Question : 61) Helton Company has the following information for the current : 1186353

 

61) Helton Company has the following information for the current year:

 

Beginning fixed manufacturing overhead in inventory

$95,000

Fixed manufacturing overhead in production

375,000

Ending fixed manufacturing overhead in inventory

25,000

 

 

Beginning variable manufacturing overhead in inventory

$10,000

Variable manufacturing overhead in production

50,000

Ending variable manufacturing overhead in inventory

15,000

 

What is the difference between operating incomes under absorption costing and variable costing?

A) $65,000

B) $50,000

C) $40,000

D) $5,000

E) $70,000

62) The following information pertains to Brian Stone Corporation:

 

Beginning fixed manufacturing overhead in inventory

$60,000

Ending fixed manufacturing overhead in inventory

45,000

Beginning variable manufacturing overhead in inventory

$30,000

Ending variable manufacturing overhead in inventory

14,250

 

 

Fixed selling and administrative costs

$724,000

Units produced

5,000 units

Units sold

4,800 units

 

What is the difference between operating incomes under absorption costing and variable costing?

A) $750

B) $7,500

C) $15,000

D) $15,750

E) $30,750

 

Answer the following question(s) using the information below.

 

Heinrich Corporation budgeted fixed manufacturing costs of $6,000 during 2012. Other information for 2012 includes:

The budgeted denominator level is 1,000 units.

Units produced total 750 units.

Units sold total 600 units.

Beginning inventory was zero.

 

The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold.

 

63) Fixed manufacturing costs expensed on the income statement (excluding adjustments for variances) total

A) $3,600.

B) $4,800.

C) $6,000.

D) $0.

E) $7,200.

64) Fixed manufacturing costs included in ending inventory total

A) $1,200.

B) $1,500.

C) $0.

D) $900.

E) $2,400.

 

65) The production-volume variance is

A) $2,000.

B) $900.

C) $2,400.

D) $0.

E) $1,500.

 

66) Operating income using absorption costing will be ________ than operating income if using variable costing.

A) $1,500 higher

B) $1,200 lower

C) $900 higher

D) $2,400 lower

E) no different

 

67) Which of the following is an example of a drawback of using absorption costing?

A) It allows management the ability to manipulate operating income via production schedules.

B) An inventoried cost will eventually become part of cost of goods sold.

C) The company’s sales level drives the production schedules.

D) A manager may increase maintenance activities above the budgeted level for the current period.

E) Expensing fixed costs as period costs reducing operating income.

68) Which of the following is a weakness particular to the absorption costing method?

A) A production manager cannot manipulate operating income.

B) A manager is always encouraged to match the production schedule to estimated demand.

C) A manager may be encouraged to switch production to difficult to manufacture products.

D) A downward demand spiral can be created.

E) A manager may be encouraged to defer maintenance.

 

69) Amalgamated Glass and Mirror Inc. had sales of 37,500 units and production of 50,000 units. Other information for the year included:

 

Direct manufacturing labour$375,000

Variable manufacturing overhead200,000

Direct materials300,000

Variable selling expenses200,000

Fixed administrative expenses200,000

Fixed manufacturing overhead400,000

There was no beginning inventory.

 

Required:

a.Compute the ending finished goods inventory under both absorption and variable costing.

b.Compute the cost of goods sold under both absorption and variable costing.

 

 

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