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Exam 19: Variable Costing and Analysis

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Question 71

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It is not possible to convert reports prepared using variable costing to absorption costing reports.

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Question 72

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The use of absorption costing can result in misleading product cost information.

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Question 73

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Which of the following statements is true regarding absorption costing?

Evaluating and rewarding managers based on absorption costing income can lead to overproduction.

Given the following data,total product cost per unit under absorption costing is $9.14.

When the number of units produced exceeds the number of units sold,absorption costing defers some of the fixed costs incurred.

Which of the following statements is true?

Absorption costing is required under GAAP.

Under an income statement prepared using absorption costing,expenses are grouped according to cost behavior.

Under variable costing,product costs consist of direct labor,direct materials,and ________.

Which of the following best describes costs assigned to the product under the absorption costing method? Direct labor (DL) Direct materials (DM) Variable selling and administrative (VSA) Variable manufacturing overhead (VOH) Fixed selling and administrative (FSA) Fixed manufacturing overhead (FOH)

Given the following data,calculate product cost per unit under absorption costing.

Under absorption costing,which of the following statements is not true?

A company is currently operating at 60% capacity producing 10,000 units.Cost information relating to this current production is shown in the following table: The company has been approached by a customer with a request for a special order for 5,000 units.What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

A company reports the following information regarding its production cost: Required: Perform the following independent calculations. a.Compute total variable overhead cost if the production cost per unit under variable costing is $240. b.Compute total variable overhead cost if the production cost per unit under absorption costing is $240.

Given the Galaxy Inc.data,what is net income using variable costing?

The key difference between variable costing and absorption costing is the treatment of ________ costs.

Variable costing is required by Generally Accepted Accounting Principles (GAAP)for financial statement purposes.

Countdown Inc.sold 17,000 units of its product at a price of $81 per unit.Total variable cost per unit is $72.09,consisting of $69.05 in variable production cost and $3.04 in variable selling and administrative cost.Compute the total contribution margin.

What is the formula to compute manufacturing margin?