Question :
61. Which of the following a valid reason for using variable : 1208029
61. Which of the following is a valid reason for using variable costing?
A. Fixed production cost should be ignored when costing units of inventory since it is not essential to the production process.
B. Absorption costing may motivate managers to overproduce in order to increase profits.
C. Absorption costing recognizes fixed costs as expense regardless of volume of production.
D. Under variable costing managers can increase profitability by increasing the volume of production.
62. Which of the following statements is true for a company that uses variable costing?
A. The manufacturing cost per unit decreases when the volume of production increases.
B. There is a proportionate relationship between sales and contribution margin.
C. Fixed manufacturing overhead is treated like a product cost.
D. Fixed manufacturing overhead costs incurred in the current period may be recognized as expense in a later period.
63. Lincoln Company produced 8,000 units of inventory and sold 6,000. The company incurred the following production costs:
Variable manufacturing cost: $6.00 per unit
Fixed manufacturing overhead cost: a total of $30,000
Assuming the company sells its product at a price of $12 per unit, what is the amount of net income under variable costing?
A. $58,500
B. $36,000
C. $13,500
D. $6,000
64. Bush Company produced 8,000 units of inventory and sold 6,000 of them. The company incurred the following production costs:
Variable manufacturing cost: $6.00 per unit
Fixed manufacturing overhead cost: a total of $30,000
Assuming the company sells its product at a price of $12 per unit, what is the amount of net income under absorption costing?
A. $58,500
B. $36,000
C. $13,500
D. $6,000
65. The accounting records for Eisenhower Manufacturing Company disclosed the following cost information for 2012:
Assume the company produced 10,000 units of inventory, sold 6,000 of these units in 2012 for $98,000, and that there was no beginning inventory. The cost per unit under variable and absorption costing would be, respectively:
A. $2.50 and $5.50.
B. $7.00 and $5.00.
C. $8.00 and $13.00.
D. $9.50 and $15.00.
66. The accounting records for Polk Manufacturing Company disclosed the following cost information for 2012:
Assume the company produced 10,000 units of inventory, sold 6,000 of these units in 2012 for $98,000, and that there was no beginning inventory. What amount of ending inventory will be reported on the balance sheet under absorption costing?
A. $32,000
B. $130,000
C. $48,000
D. $52,000
67. The accounting records for Filmore Manufacturing Company disclosed the following cost information for 2012:
Assume the company produced 10,000 units of inventory, sold 6,000 of these units in 2012 for $96,000, and that there was no beginning inventory. Under variable costing, the contribution margin for the year would be:
A. $50,000.
B. $48,000.
C. $20,000.
D. None of the other answers are correct.
68. The accounting records for Adams Manufacturing Company disclosed the following cost information for 2012:
Assume the company produced 10,000 units of inventory, sold 6,000 of these units in 2012 for $98,000, and that there was no beginning inventory. What amount of ending inventory will be reported on the balance sheet under variable costing?
A. $52,000
B. $50,000
C. $48,000
D. None of the other answers are correct.
69. Which of the following statements is false?
A. Under absorption costing some fixed manufacturing costs are deferred in ending inventory if production is greater than sales.
B. When production and sales are equal, net income will be greater under variable costing than it will be under absorption costing.
C. Under absorption costing only the fixed manufacturing cost associated with inventory sold are expensed.
D. Under variable costing fixed manufacturing costs are expensed in the period in which they are incurred regardless of when the inventory is sold.
70. Hansen Company paid $48,000 cash to purchase raw materials. The recognition of this event will:
A. Not affect total assets, total equity, and net income.
B. Decrease total assets, total equity, and net income.
C. Not affect total assets, decrease net income and cash flow.
D. Decrease total assets, net income, and net cash flow from investing activities.
