Question 1

The unit product cost under variable costing is:
A)$182
B)$92
C)$87
D)$94

Accepted Answer

Under variable costing, only variable costs are included in the cost of production. Fixed costs are treated as period expenses. 
Variable cost per unit = (direct materials + direct labor + variable manufacturing overhead) = ($30 + $45 + $17) = $92 
Therefore, the unit product cost under variable costing is $92.

Question 2

For the period above, one would expect the net operating income under absorption costing to be:
A)higher than the net operating income under variable costing.
B)lower than the net operating income under variable costing.
C)the same as the net operating income under variable costing.
D)The relation between absorption costing net operating income and variable costing net operating income cannot be determineD.When production exceeds sales, net operating income under absorption costing will always be higher than under variable costing.A portion of fixed manufacturing cost will be deferred in ending inventory rather than being included in the income statement.

Accepted Answer

When production exceeds sales, absorption costing defers some fixed manufacturing costs in inventory, resulting in higher net operating income compared to variable costing.

Question 3

The company's net operating income for the year under variable costing is:
A)$60,000
B)$81,000
C)$57,000
D)$69,000

Accepted Answer

The answer of The company's net operating income for the...

Question 4

If Eagle had sold only 9,000 tables in its first year, what total amount of cost would have been assigned to the 1,000 tables in finished goods inventory under the absorption costing method?
A)$37,100
B)$45,800
C)$58,000
D)$74,200

Accepted Answer

The answer of If Eagle had sold only 9,000 tables...

Question 5

The carrying value on the balance sheet of the ending finished goods inventory under variable costing would be:
A)$16,000
B)$10,000
C)$19,000
D)$12,000

Accepted Answer

The answer of The carrying value on the balance sheet...

Question 6

The unit product cost under absorption costing is:
A)$92
B)$228
C)$182
D)$85

Accepted Answer

The answer of The unit product cost under absorption costing...

Question 7

The total gross margin for the month under the absorption costing approach is:
A)$49,400
B)$18,200
C)$73,400
D)$124,800

Accepted Answer

Unit product cost under absorption costing:
 11eaa48f_7ba5_bf90_9e4a_0dd4de7948c1_TB2485_00 
 11eaa48f_7ba5_bf91_9e4a_8b4ee407197f_TB2485_00

Question 8

Under absorption costing, the unit product cost is:
A)$9
B)$12
C)$13
D)$16

Accepted Answer

Under absorption costing, the unit product cost includes both variable and fixed manufacturing costs. Based on the given information, the unit product cost would be calculated as follows:

Direct materials per unit = $4
Direct labor per unit = $2
Variable manufacturing overhead per unit = $1
Fixed manufacturing overhead per unit = $6

Total unit product cost = $4 + $2 + $1 + $6 = $13

Therefore, the best choice is C, with a unit product cost of $13.

Question 9

The contribution margin per unit during July was:
A)$17
B)$20
C)$25
D)$6

Accepted Answer

Contribution margin per unit = Selling price per unit - Variable cost per unit
In July, the selling price per unit was $40 and the variable cost per unit was $20. 
Contribution margin per unit = $40 - $20 = $20.
Therefore, the answer is B.

Question 10

Under variable costing, the unit product cost is:
A)$20
B)$18
C)$15
D)$22

Accepted Answer

Under variable costing,the unit product cost is the variable manufacturing cost.

Question 11

What is the total period cost for the month under the absorption costing approach?
A)$104,400
B)$31,200
C)$13,000
D)$135,600

Accepted Answer

The answer of What is the total period cost for...

Question 12

What is the total period cost for the month under the variable costing approach?
A)$31,200
B)$104,400
C)$117,400
D)$135,600

Accepted Answer

The answer of What is the total period cost for...

Question 13

How would Eagle's absorption costing net operating income have been affected in its first year if 12,000 tables were produced instead of 10,000 and Eagle still sold 10,000 tables?
A)net operating income would not have been affected
B)net operating income would have been $27,000 higher
C)net operating income would have been $31,500 higher
D)net operating income would have been $116,000 lower

Accepted Answer

Absorption costing income statement with production and sales of 10,000 units:
 11eaa48f_7ba6_34c2_9e4a_c72650d74587_TB2485_00 
 11eaa48f_7ba6_5bd3_9e4a_63e662ec6ca4_TB2485_00 Absorption costing income statement with production of 12,000 units and sales of 10,000 units:
 11eaa48f_7ba6_5bd4_9e4a_3d6c3cc5422e_TB2485_00 
 11eaa48f_7ba6_5bd5_9e4a_b131a70dfed6_TB2485_00 Therefore,net operating income would have been $27,000 higher (= $398,000 - $371,000)

Question 14

Net operating income under the variable costing method for July would be:
A)$53,000
B)$49,800
C)$61,000
D)$57,000

Accepted Answer

The answer of Net operating income under the variable costing...

Question 15

The break-even point in units for the month under variable costing is:
A)6,850 units
B)4,000 units
C)3,200 units
D)5,100 units

Accepted Answer

The answer of The break-even point in units for the...

Question 16

For the month referred to above, net operating income under variable costing will be:
A)higher than net operating income under absorption costing.
B)lower than net operating income under absorption costing.
C)the same as net operating income under absorption costing.
D)The relation between variable costing and absorption costing net operating income cannot be determineD.Since production exceeds sales, the net operating income for variable costing will be lower than for absorption costing.This occurs because under absorption costing, some of the fixed manufacturing overhead cost is deferred in ending inventories.

Accepted Answer

Since production exceeds sales, the net operating income for variable costing will be lower than for absorption costing. This occurs because under absorption costing, some of the fixed manufacturing overhead cost is deferred in ending inventories.

Question 17

Under absorption costing, the unit product cost is:
A)$20
B)$18
C)$15
D)$25

Accepted Answer

The answer of Under absorption costing, the unit product cost...

Question 18

The total contribution margin for the month under the variable costing approach is:
A)$124,800
B)$49,400
C)$20,400
D)$143,000

Accepted Answer

The answer of The total contribution margin for the month...

Question 19

How would Eagle's variable costing net operating income have been affected in its first year if only 9,000 tables were sold instead of 10,000?
A)net operating income would have been $37,100 lower
B)net operating income would have been $45,800 lower
C)net operating income would have been $56,000 lower
D)net operating income would have been $62,000 lower

Accepted Answer

Unit CM = Selling price per unit - Variable expenses per unit
= $120 per unit - ($58 per unit + $6 per unit)= $120 per unit - $64 per unit = $56 per unit
Change in contribution margin = Unit CM ratio F1F1F1S1F1F1F10 Change in unit sales
= $56 per unit F1F1F1S1F1F1F10 1,000 units = $56,000
Since fixed expenses would not be affected by this change in unit sales,the change in contribution margin would drop directly to the bottom line,decreasing net operating income by $56,000.

Question 20

The carrying value on the balance sheet of the ending finished goods inventory under absorption costing would be:
A)$16,000
B)$10,000
C)$12,000
D)$21,000

Accepted Answer

Under absorption costing, the ending finished goods inventory includes both variable and fixed manufacturing costs. The ending finished goods inventory has a total cost of $12,000 ($6,000 variable costs + $6,000 fixed costs).

Quiz 4: Variable Costing and Segment Reporting: Tools for Management

The unit product cost under variable costing is:

For the period above, one would expect the net operating income under absorption costing to be:

The company's net operating income for the year under variable costing is:

If Eagle had sold only 9,000 tables in its first year, what total amount of cost would have been assigned to the 1,000 tables in finished goods inventory under the absorption costing method?

The carrying value on the balance sheet of the ending finished goods inventory under variable costing would be:

The unit product cost under absorption costing is:

The total gross margin for the month under the absorption costing approach is:

Under absorption costing, the unit product cost is:

The contribution margin per unit during July was:

Under variable costing, the unit product cost is:

What is the total period cost for the month under the absorption costing approach?

What is the total period cost for the month under the variable costing approach?

How would Eagle's absorption costing net operating income have been affected in its first year if 12,000 tables were produced instead of 10,000 and Eagle still sold 10,000 tables?

Net operating income under the variable costing method for July would be:

The break-even point in units for the month under variable costing is:

For the month referred to above, net operating income under variable costing will be:

Under absorption costing, the unit product cost is:

The total contribution margin for the month under the variable costing approach is:

How would Eagle's variable costing net operating income have been affected in its first year if only 9,000 tables were sold instead of 10,000?

The carrying value on the balance sheet of the ending finished goods inventory under absorption costing would be: