Question : 41) If contribution margin $45 per unit, sales in June 5,000 : 1196288

 

41)

If contribution margin is $45 per unit, sales in June are 5,000 units and sales in July are 6,000 units, and operating income was $150,000 in June, and fixed manufacturing costs were $25,000 in July, and there was a 10,000 production volume variance (F) in July, what is July’s operating income under variable costing?  

41)

______ A)

$115,000 B)

$150,000 C)

$135,000 D)

$125,000 E)

$195,000

42)

For Consumer Lumber what would be the total difference between operating incomes under absorption costing and variable costing?

 

Beginning fixed manufacturing overhead in inventory$47,500

Fixed manufacturing overhead in production$37,500

Ending fixed manufacturing overhead in inventory$12,500

Beginning variable manufacturing overhead in inventory$ 5,000

Variable manufacturing overhead in production$25,000

Ending variable manufacturing overhead in inventory$ 7,500

 42)

______ A)

$35,000 B)

$20,000 C)

$25,000 D)

$2,500 E)

$1,500

43)

One possible means of determining the difference between absorption and variable costing based operating incomes is 43)

______ A)

to add fixed manufacturing cost to the variable costing operating income. B)

by subtracting the variable overhead rate from the fixed overhead rate and then multiplying the difference by the number of units in inventory. C)

by subtracting fixed manufacturing overhead in beginning inventory from fixed manufacturing overhead in ending inventory. D)

by adding fixed manufacturing overhead in beginning inventory to income. E)

by multiplying the number of units produced by the budgeted fixed manufacturing overhead rate.

44)

The following information pertains to ABC Corporation:

 

Beginning fixed manufacturing overhead in inventory$40,000

Ending fixed manufacturing overhead in inventory$30,000

Beginning variable manufacturing overhead in inventory$20,000

Ending variable manufacturing overhead in inventory$

9,500

Selling price per unit$41

Standard fixed manufacturing costs per unit$20

Variable selling and administrative cost per unit

$4

Fixed selling and administrative costs $16,000

Units produced10,000

Units sold9,600

 

What is the difference between absorption costing operating income and variable costing operating income? 44)

______ A)

$21,000 B)

$20,500 C)

$10,000 D)

$5,000 E)

$500

45)

There is not an output-level variance for variable costing, because 45)

______ A)

the inventory level increased during the period. B)

variable manufacturing overhead is not allocated to work-in-process C)

fixed manufacturing overhead is not allocated to work-in-process. D)

the inventory level decreased during the period. E)

fixed manufacturing overhead is allocated to work-in-process.

46)

Which of the following concepts is most compatible with absorption costing in a manufacturing environment? 46)

______ A)

continuous improvement B)

flexible manufacturing C)

niche marketing D)

“the whole world is the market and the whole world is the competitor” E)

matching revenue to expense for financial reporting

47)

The costing method that has been labelled as a “black hole” is commonly known as 47)

______ A)

absorption costing. B)

fixed costing. C)

variable costing. D)

breakeven point costing. E)

standard costing

48)

All of the following are examples of drawbacks of using absorption costing EXCEPT 48)

______ A)

it allows management the ability to manipulate operating income via production schedules. B)

the company’s sales level typically doesn’t reflect the manipulation of production schedules. C)

it may run counter to the best interests of the company D)

manipulation of operating income may ultimately increase the company’s costs incurred over the long run. E)

a manager may increase maintenance activities above the budgeted level for the current period.

49)

Which of the following is NOT a weakness in the absorption costing method? 49)

______ A)

a manager may be encouraged to switch production to difficult to manufacture products B)

a manager may be encouraged to defer maintenance C)

a plant manager may be encouraged to increase production of any products independent of customer demand D)

a manager may be encouraged to accept a particular to increase production even though another plant in the same company is better suited to handle that order. E)

a manager may be encouraged to switch production to those orders which absorb the highest amount of fixed manufacturing costs, irrespective of customer demand

50)

When comparing the operating incomes between absorption costing and variable costing, and beginning finished inventory exceeds ending finished inventory, it may be assumed that 50)

______ A)

variable costing income exceeds absorption costing income. B)

variable costing income equals absorption costing income. C)

variable cost per unit is less than fixed cost per unit. D)

absorption costing income exceeds variable costing income. E)

sales increased during the period.