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Exam 20: Variable Costing for Management Analysis

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Question 51

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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?

A) $41,500
B) $36,000
C) $42,800
D) $38,500

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Question 52

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On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is the:

A) fixed manufacturing costs
B) variable cost of goods sold
C) fixed selling and administrative expenses
D) variable selling and administrative expenses

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Question 53

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In determining cost of goods sold, two alternate costing concepts can be used: absorption costing and variable costing.

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

In a service firm, it may be necessary to have several activity bases to properly match the change in costs with the changes in various activities.

MATCHING -May be used in a manufacturing company.

Changes in the quantity of finished goods inventory, caused by differences in the levels of sales and production, directly affect the amount of income from operations reported under absorption costing.

Variable costing is also known as direct costing.

Accountants prefer the variable costing method over absorption costing method for evaluating the performance of a company because

Under which inventory costing method could increases or decreases in income from operations be misinterpreted to be the result of operating efficiencies or inefficiencies?

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

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

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

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 quantity factor on the change in contribution margin is:

A business operated at 100% of capacity during its first month, with the following results: Operating expenses: -What is the amount of the contribution margin that would be reported on the variable costing income statement?

Which of the following isare) reasons) for easy identification and control of variable manufacturing costs under the variable costing method?

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

Under absorption costing, the amount of income reported from operations can be increased by producing more units than are sold.

The contribution margin ratio is computed as:

Philadelphia Company has the following information for March: Determine the March a) manufacturing margin, b) contribution margin, and c) income from operations for Philadelphia Company.