Summit Corp sold 12,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Category Variable Fixed Unit manufacturing costs $12.00 $8.00 Unit operating expenses $4.00 $3.00 Which of the following statements is true? a. Net income under absorption costing will be $48,000 more than under variable costing. b. Net income will be the same under both variable and absorption costing. c. Net income under variable costing will be $50,000 less than net income under absorption costing. d. The difference in net income cannot be determined.

Summit Corp sold 12,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Category Variable Fixed Unit manufacturing costs $12.00 $8.00 Unit operating expenses $4.00 $3.00 Which of the following statements is true? a. Net income under absorption costing will be $48,000 more than under variable costing. b. Net income will be the same under both variable and absorption costing. c. Net income under variable costing will be $50,000 less than net income under absorption costing. d. The difference in net income cannot be determined.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 9E: The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the...

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S&P Enterprises sold 10,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Variable Fixed $11.00 $7.00 3.00 2.50 Unit manufacturing costs of the period Unit operating expenses of the period Which of the following statements is true? a. Net income will be the same under both variable and absorption costing. b. The difference in net income cannot be determined. d. Net income under variable costing will be $45,000 less than net income under absorption costing.
S&P Enterprises sold 10,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Variable Fixed Unit manufacturing costs of the period $ 11.00 $ 7.00 Unit operating expenses of the period 3.00 2.50 Which of the following statements is true? a. Net income under absorption costing will be $40,000 more than under variable costing. b. Net income will be the same under both variable and absorption costing. c. Net income under variable costing will be $45,000 less than net income under absorption costing. d. The difference in net income cannot be determined.
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The inventory ledger account of Yim Inc. shows that the level of inventory of the manufactured product has increased by 10,000 units over the period. Yim provided the following unit cost information for its manufacturing and non-manufacturing costs: Cost Information Costs Variable Fixed Manufacturing costs per unit 12.50 5.60 Selling and administrative costs per unit 5.00 2.00 Which of the following statements is true? Group of answer choices Net income will be the same under both variable and absorption costing. Net income under absorption costing will be $76,000 more than under variable costing. The difference in net income cannot be determined. Net income under variable costing will be $56,000 less than net income under absorption costing.
The following data relate to Lobo Corporation for the year just ended: Sales revenue $750,000 Cost of goods sold: Variable portion 370,000 Fixed portion 110,000 Variable selling and administrative cost 50,000 Fixed selling and administrative cost 75,000 Which of the following statements is correct? A. Lobo’s variable-costing income statement would reveal a gross margin of $270,000. B. Lobo’s variable costing income statement would reveal a contribution margin of $330,000. C. Lobo’s absorption-costing income statement would reveal a contribution margin of $330,000. D. Lobo’s absorption costing income statement would reveal a gross margin of $330,000. E. Lobo’s absorption-costing income statement would reveal a gross margin of $145,000.
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