If there were no variances, the company's absorption-costing net income would be: NUBD began business at the start of the current year. The company planned toproduce 25,000 units, and actual production conformed to expectations. Salestotaled 21,000 units at P30 each. Costs incurred were:Fixed manufacturing overheadFixed selling and administrative costVariable manufacturing cost per unitVariable selling and administrative cost per unitP150,000100,0002

Ans. P 325,000 25000 units @ P 30 = P750000 Less. Cost of Sale = P 425000 Net income = P 325,000…

Answered: If there were no variances, the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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How do costs behave when there is a change in volume?a) ______ increases or decreases in total in direct proportion to increases or decreases in sales volume. b) ______ remains the same in total, regardless of change in sales. c) ______ have both a variable and fixed component. d) Answer the following regarding the high-low method:i) What is the formula for determining the variable costs when using the high low method:ii) Given the following information for the high and low levels, what is the variable cost per unit and the total fixed costs? iii) Based on the information in part ii), what is the relevant range?In MyAccountingLab, complete Try It! 21-1 and S21-1 through S21-3.LO2. What is contribution margin, and how is it used to compute operating income?a) What is the contribution margin if net sales revenue is $100,000 and variable costs are $40,000? b) Based on the information in part a), what is the contribution margin ratio?In MyAccountingLab, complete Try It! 21-2 and S21-4 and…
When using the high-low method to estimate costs, the formula “Change in Cost divided by Change in Units” (or “Change in Total Cost divided by Change in Activity Level”) is used to estimate the: Fixed cost per unit Mixed cost per unit Profit per unit Indirect cost per unit Variable cost per unit Differential cost per unit Opportunity cost per unit
Which of the following is a correct definition of the margin of safety? The excess of contribution margin over fixed costs The excess of gross margin over target income 0 The excess of sales revenue over the breakeven point The excess of ner income over all costs (both variable and fixed
Which of the following line items will not be found in the absorption costing income statement? Group of answer choices Variable manufacturing and non-manufacturing costs Contribution margin Gross profit Fixed manufacturing costs
When using CVP Analysis, Net Profit (positive NI) would occur when Fixed Costs (FC) exceed total Contribution Margin. TRUE FALSE
The “plus” in cost-plus pricing is often referred to as Markup. Extra profit. Gross profit. Margin of Safety.
On a cost-volume-profit graph, the revenue line will be shown below the total expense line for any activity level above the break-even point. FALSE O TRUE
Which type of income statements, Contribution Format or Traditional Format should be used to identify relevant costs? Please provide explanation for your answer. Then provide an example including two income statements based on absorption and variable costing, respectively, to support your explanation.
Which of the following equations is correct for determining the required sales in units to generate a targeted amount of pre-tax income (πB) under the equation method (where Q = sales in units, F = total fixed costs, πB = pre-tax profit, v = variable cost per unit, and p = selling price per unit)?
Variable costing income will be greater than absorption costing income when: a. Sales is greater than production. b. contribution pricing is applied c. Production is less than or equal to sales. d. Production is greater than sales
The equation for total costs (Y) is: Y = a+ bX In this equation, “a” represents: Net income Cost of goods sold Total fixed costs The level of activity (e.g., the number of units produced) Total variable costs Variable cost per unit of X Total revenue
Consider the following two statements concerning cost-volume-profit analysis. (1) The contribution per unit is the difference between the sales price per unit and the fixed costs per unit. (2) The marginal cost per unit will usually equal the variable cost per unit. Which one of the following combinations ( true/false) relating to the above statements is correct?

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