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Exam 20: Variable Costing for Management Analysis

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Question 41

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If variable cost of goods sold totaled $90,000 for the year (18,000 units at $5.00 each) and the planned variable cost of goods sold totaled $86,400 (16,000 units at $5.40 each) , the effect of the unit cost factor on the change in variable cost of goods sold is:

A) $6,400 decrease
B) $6,400 increase
C) $7,200 increase
D) $7,200 decrease

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

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Question 42

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In variable costing, the cost of products manufactured is composed of only those manufacturing costs that increase or decrease as the volume of production rises or falls.

A) True
B) False

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Question 43

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Sales territory profitability analysis can determine profit differences between territories due to

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

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what is the amount of the manufacturing margin that would be reported on the absorption costing income statement?

Cades Company has the following information for March: Determine the March (a) manufacturing margin, (b) contribution margin, and (c) income from operations for Cades Company.

If sales totaled $200,000 for the current year (10,000 units at $20 each) and planned sales totaled $212,500 (12,500 units at $17 each) , the effect of the unit price factor on the change in sales is a:

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

The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available: What would be the effect on income from operations if absorption costing is used rather than variable costing?

A business operated at 100% of capacity during its first month and incurred the following costs: If 600 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet?

For short-run production planning, information in the variable costing format is more useful to management than is information in the absorption costing concept format.

A business operated at 100% of capacity during its first month and incurred the following costs: If 75 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet?

Which of the following would not be an appropriate activity base for cost analysis in a service firm?

Presented below are the major categories or captions that would appear on an income statement prepared in the variable costing format: Contribution margin Fixed costs Income from operations Manufacturing margin Sales Variable cost of goods sold Variable selling and administrative expenses

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

The Excelsior Company has three salespersons. Average sales price per unit sold, average variable manufacturing costs per unit, and number of units sold for each salesperson is shown below. Commissions are according to the following schedule: Prepare a contribution by salesperson report.

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

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

Fixed costs are $50 per unit and variable costs are $125 per unit. Production was 130,000 units, while sales were 125,000 units. Determine (a) whether variable cost income from operations is less than or greater than absorption costing income from operations, and (b) the difference in variable costing and absorption costing income from operations.

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