A business operated at 100% of capacity during its first month, with the following results:
Sales (90 units)
|
|
$90,000
|
Production costs (100 units):
|
|
|
Direct materials
|
$40,000
|
|
Direct labor
|
20,000
|
|
Variable factory overhead
|
2,000
|
|
Fixed factory overhead
|
7,000
|
69,000
|
Operating expenses:
Variable operating expenses
|
$ 8,000
|
|
Fixed operating expenses
|
1,000
|
9,000
|
101.What is the amount of the contribution margin that would be reported on the variable costing income statement?
a. $34,200
b. $20,200
c. $29,700
d. $26,200
102.What is the amount of the income from operations that would be reported on the variable costing incomestatement?
a. $18,900
b. $18,200
c. $18,000
d. $21,000
103.What is the amount of the income from operations that would be reported on the absorption costing incomestatement?
a. $21,000
b. $18,900
c. $18,200
d. $27,900
104.What is the amount of the gross profit that would be reported on the absorption costing income statement?
a. $21,000
b. $18,900
c. $27,900
d. $18,000
105.Accountants prefer the variable costing method over absorption costing method for evaluating the performance of acompany because
a.by using the absorption costing method, income could appear to be higher by producing more inventory.
b.by using the absorption costing method, income could appear to be lower by producing more inventory.
c.by using the variable costing method, the cost of goods sold will be higher as more units are manufacturedand sales remain the same.
d.by using the variable costing method, all fixed and variable costs are included in the unit cost of the productmanufactured.
106.Under which inventory costing method could increases or decreases in income from operations be misinterpreted tobe the result of operating efficiencies or inefficiencies?
a.only variable costing
b.only absorption costing
c.both variable and absorption costing
d.neither variable nor absorption costing
107.It would be acceptable to have the selling price of a product just above the variable costs and expenses of makingand selling it in:
a.the long run
b.the short run
c.both the short run and long run
d.neither in the short run nor the long run
108.Costs that can be influenced by management at a specific level of management are called:
a.direct costs.
b.variable costs.
c.noncontrollable costs.
d.controllable costs.
109.Which of the following is(are) reason(s) for easy identification and control of variable manufacturing costs underthe variable costing method?
a.variable and fixed costs are reported separately.
b.variable costs can be controlled by the operating management.
c.fixed costs, such as property insurance, are normally the responsibility of higher management not theoperating management.
d.All of the above are true.
110.Management will use both variable and absorption costing in all of the following activities
except:
a.controlling costs
b.product pricing
c.production planning
d.controlling inventory levels