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Exam 20: Variable Costing for Management Analysis

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Question 31

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

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

E) C) and D)
F) B) and D)

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Question 32

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Accountants prefer the variable costing method over absorption costing method for evaluating the performance of a company 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 manufactured and sales remain the same.
D) by using the variable costing method,all fixed and variable costs are included in the unit cost of the product manufactured.

E) A) and C)
F) B) and D)

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Question 33

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For a period during which the quantity of inventory at the end was smaller than that at the beginning,income from operations reported under variable costing will be smaller than income from operations reported under absorption costing.

What is the amount of the contribution margin that would be reported on the variable costing income statement?

A business operated at 100% of capacity during its first month and incurred the following costs: ​ If 500 units remain unsold at the end of the month,what is the amount of inventory that would be reported on the variable costing balance sheet?

In contribution margin analysis,the effect of a difference in unit sales price or unit cost on the number of units sold is termed the unit price or unit cost factor.

If variable selling and administrative expenses totaled $120,000 for the year (80,000 units at $1.50 each) and the planned variable selling and administrative expenses totaled $136,500 (78,000 units at $1.75 each) ,the effect of the unit cost factor on the change in contribution margin is:

A business operated at 100% of capacity during its first month and incurred the following costs: ​ If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month,what would be the amount of income from operations reported on the variable costing income statement?

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost,direct labor cost,and all factory overhead cost?

In the short run,the selling price of a product should normally not be less than the variable costs and expenses of making and selling it.

If variable cost of goods sold totaled $80,000 for the year (16,000 units at $5.00 each) and the planned variable cost of goods sold totaled $86,250 (15,000 units at $5.75 each) ,the effect of the unit cost factor on the change in contribution margin is:

On the variable costing income statement,deduction of the variable cost of goods sold from sales yields manufacturing margin.

Managers in service firms do not find contribution margin analysis reports useful because their firms do not sell inventory.

Under variable costing,which of the following costs would be included in finished goods inventory?

A change in the amount of sales can be due to either a change in the units sold or a change in price or both.

Ford's Expedition sport utility vehicle is its most profitable model.Therefore,Ford need not promote its Expedition model anymore.

Electricity purchased to operate factory machinery would be included as part of the cost of products manufactured under the absorption costing concept.

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

The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured:

Property tax expense is an example of a controllable cost for the supervisor of a manufacturing department.