管理會(huì)計(jì)Managerialaccounting習(xí)題Chapter07

True/FalseQuestions

Undervariablecosting,onlyvariableproductioncostsaretreatedasproductcosts.

Ans:True AACSB:ReflectiveThinking AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Undervariablecosting,variablesellingandadministrativecostsareincludedinproductcosts.

Ans:False AACSB:ReflectiveThinking AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Absorptioncostingtreatsallmanufacturingcostsasproductcosts.

Ans:True AACSB:ReflectiveThinking AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Inthepreparationoffinancialstatementsusingvariablecosting,fixedmanufacturingoverheadistreatedasaperiodcost.

Ans:True AACSB:ReflectiveThinking AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Absorptioncostingtreatsfixedmanufacturingoverheadasaperiodcost.

Ans:False AACSB:ReflectiveThinking AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Whenthenumberofunitsinworkinprocessandfinishedgoodsinventoriesincrease,absorptioncostingnetoperatingincomewilltypicallybegreaterthanvariablecostingnetoperatingincome.

Ans:True AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:2,3 Level:Easy

Netoperatingincomecomputedusingabsorptioncostingwillalwaysbegreaterthannetoperatingincomecomputedusingvariablecosting.

Ans:False AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:2 Level:Easy

Whenreconcilingvariablecostingandabsorptioncostingnetoperatingincome,fixedmanufacturingoverheadcostsreleasedfrominventoryunderabsorptioncostingshouldbeaddedtovariablecostingnetoperatingincometoarriveattheabsorption

costingnetoperatingincome.

Ans:False AACSB:ReflectiveThinking AICPABB:CriticalThinkingAICPAFN:Reporting LO:3 Level:Medium

Whenproductionexceedssalesfortheperiod,absorptioncostingnetoperatingincomewillexceedvariablecostingnetoperatingincome.

Ans:True AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:3 Level:Medium

Undervariablecostingitmaybepossibletoreportaprofitevenifthecompanysellslessthanthebreak-evenvolumeofsales.

Ans:False AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:4 Level:Medium

Absorptioncostingnetoperatingincomeisclosertothenetcashflowofaperiodthanisvariablecostingnetoperatingincome.

Ans:False AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:4 Level:Medium

Variablecostingisnotpermittedforincometaxpurposes,butitiswidelyacceptedforexternalfinancialreports.

Ans:False AACSB:ReflectiveThinking AICPABB:CriticalThinkingAICPAFN:Reporting LO:4 Level:Medium

Abasicconceptofthecontributionapproachandvariablecostingisthatfixedcostsarenotimportantinanorganization.

Ans:False AACSB:ReflectiveThinking AICPABB:CriticalThinkingAICPAFN:Reporting LO:4 Level:Medium

Variablecostingisbettersuitedtocost-volume-profitcalculationsthanabsorptioncosting.

Ans:True AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:4 Level:Easy

Whenleanproductionisintroduced,thedifferenceinnetoperatingincomecomputedundertheabsorptionandvariablecostingmethodsisreduced.

Ans:True AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:5 Level:Easy

MultipleChoiceQuestions

Howwouldthefollowingcostsbeclassified(productorperiod)undervariablecostingataretailclothingstore?

Costofpurchasingclothing Salescommissions

Product Product

Product Period

Period Product

Period Period

Ans:B AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Medium

Theprincipaldifferencebetweenvariablecostingandabsorptioncostingcenterson:

whethervariablemanufacturingcostsshouldbeincludedasproductcosts.

whetherfixedmanufacturingcostsshouldbeincludedasproductcosts.

whetherfixedmanufacturingcostsandfixedsellingandadministrativecostsshouldbeincludedasproductcosts.

noneofthese.

Ans:B AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Whichofthefollowingcostsatamanufacturingcompanywouldbetreatedasaproductcostunderthevariablecostingmethod?

directmaterialcost

propertytaxesonthefactorybuilding

salesmanager'ssalary

alloftheabove

Ans:A AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Medium

Assumingthatdirectlaborisavariablecost,theprimarydifferencebetweentheabsorptionandvariablecostingisthat:

variablecostingtreatsonlydirectmaterialsanddirectlaborasproductcostwhileabsorptioncostingtreatsdirectmaterials,directlabor,andthevariableportionofmanufacturingoverheadasproductcosts.

variablecostingtreatsdirectmaterials,directlabor,thevariableportionofmanufacturingoverhead,andanallocatedportionoffixedmanufacturingoverheadasproductcostswhileabsorptioncostingtreatsonlydirectmaterials,directlabor,andthevariableportionofmanufacturingoverheadasproductcosts.

variablecostingtreatsonlydirectmaterials,directlabor,thevariableportionofmanufacturingoverhead,andthevariableportionofsellingandadministrativeexpensesasproductcostwhileabsorptioncostingtreatsdirectmaterials,directlabor,thevariableportionofmanufacturingoverhead,andanallocatedportionoffixedmanufacturingoverheadasproductcosts.

variablecostingtreatsonlydirectmaterials,directlabor,andthevariableportionofmanufacturingoverheadasproductcostswhileabsorptioncostingtreatsdirectmaterials,directlabor,thevariableportionofmanufacturingoverhead,andanallocatedportionoffixedmanufacturingoverheadasproductcosts.

Ans:D AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Medium

Thecostingmethodthattreatsallfixedcostsasperiodcostsis:

absorptioncosting.

job-ordercosting.

variablecosting.

processcosting.

Ans:C AACSB:ReflectiveThinking AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Initsfirstyearofoperations,BronfrenCorporationproduced800,000setsandsold780,000setsofartificialtanlines.WhatwouldhavehappenedtonetoperatingincomeinthisfirstyearunderthefollowingcostingmethodsifBronfrenhadproduced20,000fewersets?(AssumethatBronfrenhasbothvariableandfixedproductioncosts.)

Variablecosting Absorptioncosting

Increase Increase

Decrease Increase

Decrease Decrease

Noeffect Decrease

Ans:D AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:2 Level:Medium

Whensalesareconstant,buttheproductionlevelfluctuates,netoperatingincomedeterminedbythevariablecostingmethodwill:

fluctuateindirectproportiontochangesinproduction.

remainconstant.

fluctuateinverselywithchangesinproduction.

begreaterthannetoperatingincomeunderabsorptioncosting.

Ans:B AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:2 Level:Medium

Underthevariablecostingmethod,whichofthefollowingisalwaysexpensedinitsentiretyintheperiodinwhichitisincurred?

fixedmanufacturingoverheadcost

fixedsellingandadministrativeexpense

variablesellingandadministrativeexpense

alloftheabove

Ans:D AACSB:ReflectiveThinking AICPABB:CriticalThinkingAICPAFN:Reporting LO:2 Level:Hard

Whichofthefollowingwillusuallybefoundonanincomestatementpreparedusingtheabsorptioncostingmethod?

ContributionMargin GrossMargin

Yes Yes

Yes No

No Yes

No No

Ans:C AACSB:ReflectiveThinking AICPABB:CriticalThinkingAICPAFN:Reporting LO:2 Level:Easy

Netoperatingincomeundervariableandabsorptioncostingwillgenerally:

alwaysbeequal.

neverbeequal.

beequalonlywhenproductionandsalesareequal.

beequalonlywhenproductionexceedssales.

Ans:C AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:3 Level:Medium

Whenproductionexceedssales,netoperatingincomereportedundervariablecostinggenerallywillbe:

greaterthannetoperatingincomereportedunderabsorptioncosting.

lessthannetoperatingincomereportedunderabsorptioncosting

equaltonetoperatingincomereportedunderabsorptioncosting.

higherorlowerbecausenogeneralizationcanbemade.

Ans:B AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:3 Level:Medium

Netoperatingincomeunderabsorptioncostingmaydifferfromnetoperatingincomedeterminedundervariablecosting.Howisthisdifferencecalculated?

changeinthequantityofunitsininventorytimesthefixedmanufacturingoverheadrateperunit.

numberofunitsproducedduringtheperiodtimesthefixedmanufacturing

overheadrateperunit.

changeinthequantityofunitsininventorytimesthevariablemanufacturingcostperunit.

numberofunitsproducedduringtheperiodtimesthevariablemanufacturingcostperunit.

Ans:A AACSB:Analytic AICPABB:CriticalThinking

AICPAFN:Reporting LO:3 Level:Hard Source:CMA,adapted

Whensalesareconstant,buttheproductionlevelfluctuates,netoperatingincomedeterminedbytheabsorptioncostingmethodwill:

tendtofluctuateinthesamedirectionasfluctuationsinthelevelofproduction.

tendtoremainconstant.

tendtofluctuateinverselywithfluctuationsinthelevelofproduction.

noneofthese

Ans:A AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:4 Level:Medium

Areasonwhyabsorptioncostingincomestatementsaresometimesdifficultforthemanagertointerpretisthat:

theyomitvariableexpensesentirelyincomputingnetoperatingincome.

theyshiftportionsoffixedmanufacturingoverheadfromperiodtoperiodaccordingtochanginglevelsofinventories.

theyincludeallfixedmanufacturingoverheadontheincomestatementeachyearasaperiodcost.

theyignoreinventorylevelsincomputingincomecharges.

Ans:B AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:4 Level:Medium

Underthetheoryofconstraints(TOC),whichofthefollowingistreatedasaperiodcost?

Directlabor Directmaterial

Yes Yes

Yes No

No Yes

No No

Ans:B AACSB:ReflectiveThinking AICPABB:CriticalThinkingAICPAFN:Reporting LO:5 Level:Medium

FleetCorporationproducesasingleproduct.Thecompanymanufactured700unitslastyear.Theendinginventoryconsistedof100units.Therewasnobeginninginventory.Variablemanufacturingcostswere$6.00perunitandfixedmanufacturing

costswere$2.00perunit.Whatwouldbethechangeinthedollaramountofendinginventoryifvariablecostingwasusedinsteadofabsorptioncosting?

$800decrease

$200decrease

$0

$200increase

Ans:B AACSB:Analytic AICPABB:CriticalThinking

AICPAFN:Reporting LO:1 Level:Easy Source:CMA,adaptedSolution:

Changeininventory×Fixedmanufacturingcostsperunit

=100×$2=$200decrease

ShunCorporationmanufacturesandsellsahandheldcalculator.ThefollowinginformationrelatestoShun'soperationsforlastyear:

Unitproductcostundervariablecosting

$5.20perunit

Fixedmanufacturingoverheadcostfortheyear

$260,000

Fixedsellingandadministrativecostfortheyear

$180,000

Units(calculators)producedandsold

400,000

WhatisShun'sunitproductcostunderabsorptioncostingforlastyear?

$4.10

$4.55

$5.85

$6.30

Ans:C AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Solution:

Unitfixedmanufacturingoverhead=Fixedmanufacturingoverhead÷Unitsproduced

=$260,000÷400,000units=$0.65perunitUnitproductcost=$5.20+$0.65=$5.85

Amanufacturingcompanythatproducesasingleproducthasprovidedthefollowingdataconcerningitsmostrecentmonthofoperations:

Unitsinbeginninginventory

0

Unitsproduced

7,100

Unitssold

7,000

Unitsinendinginventory

100

Variablecostsperunit:Directmaterials

$33

Directlabor $53

Variablemanufacturingoverhead $1

Variablesellingandadministrative $7

Fixedcosts:

Fixedmanufacturingoverhead $170,400

Fixedsellingandadministrative $7,000

Whatistheunitproductcostforthemonthundervariablecosting?

$118

$94

$111

$87

Ans:D AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Solution:

Unitproductcost=Directmaterials+Directlabor+Variablemanufacturingoverhead

=$33+$53+$1=$87

Amanufacturingcompanythatproducesasingleproducthasprovidedthefollowingdataconcerningitsmostrecentmonthofoperations:

Unitsinbeginninginventory

0

Unitsproduced

1,900

Unitssold

1,700

Unitsinendinginventory

200

Variablecostsperunit:Directmaterials

$33

Directlabor

$32

Variablemanufacturingoverhead

$2

Variablesellingandadministrative

$6

Fixedcosts:

Fixedmanufacturingoverhead $72,200

Fixedsellingandadministrative $6,800

Whatistheunitproductcostforthemonthunderabsorptioncosting?

$67

$105

$111

$73

Ans:B AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Solution:

Unitfixedmanufacturingoverhead=$72,200÷1,900=$38

Unitproductcost=Directmaterials+Directlabor+Variablemanufacturingoverheadcost+Fixedmanufacturingoverheadcost

=$33+$32+$2+$38=$105

Amanufacturingcompanythatproducesasingleproducthasprovidedthefollowingdataconcerningitsmostrecentmonthofoperations:

Sellingprice

$79

Unitsinbeginninginventory

0

Unitsproduced

6,600

Unitssold

6,300

Unitsinendinginventory

300

Variablecostsperunit:Directmaterials

$14

Directlabor

$30

Variablemanufacturingoverhead

$4

Variablesellingandadministrative

$8

Fixedcosts:

Fixedmanufacturingoverhead $46,200

Fixedsellingandadministrative $88,200

Whatisthetotalperiodcostforthemonthunderthevariablecostingapproach?

$138,600

$134,400

$46,200

$184,800

Ans:D AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Solution:

Totalvariablesellingandadministrativecost=$8×6,300=$50,400

Periodcost=Totalvariablesellingandadministrativecost+Fixedmanufacturingoverhead+Fixedsellingandadministrativecost

=$50,400+$46,200+$88,200=$184,800

Amanufacturingcompanythatproducesasingleproducthasprovidedthefollowingdataconcerningitsmostrecentmonthofoperations:

Sellingprice

$97

Unitsinbeginninginventory

0

Unitsproduced

2,200

Unitssold

2,100

Unitsinendinginventory

100

Variablecostsperunit:Directmaterials

$32

Directlabor

$25

Variablemanufacturingoverhead

$2

Variablesellingandadministrative

$9

Fixedcosts:

Fixedmanufacturingoverhead $8,800

Fixedsellingandadministrative $37,800

Whatisthetotalperiodcostforthemonthundertheabsorptioncostingapproach?

$56,700

$65,500

$8,800

$37,800

Ans:A AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Solution:

Totalvariablesellingandadministrativecost=$9×2,100=$18,900Periodcost=Variablesellingandadministrativecost+Fixedsellingandadministrativecost=$18,900+$37,800=$56,700

MulleeCorporationproducesasingleproductandhasthefollowingcoststructure:

Numberofunitsproducedeachyear

7,000

Variablecostsperunit:

Directmaterials

$51

Directlabor

$12

Variablemanufacturingoverhead

$2

Variablesellingandadministrativeexpense

$5

Fixedcostsperyear:

Fixedmanufacturingoverhead $441,000Fixedsellingandadministrativeexpense $112,000

Theunitproductcostunderabsorptioncostingis:

$149

$65

$63

$128

Ans:D AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Solution:

Unitfixedmanufacturingoverhead=$441,000÷7,000=$63Unitproductcost=$63+$51+$12+$2=$128

StonebergerCorporationproducesasingleproductandhasthefollowingcoststructure:

Numberofunitsproducedeachyear

4,000

Variablecostsperunit:

Directmaterials

$50

Directlabor

$72

Variablemanufacturingoverhead

$6

Variablesellingandadministrativeexpense

$3

Fixedcostsperyear:

Fixedmanufacturingoverhead $296,000Fixedsellingandadministrativeexpense $76,000

Theunitproductcostundervariablecostingis:

$128

$125

$202

$131

Ans:A AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Solution:

Unitproductcost=$50+$72+$6=$128

BeamishInc.,whichproducesasingleproduct,hasprovidedthefollowingdataforitsmostrecentmonthofoperations:

Numberofunitsproduced

8,000

Variablecostsperunit:

Directmaterials

$37

Directlabor

$56

Variablemanufacturingoverhead

$4

Variablesellingandadministrativeexpense

$2

Fixedcosts:

Fixedmanufacturingoverhead $312,000Fixedsellingandadministrativeexpense $448,000

Therewerenobeginningorendinginventories.Theunitproductcostunderabsorptioncostingwas:

$93

$97

$136

$194

Ans:C AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:1 Level:Easy

Solution:

Unitfixedmanufacturingoverhead=$312,000÷8,000=$39Unitproductcost=$37+$56+$4+$39=$136

KrayInc.,whichproducesasingleproduct,hasprovidedthefollowingdataforitsmostrecentmonthofoperations:

Numberofunitsproduced

3,000

Variablecostsperunit:

Directmaterials

$91

Directlabor

$13

Variablemanufacturingoverhead

$7

Variablesellingandadministrativeexpense

$6

Fixedcosts:

Fixedmanufacturingoverhead $237,000

Fixedsellingandadministrativeexpense $165,000

Therewerenobeginningorendinginventories.Theunitproductcostundervariablecostingwas:

$111

$190

$117

$110

Ans:A AACSB:Analytic AICPABB:CriticalThinking

AICPAFN:Reporting LO:1 Level:EasySolution:

Unitproductcost=Directmaterials+Directlabor+Variablemanufacturingoverhead

=$91+$13+$7=$111

Thefollowingdatapertaintolastyear'soperationsatClarkson,Incorporated,acompanythatproducesasingleproduct:

Unitsinbeginninginventory

0

Unitsproduced

100,000

Unitssold

98,000

Sellingpriceperunit

$10.00

Variablecostsperunit:Directmaterials

$1.50

Directlabor

$2.50

Variablemanufacturingoverhead

$1.00

Variablesellingandadministrative

$2.00

Fixedcostsperyear:

Fixedmanufacturingoverhead $200,000

Fixedsellingandadministrative $50,000

Whatwastheabsorptioncostingnetoperatingincomelastyear?

$44,000

$48,000

$50,000

$49,000

Ans:B AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:2 Level:Medium

Solution:

Unitfixedmanufacturingoverhead=$200,000÷100,000=$2Unitproductcost=$1.50+$2.50+$1+$2=$7

Absorptioncostingincomestatement

Sales($10×98,000)..............................................

$980,000

Costofgoodssold($7×98,000)...........................

686,000

Grossmargin

294,000

Sellingandadministrativeexpensesexpenses:

Variablesellingandadministrative

$196,000

Fixedsellingandadministrative

50,000

246,000

Netoperatingincome $48,000

Amanufacturingcompanythatproducesasingleproducthasprovidedthefollowingdataconcerningitsmostrecentmonthofoperations:

Sellingprice

$135

Unitsinbeginninginventory

0

Unitsproduced

6,400

Unitssold

6,200

Unitsinendinginventory

200

Variablecostsperunit:Directmaterials

$49

Directlabor

$38

Variablemanufacturingoverhead

$6

Variablesellingandadministrative

$11

Fixedcosts:

Fixedmanufacturingoverhead

$108,800

Fixedsellingandadministrative................

$74,400

Thetotalcontributionmarginforthemonthunderthevariablecostingapproachis:

$155,000

$260,400

$192,200

$83,400

Ans:C AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:2 Level:Easy

Solution:

Salesrevenue($135×6,200).................................

$837,000

Variablecost:.........................................................

Directmaterials($49×6,200)............................

$303,800

Directlabor($38×6,200)..................................

235,000

Variablemanufacturingoverhead($6×6,200)..

37,200

Variablesellingandadministrative($11×

6,200)...............................................................

68,200

644,800

Contributionmargin...............................................

$192,200

Amanufacturingcompanythatproducesasingleproducthasprovidedthefollowingdataconcerningitsmostrecentmonthofoperations:

Sellingprice

$123

Unitsinbeginninginventory

0

Unitsproduced

1,000

Unitssold

900

Unitsinendinginventory

100

Variablecostsperunit:Directmaterials

$41

Directlabor

$26

Variablemanufacturingoverhead

$4

Variablesellingandadministrative

$6

Fixedcosts:

Fixedmanufacturingoverhead $17,000

Fixedsellingandadministrative $11,700

Whatisthenetoperatingincomeforthemonthundervariablecosting?

$12,700

$5,600

$1,700

$14,400

Ans:A AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:2 Level:Medium

Solution:

Sales($123×900).................................................

$110,700

Variablecostofgoodssold($71×900)................

63,900

Lessvariablesellingandadministrative($6×900)

5,400

Contributionmargin...............................................

41,400

Fixedcost:

Fixedmanufacturingoverhead...........................

$17,000

Fixedsellingandadministrative

11,700

28,700

Netoperatingincome

$12,700

SwiftonCompanyproducesasingleproduct.Lastyear,thecompanyhadnetoperatingincomeof$40,000usingvariablecosting.Beginningandendinginventorieswere22,000and27,000units,respectively.Ifthefixedmanufacturingoverheadcostwas$3.00perunit,whatwastheincomeusingabsorptioncosting?

$15,000

$25,000

$40,000

$55,000

Ans:D AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:3 Level:Medium

Solution:

Differencebetweenabsorptioncostingnetincomeandvariablecostingnetincome=Changeininventoryinunits×Unitfixedmanufacturingoverhead

=(27,000?22,000)×$3=5,000×$3=$15,000

Netincomeunderabsorptioncosting=$40,000+$15,000=$55,000

BlakeCompanyproducesasingleproduct.Lastyear,Blake'snetoperatingincomeunderabsorptioncostingwas$3,600lowerthanundervariablecosting.Thecompanysold10,000unitsduringtheyear,anditsvariablecostswere$9perunit,ofwhich$1wasvariablesellingexpense.Ifproductioncostwas$11perunitunderabsorptioncosting,thenhowmanyunitsdidthecompanyproduceduringtheyear?

8,200units

8,800units

11,200units

11,800units

Ans:B AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:3 Level:Hard

Solution:

Directmaterial+Directlabor+Variablemanufacturingoverhead

=Variableunitproductcost=$9–$1=$8

Unitfixedmanufacturingoverhead=$11–$8=$3

Differenceinnetincomebetweenmethods÷Unitfixedmanufacturingoverhead=($3,600)÷$3perunit=(1,200)units

Unitsproduced=Unitssold+Changeininventory=10,000+(1,200)=8,800

PungentCorporationmanufacturesandsellsaspicerack.Shownbelowaretheactualoperatingresultsforthefirsttwoyearsofoperations:

Year1

Year2

Units(spiceracks)produced

40,000

40,000

Units(spiceracks)sold

37,000

41,000

Absorptioncostingnetoperatingincome

$44,000

$52,000

Variablecostingnetoperatingincome

$38,000

???

Pungent'scoststructureandsellingpricewerethesameforbothyears.WhatisPungent'svariablecostingnetoperatingincomeforYear2?

$48,000

$50,000

$54,000

$56,000

Ans:C AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:3 Level:Hard

Solution:

Unitfixedmanufacturingoverhead=Differenceinnetincome÷Changeininventory

=($44,000–$38,000)÷(40,000–37,000)=$6,000÷3,000=$2

Variablecostingnetoperatingincome=Absorptioncostingnetincome?Differenceinnetoperatingincome

=$52,000?[(40,000?41,000)×$2)]

=$52,000?($2,000)=$54,000

SiphoCorporationmanufacturesavarietyofproducts.Lastyear,thecompany'svariablecostingnetoperatingincomewas$90,900.Fixedmanufacturingoverheadcostsreleasedfrominventoryunderabsorptioncostingamountedto$21,900.Whatwastheabsorptioncostingnetoperatingincomelastyear?

$69,000

$90,900

$21,900

$112,800

Ans:A AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:3 Level:Easy

Solution:

Absorptioncostingnetincome=Variablecostingnetincome–fixedmanufacturingoverheadcostsreleasedfrominventory

=$90,900–$21,900=$69,000

Lastyear,KirstenCorporation'svariablecostingnetoperatingincomewas$63,400.Fixedmanufacturingoverheadcostsreleasedfrominventoryunderabsorptioncostingamountedto$10,700.Whatwastheabsorptioncostingnetoperatingincomelastyear?

$10,700

$74,100

$63,400

$52,700

Ans:D AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:3 Level:Easy

Solution:

Absorptioncostingnetincome=Variablecostingnetincome–fixedmanufacturingoverheadcostsreleasedfrominventory

=$63,400–$10,700=$52,700

BellueInc.manufacturesavarietyofproducts.Variablecostingnetoperatingincomewas$96,300lastyearandendinginventorydecreasedby2,600units.Fixedmanufacturingoverheadcostwas$1perunit.Whatwastheabsorptioncostingnetoperatingincomelastyear?

$2,600

$93,700

$96,300

$98,900

Ans:B AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:3 Level:Medium

Solution:

Absorptioncostingnetincome=Variablecostingnetincome?fixedmanufacturingoverheadcostsreleasedfrominventory

=$96,300?[2,600×$1]=$96,300?$2,600=$93,700

Lastyear,TinklenbergCorporation'svariablecostingnetoperatingincomewas

$52,400anditsendinginventorydecreasedby1,400units.Fixedmanufacturingoverheadcostwas$8perunit.Whatwastheabsorptioncostingnetoperatingincomelastyear?

$41,200

$11,200

$63,600

$52,400

Ans:A AACSB:Analytic AICPABB:CriticalThinkingAICPAFN:Reporting LO:3 Level:Medium

Solution:

Absorptioncostingnetincome=Variablecostingnetincome?fixedmanufacturingoverheadcostsreleasedfrominventory

=$52,400?[1,400×$8]=$52,400?$11,200=$41,200

Usethefollowingtoanswerquestions51-53:

HurlexCompanyproducesasingleproduct.Lastyear,Hurlexmanufactured15,000unitsandsold12,000units.Productioncostsfortheyearwereasfollows:

Directmaterials

$150,000

Directlabor

$180,000

Variablemanufacturingoverhead

$135,000

Fixedmanufacturingoverhead

$210,000

Salestotaled$840,000fortheyear,variablesellingexpensestotaled$60,000,andfixedsellingandadministrativeexpensestotaled$180,000.Therewerenounitsinthebeginninginventory.Assumethat