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Variable costing net operating income is usually closer to the net cash flow of a period than is absorption costing net operating income.

A) True
B) False

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Murphy Inc., which produces a single product, has provided the following data for its most recent month of operation: Murphy Inc., which produces a single product, has provided the following data for its most recent month of operation: The company had no beginning or ending inventories. Required: a. Compute the unit product cost under absorption costing. Show your work! b. Compute the unit product cost under variable costing. Show your work! The company had no beginning or ending inventories. Required: a. Compute the unit product cost under absorption costing. Show your work! b. Compute the unit product cost under variable costing. Show your work!

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a. Absorpt...

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Under the absorption costing method, a company can increase profits simply by increasing the number of units produced.

A) True
B) False

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Plummer Corporation has provided the following data for its two most recent years of operation: Plummer Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under variable costing in Year 2 is closest to: A) $31,000 B) $160,000 C) $200,000 D) $26,000 Plummer Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under variable costing in Year 2 is closest to: A) $31,000 B) $160,000 C) $200,000 D) $26,000 The net operating income (loss) under variable costing in Year 2 is closest to:


A) $31,000
B) $160,000
C) $200,000
D) $26,000

E) C) and D)
F) B) and C)

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Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under absorption costing? A) $32 per unit B) $61 per unit C) $37 per unit D) $66 per unit Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under absorption costing? A) $32 per unit B) $61 per unit C) $37 per unit D) $66 per unit What is the unit product cost for the month under absorption costing?


A) $32 per unit
B) $61 per unit
C) $37 per unit
D) $66 per unit

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

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A cost that would be included in product costs under both absorption costing and variable costing is:


A) supervisory salaries.
B) factory rent.
C) variable manufacturing costs.
D) variable selling expenses.

E) All of the above
F) None of the above

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Moskowitz Corporation has provided the following data for its two most recent years of operation: Moskowitz Corporation has provided the following data for its two most recent years of operation: The unit product cost under variable costing in Year 1 is closest to: A) $63.00 B) $69.00 C) $23.00 D) $29.00 Moskowitz Corporation has provided the following data for its two most recent years of operation: The unit product cost under variable costing in Year 1 is closest to: A) $63.00 B) $69.00 C) $23.00 D) $29.00 The unit product cost under variable costing in Year 1 is closest to:


A) $63.00
B) $69.00
C) $23.00
D) $29.00

E) None of the above
F) A) and B)

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Holts Corporation has two divisions: Xi and Sigma. Data from the most recent month appear below: Holts Corporation has two divisions: Xi and Sigma. Data from the most recent month appear below: The company's common fixed expenses total $78,840. The break-even in sales dollars for the company as a whole is closest to: A) $487,491 B) $606,715 C) $466,018 D) $119,225 The company's common fixed expenses total $78,840. The break-even in sales dollars for the company as a whole is closest to:


A) $487,491
B) $606,715
C) $466,018
D) $119,225

E) None of the above
F) B) and D)

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The Dorset Corporation produces and sells a single product. The following data refer to the year just completed: The Dorset Corporation produces and sells a single product. The following data refer to the year just completed: Assume that direct labor is a variable cost. Required: a. Compute the unit product cost under both the absorption costing and variable costing approaches. b. Prepare an income statement for the year using absorption costing. c. Prepare an income statement for the year using variable costing. d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above. Assume that direct labor is a variable cost. Required: a. Compute the unit product cost under both the absorption costing and variable costing approaches. b. Prepare an income statement for the year using absorption costing. c. Prepare an income statement for the year using variable costing. d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above.

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a. Cost per unit under absorption costin...

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Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. What is the net operating income for the month under variable costing? A) $4,600 B) $11,600 C) $24,200 D) $7,000 Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. What is the net operating income for the month under variable costing? A) $4,600 B) $11,600 C) $24,200 D) $7,000 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. What is the net operating income for the month under variable costing?


A) $4,600
B) $11,600
C) $24,200
D) $7,000

E) A) and C)
F) All of the above

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Vancott Inc., which produces a single product, has provided the following data for its most recent month of operation: Vancott Inc., which produces a single product, has provided the following data for its most recent month of operation: The company had no beginning or ending inventories. Required: Compute the unit product cost under absorption costing. Show your work! The company had no beginning or ending inventories. Required: Compute the unit product cost under absorption costing. Show your work!

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Azuki Corporation operates in two sales territories, Urban and Rural. Data concerning last year's operations appear below: Azuki Corporation operates in two sales territories, Urban and Rural. Data concerning last year's operations appear below: Azuki's common fixed expenses were $25,000 last year. If Urban sales were 10% higher last year, by approximately how much would Azuki's net operating income have increased? (Assume no change in selling prices, unit variable expenses, or total fixed expenses.) A) $4,400 B) $6,400 C) $11,200 D) $32,000 Azuki's common fixed expenses were $25,000 last year. If Urban sales were 10% higher last year, by approximately how much would Azuki's net operating income have increased? (Assume no change in selling prices, unit variable expenses, or total fixed expenses.)


A) $4,400
B) $6,400
C) $11,200
D) $32,000

E) A) and B)
F) B) and D)

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Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. What is the net operating income for the month under absorption costing? A) $7,000 B) $4,600 C) $11,600 D) $24,200 Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. What is the net operating income for the month under absorption costing? A) $7,000 B) $4,600 C) $11,600 D) $24,200 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. What is the net operating income for the month under absorption costing?


A) $7,000
B) $4,600
C) $11,600
D) $24,200

E) All of the above
F) C) and D)

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Toxemia Salsa Corporation manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The following information was taken from last year's income statement segmented by flavor (brackets indicate a negative amount) : Toxemia Salsa Corporation manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The following information was taken from last year's income statement segmented by flavor (brackets indicate a negative amount) : Toxemia expects similar operating results for the upcoming year. If Toxemia wants to maximize its profitability in the upcoming year, which flavor or flavors should Toxemia discontinue? A) no flavors should be discontinued B) Wimpy C) Wimpy and Mild D) Wimpy, Mild, and Medium Toxemia expects similar operating results for the upcoming year. If Toxemia wants to maximize its profitability in the upcoming year, which flavor or flavors should Toxemia discontinue?


A) no flavors should be discontinued
B) Wimpy
C) Wimpy and Mild
D) Wimpy, Mild, and Medium

E) All of the above
F) A) and B)

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Badoni Corporation has provided the following data for its two most recent years of operation: Badoni Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under variable costing in Year 2 is closest to: A) $180,000 B) $195,000 C) $59,000 D) $7,000 Badoni Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under variable costing in Year 2 is closest to: A) $180,000 B) $195,000 C) $59,000 D) $7,000 The net operating income (loss) under variable costing in Year 2 is closest to:


A) $180,000
B) $195,000
C) $59,000
D) $7,000

E) A) and B)
F) A) and C)

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Cadavieco Corporation has provided the following data for its two most recent years of operation: Cadavieco Corporation has provided the following data for its two most recent years of operation: Required: a. Assume the company uses absorption costing. Compute the unit product cost in each year. b. Assume the company uses absorption costing. Prepare an income statement for each year. c. Assume the company uses variable costing. Compute the unit product cost in each year. d. Assume the company uses variable costing. Prepare an income statement for each year. Cadavieco Corporation has provided the following data for its two most recent years of operation: Required: a. Assume the company uses absorption costing. Compute the unit product cost in each year. b. Assume the company uses absorption costing. Prepare an income statement for each year. c. Assume the company uses variable costing. Compute the unit product cost in each year. d. Assume the company uses variable costing. Prepare an income statement for each year. Required: a. Assume the company uses absorption costing. Compute the unit product cost in each year. b. Assume the company uses absorption costing. Prepare an income statement for each year. c. Assume the company uses variable costing. Compute the unit product cost in each year. d. Assume the company uses variable costing. Prepare an income statement for each year.

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a. Absorption costing unit pro...

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Beach Corporation, which produces a single product, budgeted the following costs for its first year of operations. These costs are based on a budgeted volume of 30,000 towels produced and sold: Beach Corporation, which produces a single product, budgeted the following costs for its first year of operations. These costs are based on a budgeted volume of 30,000 towels produced and sold: During the first year of operations, Beach Corporation actually produced 30,000 towels but only sold 24,000 towels. Actual costs did not fluctuate from the cost behavior patterns described above. The 24,000 towels were sold for $16 per towel. Assume that direct labor is a variable cost. Under absorption costing, what is Beach Corporation's actual net operating income for its first year? A) $60,000 B) $115,200 C) $117,600 D) $124,800 During the first year of operations, Beach Corporation actually produced 30,000 towels but only sold 24,000 towels. Actual costs did not fluctuate from the cost behavior patterns described above. The 24,000 towels were sold for $16 per towel. Assume that direct labor is a variable cost. Under absorption costing, what is Beach Corporation's actual net operating income for its first year?


A) $60,000
B) $115,200
C) $117,600
D) $124,800

E) B) and D)
F) A) and B)

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Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the net operating income for the month under variable costing? A) $14,500 B) $17,400 C) $11,300 D) $2,900 Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the net operating income for the month under variable costing? A) $14,500 B) $17,400 C) $11,300 D) $2,900 What is the net operating income for the month under variable costing?


A) $14,500
B) $17,400
C) $11,300
D) $2,900

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

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Moskowitz Corporation has provided the following data for its two most recent years of operation: Moskowitz Corporation has provided the following data for its two most recent years of operation: The unit product cost under absorption costing in Year 2 is closest to: A) $77.00 B) $48.00 C) $23.00 D) $71.00 Moskowitz Corporation has provided the following data for its two most recent years of operation: The unit product cost under absorption costing in Year 2 is closest to: A) $77.00 B) $48.00 C) $23.00 D) $71.00 The unit product cost under absorption costing in Year 2 is closest to:


A) $77.00
B) $48.00
C) $23.00
D) $71.00

E) All of the above
F) C) and D)

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Neef Corporation has provided the following data for its two most recent years of operation: Neef Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under variable costing in Year 2 is closest to: A) $630,000 B) $75,000 C) $87,000 D) $580,000 Neef Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under variable costing in Year 2 is closest to: A) $630,000 B) $75,000 C) $87,000 D) $580,000 The net operating income (loss) under variable costing in Year 2 is closest to:


A) $630,000
B) $75,000
C) $87,000
D) $580,000

E) A) and B)
F) A) and C)

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