1) Pungent Corporation manufactures and sells a spice rack. Shown below are the actual operating results for the first two years of operations: Year 1 Year 2 Units (spice racks) produced 40,000 40,000 Units (spice racks) sold 37,000 41,000 Absorption costing net operating income $ 44,000 $ 52,000 Variable costing net operating income $ 38,000 ??? Pungent's selling price and unit variable cost and total fixed cost were the same for both years. What is Pungent's variable costing net operating income for Year 2? A $50,000 B $48,000 C $56,000 D $54,000
1) Pungent Corporation manufactures and sells a spice rack. Shown below are the actual operating results for the first two years of operations: Year 1 Year 2 Units (spice racks) produced 40,000 40,000 Units (spice racks) sold 37,000 41,000 Absorption costing net operating income $ 44,000 $ 52,000 Variable costing net operating income $ 38,000 ??? Pungent's selling price and unit variable cost and total fixed cost were the same for both years. What is Pungent's variable costing net operating income for Year 2? A $50,000 B $48,000 C $56,000 D $54,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
SOLVE THE GIVEN MCQS:
1)
Pungent Corporation manufactures and sells a spice rack. Shown below are the actual operating results for the first two years of operations:
Pungent's selling price and unit variable cost and total fixed cost were the same for both years. What is Pungent's variable costing net operating income for Year 2?
| Year 1 | Year 2 | |||
| Units (spice racks) produced | 40,000 | 40,000 | ||
| Units (spice racks) sold | 37,000 | 41,000 | ||
| Absorption costing net operating income | $ | 44,000 | $ | 52,000 |
| Variable costing net operating income | $ | 38,000 | ??? |
Pungent's selling price and unit variable cost and total fixed cost were the same for both years. What is Pungent's variable costing net operating income for Year 2?
| A |
$50,000
|
|
| B |
$48,000
|
|
| C |
$56,000
|
|
| D |
$54,000
|
2)
A company produces a single product. Variable production costs are $21 per unit and variable selling and administrative expenses are $4 per unit. Fixed manufacturing overhead totals $30,000 and fixed selling and administration expenses total $36,000. Assuming a beginning inventory of zero, production of 6,000 units and sales of 5,600 units, the dollar value of the ending inventory under variable costing would be:
| A |
$14,400
|
|
| B |
$12,000
|
|
| C |
$8,400
|
|
| D |
$10,000
|
3)
If a cost must be arbitrarily allocated in order to be assigned to a particular segment, then that cost should be considered a common cost.
A) True
B ) False
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