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Under the LIFO inventory flow assumption, if the number of units in inventories increase between the beginning and end of the period, absorption costing net operating income will generally be greater than variable costing net operating income.

A) True
B) False

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Sherwood Corporation has provided the following data for its two most recent years of operation: Sherwood Corporation has provided the following data for its two most recent years of operation: Required: a. Assume the company uses absorption costing. Compute the unit product cost in each year. b. Assume the company uses variable costing. Compute the unit product cost in each year. c. Assume the company uses absorption costing. Prepare an income statement for each year. d. Assume the company uses variable costing. Prepare an income statement for each year. e. Prepare a report in good form reconciling the variable costing and absorption costing net incomes. Sherwood Corporation has provided the following data for its two most recent years of operation: Required: a. Assume the company uses absorption costing. Compute the unit product cost in each year. b. Assume the company uses variable costing. Compute the unit product cost in each year. c. Assume the company uses absorption costing. Prepare an income statement for each year. d. Assume the company uses variable costing. Prepare an income statement for each year. e. Prepare a report in good form reconciling the variable costing and absorption costing net incomes. Required: a. Assume the company uses absorption costing. Compute the unit product cost in each year. b. Assume the company uses variable costing. Compute the unit product cost in each year. c. Assume the company uses absorption costing. Prepare an income statement for each year. d. Assume the company uses variable costing. Prepare an income statement for each year. e. Prepare a report in good form reconciling the variable costing and absorption costing net incomes.

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a. Absorption costing unit product costs...

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Carriveau Corporation has two divisions: Consumer Division and Business Division. The following data are for the most recent operating period: Carriveau Corporation has two divisions: Consumer Division and Business Division. The following data are for the most recent operating period: The company's common fixed expenses total $63,360. The Business Division's break-even sales is closest to: A) $488,153 B) $218,355 C) $266,263 D) $182,895 The company's common fixed expenses total $63,360. The Business Division's break-even sales is closest to:


A) $488,153
B) $218,355
C) $266,263
D) $182,895

E) B) and C)
F) None of the above

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Caruso Inc., which produces a single product, has provided the following data for its most recent month of operations: Caruso Inc., which produces a single product, has provided the following data for its most recent month of operations: There were no beginning or ending inventories. The unit product cost under absorption costing was: A) $170 per unit B) $115 per unit C) $255 per unit D) $110 per unit There were no beginning or ending inventories. The unit product cost under absorption costing was:


A) $170 per unit
B) $115 per unit
C) $255 per unit
D) $110 per unit

E) A) and C)
F) A) and B)

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A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the variable costing unit product cost for the month? A) $59 per unit B) $83 per unit C) $87 per unit D) $55 per unit What is the variable costing unit product cost for the month?


A) $59 per unit
B) $83 per unit
C) $87 per unit
D) $55 per unit

E) B) and D)
F) None of the above

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Kern Corporation produces a single product. Selected information concerning the operations of the company follow: Kern Corporation produces a single product. Selected information concerning the operations of the company follow: Assume that direct labor is a variable cost. Which costing method, absorption or variable costing, would show a higher operating income for the year and by what amount? A) Absorption costing net operating income would be higher than variable costing net operating income by $2,500. B) Variable costing net operating income would be higher than absorption costing net operating income by $2,500. C) Absorption costing net operating income would be higher than variable costing net operating income by $5,500. D) Variable costing net operating income would be higher than absorption costing net operating income by $5,500. Kern Corporation produces a single product. Selected information concerning the operations of the company follow: Assume that direct labor is a variable cost. Which costing method, absorption or variable costing, would show a higher operating income for the year and by what amount? A) Absorption costing net operating income would be higher than variable costing net operating income by $2,500. B) Variable costing net operating income would be higher than absorption costing net operating income by $2,500. C) Absorption costing net operating income would be higher than variable costing net operating income by $5,500. D) Variable costing net operating income would be higher than absorption costing net operating income by $5,500. Assume that direct labor is a variable cost. Which costing method, absorption or variable costing, would show a higher operating income for the year and by what amount?


A) Absorption costing net operating income would be higher than variable costing net operating income by $2,500.
B) Variable costing net operating income would be higher than absorption costing net operating income by $2,500.
C) Absorption costing net operating income would be higher than variable costing net operating income by $5,500.
D) Variable costing net operating income would be higher than absorption costing net operating income by $5,500.

E) None of the above
F) All of the above

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Carroll Corporation has two products, Q and P. During June, the company's net operating income was $25,000, and the common fixed expenses were $37,000. The contribution margin ratio for Product Q was 30%, its sales were $200,000, and its segment margin was $21,000. If the contribution margin for Product P was $80,000, the segment margin for Product P was:


A) $62,000
B) $59,000
C) $37,000
D) $41,000

E) A) and B)
F) B) and C)

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Combe Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below: Combe Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below: The company's common fixed expenses total $80,800. The break-even in sales dollars for Alpha Division is closest to: A) $491,129 B) $143,478 C) $187,536 D) $260,580 The company's common fixed expenses total $80,800. The break-even in sales dollars for Alpha Division is closest to:


A) $491,129
B) $143,478
C) $187,536
D) $260,580

E) C) and D)
F) None of the above

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Corbel Corporation has two divisions: Division A and Division B. Last month, the company reported a contribution margin of $60,000 for Division A. Division B had a contribution margin ratio of 40% and its sales were $300,000. Net operating income for the company was $40,000 and traceable fixed expenses were $80,000. Corbel Corporation's common fixed expenses were:


A) $140,000
B) $60,000
C) $100,000
D) $80,000

E) A) and D)
F) A) and B)

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Lenart Corporation has provided the following data for its two most recent years of operation: Lenart Corporation has provided the following data for its two most recent years of operation: The unit product cost under absorption costing in Year 2 is closest to: A) $39.00 B) $23.00 C) $10.00 D) $33.00 Lenart Corporation has provided the following data for its two most recent years of operation: The unit product cost under absorption costing in Year 2 is closest to: A) $39.00 B) $23.00 C) $10.00 D) $33.00 The unit product cost under absorption costing in Year 2 is closest to:


A) $39.00
B) $23.00
C) $10.00
D) $33.00

E) C) and D)
F) B) and C)

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Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under absorption costing? A) $81 per unit B) $65 per unit C) $85 per unit D) $69 per unit Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under absorption costing? A) $81 per unit B) $65 per unit C) $85 per unit D) $69 per unit What is the unit product cost for the month under absorption costing?


A) $81 per unit
B) $65 per unit
C) $85 per unit
D) $69 per unit

E) B) and D)
F) B) and C)

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Neef Corporation has provided the following data for its two most recent years of operation: Neef Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under absorption costing in Year 1 is closest to: A) $137,000 B) $198,000 C) $29,000 D) $243,000 Neef Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under absorption costing in Year 1 is closest to: A) $137,000 B) $198,000 C) $29,000 D) $243,000 The net operating income (loss) under absorption costing in Year 1 is closest to:


A) $137,000
B) $198,000
C) $29,000
D) $243,000

E) None of the above
F) A) and B)

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Variable costing is more compatible with cost-volume-profit analysis than is absorption costing.

A) True
B) False

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Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period: Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period: What is the company's overall net operating income if it operates at the break-even points for its two divisions? A) $2,250 B) $0 C) $(73,080) D) $(359,080) What is the company's overall net operating income if it operates at the break-even points for its two divisions?


A) $2,250
B) $0
C) $(73,080)
D) $(359,080)

E) C) and D)
F) All of the above

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A company that produces a single product had a net operating income of $65,000 using variable costing and a net operating income of $95,000 using absorption costing. Total fixed manufacturing overhead was $60,000 and production was 10,000 units. This year was the first year of operations. Between the beginning and the end of the year, the inventory level:


A) decreased by 5,000 units
B) increased by 5,000 units
C) decreased by 30,000 units
D) increased by 30,000 units

E) B) and C)
F) A) and B)

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Bryans Corporation has provided the following data for its two most recent years of operation: Bryans Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under absorption costing in Year 2 is closest to: A) $146,000 B) $118,000 C) $47,000 D) $41,000 Bryans Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under absorption costing in Year 2 is closest to: A) $146,000 B) $118,000 C) $47,000 D) $41,000 The net operating income (loss) under absorption costing in Year 2 is closest to:


A) $146,000
B) $118,000
C) $47,000
D) $41,000

E) A) and D)
F) B) and C)

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Mandato Corporation has provided the following data for its two most recent years of operation: Mandato Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under variable costing in Year 1 is closest to: A) $144,000 B) $2,000 C) $26,000 D) $174,000 Mandato Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under variable costing in Year 1 is closest to: A) $144,000 B) $2,000 C) $26,000 D) $174,000 The net operating income (loss) under variable costing in Year 1 is closest to:


A) $144,000
B) $2,000
C) $26,000
D) $174,000

E) C) and D)
F) B) and C)

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Davitt Corporation produces a single product and has the following cost structure: Davitt Corporation produces a single product and has the following cost structure: Required: Compute the unit product cost under variable costing. Show your work! Required: Compute the unit product cost under variable costing. Show your work!

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A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the absorption costing unit product cost for the month? A) $124 per unit B) $132 per unit C) $113 per unit D) $143 per unit What is the absorption costing unit product cost for the month?


A) $124 per unit
B) $132 per unit
C) $113 per unit
D) $143 per unit

E) A) and D)
F) A) and C)

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The Southern Corporation manufactures a single product and has the following cost structure: The Southern Corporation manufactures a single product and has the following cost structure: Last year, 7,000 units were produced and 6,800 units were sold. There was no beginning inventory. Under variable costing, the unit product cost would be: A) $38 per unit B) $52 per unit C) $58 per unit D) $70 per unit Last year, 7,000 units were produced and 6,800 units were sold. There was no beginning inventory. Under variable costing, the unit product cost would be:


A) $38 per unit
B) $52 per unit
C) $58 per unit
D) $70 per unit

E) B) and C)
F) C) and D)

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