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Exam 20: Variable Costing for Management Analysis

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Question 31

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Under absorption costing, which of the following costs would not be included in finished goods inventory?

A) hourly wages of assembly worker
B) straight-line depreciation on factory equipment
C) overtime wages paid to factory workers
D) the salaries for salespeople

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

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Question 32

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In contribution margin analysis, the increase or decrease in unit sales price or unit cost on the number of units sold is referred to as the:

A) sales factor
B) cost of goods sold factor
C) quantity factor
D) unit price or unit cost factor

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

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Question 33

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If variable selling and administrative expenses totaled $120,000 for the year 80,000 units at $1.50 each) and the planned variable selling and administrative expenses totaled $136,500 78,000 units at $1.75 each) , the effect of the unit cost factor on the change in contribution margin is:

Tony's Company has the following information for March: $\begin{array} { | l | c | } \hline \text { Sales } & \$ 1,000,000 \\\hline \text { Variable cost of goods sold } & 490,000 \\\hline \text { Fixed manufacturing costs } & 170,000 \\\hline \text { Variable selling and administrative expenses } & 112,000 \\\hline \text { Fixed selling and admini strative expenses } & 100,000 \\\hline\end{array}$ Determine the March a) manufacturing margin, b) contribution margin, and c) income from operations for Tony's Company.

Which of the following would be included in the cost of a product manufactured according to absorption costing?

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

A business operated at 100% of capacity during its first month and incurred the following costs: If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, what would be the amount of income from operations reported on the variable costing income statement?

The contribution margin ratio is computed as contribution margin divided by sales.

If the ability to sell and the amount of production facilities devoted to each of two products is equal, it is profitable to increase the sales of that product with the lowest contribution margin.

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.

Which of the following would be included in the cost of a product manufactured according to variable costing?

Which of the following statements is correct using the direct costing concept?

Under absorption costing, increases or decreases in income from operations due to changes in inventory levels could be misinterpreted to be the result of operating efficiencies or inefficiencies.

MATCHING -Generally provides the most useful report for controlling costs.

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

A business operated at 100% of capacity during its first month, with the following results: What is the amount of the manufacturing margin that would be reported on the variable costing income statement?

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?

In contribution margin analysis, the unit price or unit cost factor is computed as the difference between actual quantity sold and the planned quantity sold, multiplied by the planned unit sales price or unit cost.

For a period during which the quantity of product manufactured exceeded the quantity sold, income from operations reported under absorption costing will be smaller than income from operations reported under variable costing.

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