amount is immaterial).

Dollarwise Trainers provides a personalized training program that is popular with many companies.The number of programs offered over the last five months,and the costs of offering these programs are as follows:

The facility manager of Tovar Corporation asked the systems analyst for information to help in forecasting handling costs.The following printout was generated using the least squares regression method.

Buxton Office Supply Company has the following information available regarding costs and revenues for two recent months.Selling price is $20.

Thompson Enterprises owns two luxury automobiles that are used by employees on company business.Mileage and expenses,excluding depreciation,by quarters for the most recent year are presented below:

On December 30,a fire destroyed most of the accounting records of the Stone Division,a small one-product manufacturing division that uses standard costs and flexible budgets.All variances are written off as additions to (or deductions from)income;none are pro-rated to inventories.You have the task of reconstructing the records for the year.The general manager informs you that the accountant has been experimenting with both absorption costing and variable costing. The following information is available for the current year:

Owens Athletics,Inc.has developed a new design to produce hurdles that are used in track and field competition.The company's hurdle design is innovative in that the hurdle yields when hit by a runner and its height is extraordinarily easy to adjust.Management estimates expected annual capacity to be 90,000 units;overhead is applied using expected annual capacity.The company's cost accountant predicts the following current year activities and related costs:

Dynamic Designs,Inc.has developed a new design to produce track shoes that are used in cross-country races.The company's shoe design is innovative in that the insole is made od a product that provides a greater cushion and adapts more easily to a runner's foot.Management estimates expected annual capacity to be 80,000 units;overhead is applied using expected annual capacity.The company's cost accountant predicts the following current year activities and related costs:

Vidal Corporation produces a single product.The following is a cost structure applied to its first year of operations.

Terry Smith Corporation used least squares regression analysis to obtain the following output: