Objective 9.2
1) The contribution-margin format is used for ________.
A) variable costing income statement
B) mixed costing income statement
C) absorption costing income statement
D) job order costing income statement
2) The gross-margin format is used for ________.
A) variable costing income statement
B) mixed costing income statement
C) absorption costing income statement
D) standard costing income statement
3) Which of the following statements is true of contribution-margin format of the income statement?
A) It is used for absorption costing.
B) It highlights the lump sum of fixed manufacturing costs.
C) It distinguishes manufacturing costs from nonmanufacturing costs.
D) It calculates gross margin.
4) Which of the following statements is true of gross-margin format of the income statement?
A) It distinguishes between manufacturing and nonmanufacturing costs.
B) It distinguishes variable costs from fixed costs.
C) It is used for variable costing.
D) It calculates the contribution margin from sales.
5) ________ is subtracted from sales while calculating contribution margin.
A) Direct labor in factory
B) Rent on factory building
C) Rent on the headquarter?s building
D) Sales commission on incremental sales
6) ________ are subtracted from sales to calculate gross margin.
A) Variable manufacturing costs
B) Fixed administrative costs
C) Variable administrative costs
D) Fixed selling costs
Zahra’s Decoratives produces and sells a decorative pillow for $97.50 per unit. In the first month of operation, 2,000 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:
Variable manufacturing costs $22.10 per unit
Variable marketing costs $ 3.90 per unit
Fixed manufacturing costs $13.00 per unit
Administrative expenses, all fixed $19.50 per unit
Ending inventories:
Direct materials-0-
WIP-0-
Finished goods250 units
7) What is cost of goods sold per unit using variable costing?
A) $22.10
B) $26
C) $39
D) $58.50
8) What is cost of goods sold using variable costing?
A) $38,675
B) $35,000
C) $44,200
D) $52,000
9) What is the contribution margin using variable costing?
A) $118,625
B) $125,125
C) $126,425
D) $135,625
10) What is the operating income using variable costing?
A) $125,125
B) $85,125
C) $65,000
D) $60,125
Jean Peck’s Furniture’s manufactures tables for hospitality sector. It takes only bulk orders and each table is sold for $300 after negotiations. In the month of January, it manufactures 3,000 tables and sells 2,250 tables. Actual fixed costs are the same as the amount fixed costs budgeted for the month.
The following information is provided for the month of January:
Variable manufacturing costs$120 per unit
Fixed manufacturing costs$90,000 per month
Fixed Administrative expenses$25,000 per month
At the end of the month Jean Peck’s Furniture’s has an ending inventory of finished goods of 750 units. The company also incurs a sales commission of $10 per unit.
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