1. The amount of fixed factory costs applied to the product during the first 6 months under absorption costing is? A. Over-applied by $20,000.            C. Under-applied by $40,000. B.Equal to the fixed costs incurred.   D.  Under-applied by $80,000. 2. Reported net income (or loss) for the first 6 months under absorption costing is? A. $160,000         B.  $0                       C.  $40,000                 D.  $(40,000) 3. Reported net income (or loss) for the first 6 months under variable costing is? A. $180,000      B.  $40,000                 C.  $0                          D.  $(180,000)

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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1. The amount of fixed factory costs applied to the product during the first 6 months under absorption costing is?

A. Over-applied by $20,000.            C. Under-applied by $40,000.

B.Equal to the fixed costs incurred.   D.  Under-applied by $80,000.

2. Reported net income (or loss) for the first 6 months under absorption costing is?

A. $160,000         B.  $0                       C.  $40,000                 D.  $(40,000)

3. Reported net income (or loss) for the first 6 months under variable costing is?

A. $180,000      B.  $40,000                 C.  $0                          D.  $(180,000)

Questions 20 through 23 are based on the following information.
The annual flexible budget below was prepared for use in making decisions relations to Product
X.
200,000 units
$1,600,000
100,000 units
Sales volume
Manufacturing costs:
$ 800,000
150,000 units
$1,200,000
$300,000
200,000
$500,000
$450,000
200,000
$650,000
$600,000
200,000
$800,000
Variable
Fixed
Selling & other expenses
$200,000
160,000
$360,000
$(60,000)
The 200,000 unit budget has been adopted and will be used for allocating fixed manufacturing
costs to units of Product X. At the end of the first 6 months, the following information is|
$300,000
160,000
$460,000
$90000
$400,000
160,000
$560,000
$240,000
Variable
Fixed
Income (or loss)
available:
Units
120,000
60,000
Production completed
Sales
All fixed costs are budgeted and incurred uniformly throughout the year, and all costs incurred
coincide with the budget. Over- and under-applied fixed manufacturing costs are deferred until
year-end. Annual sales have the following seasonal pattern.
Portion of Annual Sales
First quarter
Second quarter
Third quarter
Fourth quarter
10%
20%
30%
40%
Transcribed Image Text:Questions 20 through 23 are based on the following information. The annual flexible budget below was prepared for use in making decisions relations to Product X. 200,000 units $1,600,000 100,000 units Sales volume Manufacturing costs: $ 800,000 150,000 units $1,200,000 $300,000 200,000 $500,000 $450,000 200,000 $650,000 $600,000 200,000 $800,000 Variable Fixed Selling & other expenses $200,000 160,000 $360,000 $(60,000) The 200,000 unit budget has been adopted and will be used for allocating fixed manufacturing costs to units of Product X. At the end of the first 6 months, the following information is| $300,000 160,000 $460,000 $90000 $400,000 160,000 $560,000 $240,000 Variable Fixed Income (or loss) available: Units 120,000 60,000 Production completed Sales All fixed costs are budgeted and incurred uniformly throughout the year, and all costs incurred coincide with the budget. Over- and under-applied fixed manufacturing costs are deferred until year-end. Annual sales have the following seasonal pattern. Portion of Annual Sales First quarter Second quarter Third quarter Fourth quarter 10% 20% 30% 40%
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