MCQ Kelton Corp. completed its first year ofoperations with 1,200 units of inventoryremaining on hand. The variable and fixedmanufacturing costs per unit were $85 and $25,respectively. If Kelton uses absorption costingrather than variable (direct) costing, the resultwould be a higher pretax income of:a. $30,000b. $25,000c. $85,000d. $102,000

Explanation of Absorption Costing: Absorption costing is an inventory valuation method that treats…

Answered: Kelton Corp. completed its first year…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 1PB: When prices are falling (deflation), which costing method would produce the highest gross margin for...

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Bradshaw Company reported sales of 5,000,000 in 20X1. At the end of the fiscal year (June 30, 20X1), the following quality costs were reported: Required: 1. Prepare a quality cost report. 2. Prepare a graph (pie chart or bar graph) that shows the relative distribution of quality costs, and comment on the distribution. 3. Assuming sales of 5,000,000, by how much would profits increase if quality improves so that quality costs are only 3% of sales?
Pietro expects to produce 50,000 units and sell 49,300 units. Beginning inventory of finished goods is 42,500, and ending inventory of finished goods is expected to be 34,000. Required: 1. Prepare a statement of cost of goods sold in good form. 2. What if the beginning inventory of finished goods decreased by 5,000? What would be the effect on the cost of goods sold?
When prices are rising (inflation), which costing method would produce the highest value for gross margin? Choose between first-in, first-out (FIFO); last-in, first-out (LIFO); and weighted average (AVG). Evansville Company had the following transactions for the month. Calculate the gross margin for each of the following cost allocation methods, assuming A62 sold just one unit of these goods for $10,000. Provide your calculations. A. first-in, first-out (FIFO) B. last-in, first-out (LIFO) C. weighted average (AVG)
The following information pertains to Vladamir, Inc., for last year: There are no work-in-process inventories. Normal activity is 100,000 units. Expected and actual overhead costs are the same. Costs have not changed from one year to the next. Required: 1. How many units are in ending inventory? 2. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income. 3. Assume the selling price per unit is 29. Prepare an income statement using (a) variable costing and (b) absorption costing.
Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett allocates common fixed cost to Product 1 and Product 2 on the basis of sales. If Product 2 is dropped, which of the following is true? a. Sales will increase by 300,000. b. Overall operating income will increase by 2,600. c. Overall operating income will decrease by 25,000. d. Overall operating income will not change. e. Common fixed cost will decrease by 27,600.
Evans Company had total sales of 3,000,000 for fiscal 20x5. The costs of quality-related activities are given below. Required: 1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. What message does the cost report provide? 2. Prepare a bar graph and pie chart that illustrate each categorys contribution to total quality costs. Comment on the significance of the distribution. 3. What if, five years from now, quality costs are 7.5 percent of sales, with control costs being 65 percent of the total quality costs? What would your conclusion be?
on Last year, Terrific Copying had total revenue of $475 000, while operating at 60% of capacity. The total of its variable cost is $150 000. Fixed costs were $180 000. If the current selling price, variable costs, and fixed costs are the same as last year, what net income can be expected from revenue of $500 000 in the current year Select one: OA. $1 184 210 OB. $346 260 OC. $381 388 O D. $394 737 OE. $1 418 216
Last year, Terrific Copying had total revenue of $475 000, while operating at 60% of capacity. The total of its variable cost is $150 000. Fixed costs were $180 000. If the current selling price, variable costs, and fixed costs are the same as last year, what net income can be expected from revenue of $500 000 in the current year Select one: A. $1 184 210 B. $346 260 C. $394 737 D. $1 418 216 E. $381 388
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5. A company has £8.00 per unit in variable production cost and £3.00 per unit in variable selling and administrative cost. The annual fixed production cost is £300,000. The annual fixed selling and administrative cost is £50,000. a. Complete the table below for the number of units and dollar value of ending inventory for each year. Assume a FIFO flow. Units Produced Units Sold Units in ending inventory Ending inventory using variable costing Ending inventory using full costing b. 2004 120,000 110,000 2005 150,000 120,000 2006 100,000 140,000 2007 100,000 100,000 Assume that the selling price and cost structure stayed the same over the 4-year period. How would the total income compare over the period between variable and full costing?
Smith, which began business at the start of the current year, had the following data: Planned and actual production: 40,000 units Sales: 37,000 units at $15 per unit Production costs: Variable: $4 per unit Fixed: $260,000 Selling and administrative costs: Variable: $1 per unit Fixed: $32,000 The gross margin that the company would disclose on an absorption- costing income statement is: A. $97,500. B. $147,000. C. $166,500. D. $370,000. E. some other amount.
Rocky River Company is a price - taker and uses target pricing. Refer to the following information: Production volume Market price Desired operating income Total assets 601,000 units per year $30 per unit 17% of total assets $13,800,000 What is the target full product cost per unit? (Round your answer to nearest cent.) Assume all units produced are sold. OA. $24.90 OB. $26.10 OC. $30.00 OD. $5.10

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