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Exam 20: Variable Costing for Management Analysis

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Question 71

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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?

A) Absorption costing
B) Differential costing
C) Standard costing
D) Variable costing

E) A) and D)
F) C) and D)

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Question 72

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Companies prepare contribution margin reports by market segments and product segments because products contribute to profitability in various ways.

A) True
B) False

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Question 73

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

The systematic examination of differences between planned and actual contribution margins is termed contribution margin analysis.

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

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

In determining cost of goods sold,two alternate costing concepts can be used: direct costing and variable costing.

What is the amount of the gross profit that would be reported on the absorption costing income statement?

On the variable costing income statement,the amounts representing the difference between the contribution margin and income from operations is the fixed manufacturing costs and fixed selling and administrative expenses.

If variable manufacturing costs are $15 per unit and total fixed manufacturing costs are $200,000,what is the manufacturing cost per unit if: ​ (a)20,000 units are manufactured and the company uses the variable costing concept? ​ (b)25,000 units are manufactured and the company uses the variable costing concept? ​ (c)20,000 units are manufactured and the company uses the absorption costing concept? ​ (d)25,000 units are manufactured and the company used the absorption costing concept?

Management may use both absorption and variable costing methods for analyzing a particular product.

On the variable costing income statement,deduction of the variable cost of goods sold from sales yields gross profit.

Property taxes on a factory building would be included as part of the cost of products manufactured under the absorption costing concept.

At EOM Inc.,the beginning inventory is 20,000 units.All of the units manufactured during the period and 16,000 units of the beginning inventory were sold.The beginning inventory fixed costs are $50 per unit,and variable costs are $300 per unit.Determine (a)whether variable costing income from operations is less than or greater than absorption costing income from operations,and (b)the difference in variable costing and absorption income from operations.

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

In determining cost of goods sold,two alternate costing concepts can be used: absorption costing and variable costing.

If variable selling and administrative expenses totaled $124,000 for the year (80,000 units at $1.55 each) and the planned variable selling and administrative expenses totaled $136,500 (78,000 units at $1.75 each) ,the effect of the quantity factor on the change in contribution margin is:

For a period during which the quantity of inventory at the end equals the inventory at the beginning,income from operations reported under variable costing will equal income from operations reported under absorption costing.

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

The beginning inventory is 5,000 units.All of the units manufactured during the period and 3,000 units of the beginning inventory were sold.The beginning inventory fixed costs are $25 per unit,and variable costs are $55 per unit.Determine (a)whether variable costing income from operations is less than or greater than absorption costing income from operations,and (b)the difference in variable costing and absorption income from operations.