Question : 41) For Consumer Lumber what would be the total difference : 1186351

 

41) 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

 

A) $35,000

B) $25,000

C) $20,000

D) $2,500

E) $1,500

 

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

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

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

43) 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 produced

10,000

Units sold

9,600

 

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

A) $500

B) $5,000

C) $10,000

D) $20,500

E) $21,000

 

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

A) the inventory level decreased during the period.

B) the inventory level increased during the period.

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

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

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

 

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

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

B) niche marketing

C) flexible manufacturing

D) continuous improvement

E) matching revenue to expense for financial reporting

46) The costing method that has been labelled as a “black hole” because fixed costs are inventoried is commonly known as

A) absorption costing.

B) direct costing.

C) break-even point costing.

D) variable costing.

E) standard costing.

 

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

A) sales increased during the period.

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

C) absorption costing income exceeds variable costing income.

D) variable costing income exceeds absorption costing income.

E) variable costing income equals absorption costing income.

 

48) Which of the following is true concerning operating income calculated under variable costing as compared to absorption costing?

A) Operating income is lower under variable costing when production exceeds sales.

B) Operating income is higher under variable costing when production exceeds sales.

C) Operating income is lower under variable costing when sales exceeds production only if there is a production-volume variance.

D) operating income is higher under variable costing when production exceeds sales only if there is a production-volume variance.

E) The relationship between production and sales has no bearing on the differences in operating income between the two methods.

 

49) A possible criticism of ________ costing is that fixed manufacturing overhead is treated as a/an ________.

A) variable; asset

B) absorption; period cost

C) absorption; asset

D) variable; liability

E) absorption; variable cost in the long run

Use the information below to answer the following question(s).

 

Balloon Arrangements produces balloon bouquets. The following information has been provided by management:

 

Budgeted production

100,000 bouquets

Direct manufacturing costs

$2.50/bouquet

Fixed manufacturing overhead

$1.00/bouquet

Variable manufacturing overhead

$0.75/bouquet

Variable administrative costs

$1.25/bouquet

 

50) What is the total cost per bouquet if absorption costing is used?

A) $5.50

B) $4.75

C) $3.75

D) $2.50

E) $1.98