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Exam 21: Variable Costing for Management Analysis

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Question 41

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Match each of the following descriptions with the appropriate costing concept (a-c). -Includes gross profit on the income statement A)Absorption costing only B)Variable costing only C)Both absorption and variable costing

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Question 42

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Management should focus its sales and production efforts on the product or products that will provide the

A) highest sales revenue
B) lowest product costs
C) maximum contribution margin
D) lowest direct labor hours

E) A) and C)
F) All of the above

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Question 43

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Gyro Company manufactures Products T and W and is operating at full capacity. Manufacturing Product W requires three times the number of machine hours required for Product T. Market research indicates that 1,000 additional units of Product W could be sold. The contribution margin by unit of product is as follows: Determine the increase or decrease in total contribution margin if 1,000 additional units of Product W are produced and sold.​

Property taxes on a factory building would be included as part of the cost of products manufactured under the absorption costing concept.

A business operated at 100% of capacity during its first month, with the following results: ​ -The amount of gross profit that would be reported on the absorption costing income statement is

Fixed costs are $10 per unit, and variable costs are $25 per unit. Production was 13,000 units, while sales were 12,000 units. Determine (a) whether variable costing operating income is less than or greater than absorption costing operating income and (b) the difference in variable costing and absorption costing operating income.

The following data are for Trendy Fashion Apparel: Determine the contribution margin for (a) Skirts and (b) the South Region.

For a supervisor of a manufacturing department, which of the following costs is controllable?

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,600 units remain unsold at the end of the month, the amount of inventory that would be reported on the variable costing balance sheet is

Which of the following would not be an appropriate activity base for cost analysis in a service firm?

For a period during which the quantity of product manufactured is less than the quantity sold, operating income reported under absorption costing will be smaller than operating income reported under variable costing.

Another name for variable costing is

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, the amount of operating income reported on the absorption costing income statement would be

Under variable costing, which of the following costs would not be included in finished goods inventory?

A business operated at 100% of capacity during its first month, with the following results: The amount of manufacturing margin that would be reported on the variable costing income statement is

On the absorption costing income statement, deduction of the cost of goods sold from sales yields net profit.

On the variable costing income statement, variable selling and administrative expenses are deducted from manufacturing margin to yield contribution margin.

Match each of the following descriptions with the appropriate costing concept (a-c). -Operating income impacted by changes in inventory level A)Absorption costing only B)Variable costing only C)Both absorption and variable costing

A business operated at 100% of capacity during its first month, with the following results: ​ -The amount of operating income that would be reported on the absorption costing income statement is

The factory superintendent's salary would be included as part of the cost of products manufactured under the absorption costing concept.