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Exam 5: Variable Costing for Management Analysis

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Question 71

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In the absorption costing income statement, deduction of the cost of goods sold from sales yields net profit.

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Question 72

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Under variable costing, which of the following costs would be included in finished goods inventory?

A) advertising costs
B) salary of vice-president of finance
C) wages of carpenters in a furniture factory
D) straight-line depreciation on factory equipment

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Question 73

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In contribution margin analysis, the effect of a difference in the number of units sold, assuming no change in unit sales price or cost, is termed the unit price or unit cost factor.

In contribution margin analysis, the effect of a difference in unit sales price or unit cost on the number of units sold is termed the quantity factor.

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and variable factory overhead cost?

Service firms can only have one activity base for analyzing changes in costs.

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what is the amount of the manufacturing margin that would be reported on the absorption costing income statement?

If variable cost of goods sold totaled $80,000 for the year (16,000 units at $5.00 each) and the planned variable cost of goods sold totaled $86,250 (15,000 units at $5.75 each) , the effect of the unit cost factor on the change in variable cost of goods sold is:

On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is the:

For a period during which the quantity of inventory at the end was smaller than that at the beginning, income from operations reported under variable costing will be smaller than income from operations reported under absorption costing.

The amount of income under absorption costing will be less than the amount of income under variable costing when units manufactured:

Fixed factory overhead costs are included as part of the cost of products manufactured under the absorption costing concept.

On the variable costing income statement, all of the fixed costs are deducted from the contribution margin.

The factory superintendent's salary would be included as part of the cost of products manufactured under the variable costing concept.

The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured:

On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January:

In contribution margin analysis, the effect of a difference in the number of units sold, assuming no change in unit sales price or cost, is termed the quantity factor.

The systematic examination of the differences between planned and actual contribution margin is termed the:

In contribution margin analysis, the quantity factor is computed as:

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,600 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?