Use the information below to answer the following question(s).
Beauty Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs.
January
February
Beginning inventory
0
—
Production
2,500
3,000
Sales
2,250
3,025
Other information:
Selling price
$20.00
Standard variable manufacturing cost/unit
$8.00
Standard variable market/admin. cost/unit
$4.00
Standard fixed manufacturing overhead cost/month
$40,000
Standard fixed market/admin. cost/month
$20,000
Budgeted denominator level per month (output units)
4,000
There were no beginning or ending inventories of materials or work-in-process.
31) What is the per unit variable cost?
A) $22.00
B) $18.00
C) $14.00
D) $12.00
E) $11.00
32) What is the per unit manufacturing cost using absorption costing?
A) $23.00
B) $18.00
C) $27.00
D) $12.00
E) $10.00
33) What would Beauty Supply Company’s operating income (loss) be for January and February, respectively, using the variable costing approach?
A) $18,000 and $24,200
B) $(45,000) and $(35,500)
C) $(44,000) and $(33,809)
D) $(42,000) and $(35,800)
E) $18,000 and $(35,800)
34) Advanced Lighting’s total variable costs are $102 and total manufacturing costs are $98. Standard variable marketing/administrative costs constitute 20 percent of the total variable costs. Respectively, what are Advanced Lighting’s standard variable manufacturing costs and standard fixed manufacturing costs?
A) $77.60 and $81.60
B) $78.40 and $98.00
C) $81.60 and $16.40
D) $81.60 and $77.60
E) $78.40 and $16.40
35) When the distinction between variable and fixed costs is one of the important elements in the preparation of the income statement, the method used should be the
A) capitalization method.
B) contribution margin method.
C) gross margin method.
D) inventorial method.
E) absorption method.
36) Which of the following is correct concerning variable vs absorption costing?
A) Absorption costing income statement classifies fixed costs as period costs.
B) The absorption costing income statement combines costs by cost behaviour.
C) Absorption costing income statements need to differentiate between variable and fixed costs.
D) The difference in operating income between the two approaches is captured by the difference between fixed manufacturing costs in ending inventory minus fixed manufacturing costs in opening inventory.
E) The difference in operating income between the two approaches is captured by the difference between fixed manufacturing costs in ending inventory minus variable manufacturing costs in ending inventory.
37) Which of the following variances exists only under absorption costing?
A) spending variance
B) efficiency variances
C) sales-volume variance
D) variable overhead flexible budget variance
E) production-volume variance
Use the information below to answer the following question(s).
Car Tunes produces car radios. Actual fixed manufacturing overhead is the same as the budgeted amount, $330,000. Production in September increased by 10% over the previous month’s production. August production was 5,000 radios. The production level is the same as the budgeted denominator level. At the end of September, 1,000 radios remained in stock. In August, all of the radios were sold by the end of the month and there was no remaining work in process inventory.
38) What are Car Tune’s appropriate period costs for September if variable costing is used?
A) $330,000
B) $363,000
C) $550,000
D) $583,000
E) $630,000
39) What is the Car Tune’s September cost of goods sold amount if absorption costing is used?
A) $300,000
B) $266,000
C) $270,000
D) $258,600
E) $630,000
40) When large differences exist between practical capacity and master-budget capacity utilization, companies can classify part of the large difference as
A) production-volume variance.
B) sales volume variance.
C) normal capacity utilization.
D) theoretical capacity utilization.
E) planned unused capacity.
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