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Question
Which of the following statements is true?A. Under variable costing, direct materials and direct labor are expensed as period expenses.
B. Under variable costing, fixed manufacturing overhead is expensed as period expenses.
C. Fixed manufacturing overhead costs are treated the same under both absorption costing and variable costing.
D. Reported income under absorption costing is not affected by production level changes.
E. Under absorption costing, fixed manufacturing overhead is expensed as period expenses.
Answer
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What is the formula to compute manufacturing margin?
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Direct labor X X
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Variable manufacturing overhead
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Direct materials
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Match the following
Q:
Given the following data, calculate product cost per unit under variable costing.
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Direct materials $3 per unit
Overhead
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Total fixed overhead $85,000
Expected units to be produced 50,000 units
A. $7 per unit
B. $13.30 per unit
C. $11.00 per unit
D. $11.60 per unit
E. $16.50 per unit
Q:
Tim's Tools, a manufacturer of cordless drills, began operations this year. During this year, the company produced 20,000 units and sold 18,000 units. At year-end the company reported the following income statement using absorption costing:
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Cost of goods sold (18,000 $14) 252,000
Gross margin $288,000
Selling and administrative expenses 90,000
Net income $198,000
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Q:
Decko Industries reported the following monthly data:
Units produced 52,000 units
Sales price $33 per unit
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Direct labor $2.50 per unit
Variable overhead $3.50 per unit
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E. $21,560
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Given the Cool Pools Company data, what is net income using absorption costing?
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Given the Scavenger Company data, what is net income using variable costing?
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D. $177,600
E. $276,250
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Given the Galaxy, Inc. data, what is net income using absorption costing?
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B. $17,400,000
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E. $16,220,000