neds dr blooWino 0000inu 00McGrawHillE ducationconnectEXERCISE 6–-1 Variable and Absorption Costing Unit Product Costs LO6-1Ida Sidha Karya Company is a family-owned company located in the village of Gianyar oD t.island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrumentcalled a gamelan that is similar to a xylophone. The gamelans are sold for $850. Selected data fthe company's operations last year follow:Units in beginning inventory..Units produced ...Units sold .........A-8025022525Units in ending inventoryVariable costs per unit:Direct materials ....Direct labor..Variable manufacturing overhead .Variable selling and administrative ..$100$320$40$20Fixed costs:Fixed manufacturing overhead .000 Fixed selling and administrative$60,000$20,000.. Variable Costing and Segment Reporting: Tools for ManagementRequired:1. Assume that the company uses absorption costing. Compute the unit product cost for onegamelan.2. Assume that the company uses variable costing. Compute the unit product cost for onegamelan.Difference in Net Operating

Step 1 The fixed manufacturing overhead per unit of $240 is obtained by dividing the fixed…

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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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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
Under variable costing: a. Net operating income will always be higher than under absorption costing. b. Net operating income will tend to move up and down in response to changes in levels of production. O c.Inventory costs will be lower than under absorption costing. d. Net operating income will tend to vary inversely with production changes
1. Activity based costing is likely a more advantageous costing methold versus traditonal costing, to facilliate which of the following type of analysis? a) analysis of service organization cost b) analysis of channel profitablity c) analysis of long term profitablity d) analysis for reduction selling price of all products? 2. A ___ is any factor that causes a change in the cost of an activity. a) activity based cost b) cost pool c) cost driver d) standard 3. Which of the following is no a basic cost category for indirect cost? a) inventory financing cost b) Volume related cost c) Product batch cost d) activity based cost
Hi-Tek Manufacturing, Incorporated, makes two industrial component parts-B300 and T500. An absorption costing income statement for the most recent period is shown below: Hi-Tek Manufacturing, Incorporated Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss Hi-Tek produced and sold 60,400 units of B300 at a price of $21 per unit and 12,800 units of T500 at a price of $39 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below: Direct materials Direct labor Manufacturing overhead Cost of goods sold $ 1,767,600 1,212,922 554,678 610,000 $ (55,322) 8300 T500 $ 400,300 $ 162,400 $ 120,100. $ 42,400 Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other…
True or false Give answer of all with explanation.
Which of the following is a correct statement? O A. the fixed manufacturing cost is based on a per unit cost, when using Variable Costing O B. the fixed manufacturing cost is based on a per unit cost, when using Absorption Costing and a total cost, when using Variable Costing Oc the variable manufacturing cost is shown as a total cost in both Variable Costing and Absorption Costing O D. the fixed manufacturing cost is always shown as a total cost, when using Absorption Costing
The product costing method that includes fixed manufacturing cost in inventories costs is called Select one: Variable costing. O a. Ob. Direct costing. O c. Absorption costing. Od. Contribution margin. The strategy MOST likely to reduce the breakeven point would be to: Select one: Oa. Decrease the fixed costs and increase the contribution margin. Ob. Increase both the fixed costs and the contribution margin. on Increase the fixed costs and decrease the contribution margin. d. Decrease both the fixed costs and the contribution margin.
TRUE OR FALSE Companies that use just-in-time processing techniques will have significant differences between absorption and variable costing net income
1
Contribution Margin, Cost-Volume-Profit Analysis and Break-Even Point (Overview) Fixed, Variable and Mixed Costs An appreciation of cost behavior is needed in order for management to understand and predict profitability as the costs of material, labor and other operating expenses and levels of production and sales change. It's important to review the cost behavior of fixed, variable and mixed costs before contribution margins, cost-volume-profit analysis, and break-even points. 1. In the table below, Have-A-Seat Inc. has outlined many of the costs associated with producing office chairs. With respect to the production and sale of office chairs, classify each cost as fixed, mixed, or variable. a. Pressure-molded plastic for chair frames b. Pension cost: $0.50 per employee hour on the job c. Insurance premiums for inventory: $2,100 per month plus $0.01 for each dollar of inventory over $2 million d. Property taxes: $120,000 per year for the factory building and…
Over extended periods of time, the net income figures reported under absorption costing will be: a. Equal to net income reported under variable costing b. Higher or lower because no generalization can be made c. Less than net income reported under variable costing d. Greater than net income reported under variable costing
How is operating income affected if the number of units sold exceeds the number of units produced? Select one: a. Operating income would be higher under a variable costing income statement. b. Operating income would be lower under a variable costing income statement. c. Operating income would be higher under an absorption costing income statement. d. Operating income would be the same under both a variable costing and absorption costing income PreviousSave AnswersNext

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