41 if a company produces more units than it sells in a period net operating income u 4313343

41 if a company produces more units than it sells in a period net operating income u 4313343

 

41.If a company produces more units than it sells in a period, net operating income under variable costing will:

A.Be the same as it would be under absorption costing

B.Be less than it would be under absorption costing

C.Be equal to the net operating income using absorption costing plus selling and administrative costs

D.Be equal to the net operating income using absorption costing less fixed manufacturing costs

42.When using variable costing which of the following is not considered a product cost?

A.Direct materials

B.Variable manufacturing overhead

C.Fixed manufacturing overhead

D.Direct labor

43.The following unit information is available for the ClubOne Company for 2013:

1st Qtr2nd Qtr3rd Qtr4th Qtr

A.Total net operating income will be greater if the company uses variable costing

B.Total net operating income will be greater if the company uses absorption costing

C.Total net operating income will be the same under either method

D.None of the above choices are correct

44.Brown Corporation produced 2,200 units during the most recent period.  Brown’s costs were as follows:

Direct material$1,000

Direct labor2,000

Variable manufacturing overhead500

Variable marketing and sales300

Fixed manufacturing overhead900

Fixed marketing and sales400

A.$0

B.$928

C.$544

D.$800

E.$856

45.At the end of an accounting period, using absorption costing, the cost of goods sold account will include:

A.Direct material, direct labor, variable manufacturing overhead.

B.Direct material, direct labor, variable manufacturing overhead, and variable marketing and sales.

C.Direct material, direct labor, variable manufacturing overhead, and fixed manufacturing overhead.

D.Direct material, direct labor, variable manufacturing overhead, fixed manufacturing overhead, and variable marketing and sales.

E.Direct material, direct labor, variable manufacturing overhead, fixed manufacturing overhead, variable marketing and sales, and fixed marketing and sales.

46.Which of the following formulas will reconcile the difference between variable and absorption costing?

A.  Income reported under variable costing

     + Fixed manufacturing costs in ending inventory

     – Fixed manufacturing costs in beginning inventory

     = Income reported under absorption costing

B.  Income reported under absorption costing

     + Fixed manufacturing costs in ending inventory

     – Fixed manufacturing costs in beginning inventory

     = Income reported under variable costing

C.  Income reported under variable costing 

     – Total manufacturing costs in ending inventory

     + Total manufacturing costs in beginning inventory

     = Income reported under absorption costing

D.  Income reported under absorption costing

     – Total manufacturing costs in ending inventory

     + Total manufacturing costs in beginning inventory

     = Income reported under variable costing

47.Geronimo Gym Equipment produces playground equipment with a selling price of $800 per set. The costs to produce each set include: direct materials, $300; direct labor, $125, variable manufacturing overhead, $100. The fixed manufacturing overhead per year is $12,000. There is no beginning inventory. If Geronimo produces 200 sets and sells 180 sets, and income under variable costing is $37,500, how much is income under absorption costing?

A.$106,500

B.$38,700

C.$49,500

D.$43,000

48.Which criterion determines which costs to measure?

A.GAAP

B.Controllability

C.Traceability

D.Incentives

49.On an absorption costing income statement, which of the following correctly determines gross margin?

A.Revenue – (direct materials + direct labor + fixed marketing and sales).

B.Revenue – (direct materials + direct labor + variable marketing and sales).

C.Revenue – (direct materials + direct labor + manufacturing overhead).

D.Revenue – (direct materials + direct labor).

50.In the month of March, the Asai Company produced 100,000 units but only sold 85,000 units.  Costs incurred were:

Direct materials$18,000

Direct labor$36,000

Variable manufacturing overhead$18,000

Variable selling & administrative$16,000

Fixed manufacturing overhead$19,000

Fixed selling & administrative$10,000

Total$117,000

If the company utilizes absorption costing, the value in the finished goods inventory account at the end of March will be:

A.$13,200

B.$17,550

C.$13,650

D.$10,800

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