Question : 101. A business operated at 100% of capacity during its first : 1233844

 

101. A business operated at 100% of capacity during its first month, with the following results: 

Sales (80 units)

 

$80,000

Production costs (100 units):

 

 

  Direct materials

$50,000

 

  Direct labor

10,000

 

  Variable factory overhead

5,000

 

  Fixed factory overhead

  2,000

67,000

 

 

 

Operating expenses:

 

 

  Variable operating expenses

$ 6,000

 

  Fixed operating expenses

  1,000

7,000

 

 

 

What is the amount of the contribution margin that would be reported on the variable costing income statement? A. $15,000B. $19,400C. $28,000D. $22,000

102. A business operated at 100% of capacity during its first month, with the following results: 

Sales (80 units)

 

$80,000

Production costs (100 units):

 

 

  Direct materials

$50,000

 

  Direct labor

10,000

 

  Variable factory overhead

5,000

 

  Fixed factory overhead

  2,000

67,000

 

 

 

Operating expenses:

 

 

  Variable operating expenses

$ 6,000

 

  Fixed operating expenses

  1,000

7,000

 

 

 

What is the amount of the income from operations that would be reported on the variable costing income statement? A. $19,400B. $19,000C. $22,000D. $28,000

103. A business operated at 100% of capacity during its first month, with the following results: 

Sales (80 units)

 

$80,000

Production costs (100 units):

 

 

  Direct materials

$50,000

 

  Direct labor

10,000

 

  Variable factory overhead

5,000

 

  Fixed factory overhead

  2,000

67,000

 

 

 

Operating expenses:

 

 

  Variable operating expenses

$ 6,000

 

  Fixed operating expenses

  1,000

7,000

 

 

 

What is the amount of the income from operations that would be reported on the absorption costing income statement? A. $21,000B. $19,400C. $22,000D. $28,000

104. A business operated at 100% of capacity during its first month, with the following results: 

Sales (80 units)

 

$80,000

Production costs (100 units):

 

 

  Direct materials

$50,000

 

  Direct labor

10,000

 

  Variable factory overhead

5,000

 

  Fixed factory overhead

  2,000

67,000

 

 

 

Operating expenses:

 

 

  Variable operating expenses

$ 6,000

 

  Fixed operating expenses

  1,000

7,000

 

 

 

What is the amount of the gross profit that would be reported on the absorption costing income statement? A. $19,400B. $21,000C. $26,400D. $22,000

105. 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 method, more sales will be generated. 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.

106. Under which inventory costing method could increases or decreases in income from operations be misinterpreted to be the result of operating efficiencies or inefficiencies? A. Variable costingB. Absorption costingC. Incremental costingD. Differential costing

107. It would be acceptable to have the selling price of a product just above the variable costs and expenses of making and selling it in: A. the long runB. the short runC. both the short run and long runD. monopoly situations

108. Costs that can be influenced by management at a specific level of management are called: A. direct costs.B. indirect costs.C. noncontrollable costs.D. controllable costs.

109. Under the variable costing method variable manufacturing costs are easier to identify and control because: A. Variable and fixed costs are reported separately.B. Variable costs can be controlled by the operating management.C. Fixed costs, such as property insurance, are normally the responsibility of higher management not the operating management.D. All of the above are true.

110. Which of the following is not true when determining the selling price for a product? A. Absorption costing should be used to determine routine pricing which include both fixed and variable costs.B. As long as the selling price is set above the variable costs, the company will make a profit.C. Variable costing is effective when determining short run decisions, but absorption costing is generally used for long-term pricing policies.D. Both variable and absorption pricing plans should be considered, to include several pricing alternatives.