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Exam 20: Variable Costing for Management Analysis

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Question 21

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The relative distribution of sales among various products sold is referred to as the:

A) by-product mix
B) joint product mix
C) profit mix
D) sales mix

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

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Question 22

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Edna's Chocolates had planned to sell chocolate covered strawberries for $3.00 each. Due to various factors, the actual price was $2.75. Edna's was able to sell 1,000 more strawberries than the anticipated 4,000. What is 1) the quantity factor and 2) the price factor for sales?

A) 1) $3,000, 2) $1,250)
B) 1) $3,000, 2) $3,000)
C) 1) $1,250, 2) $3,000
D) 1) $4,000) 2) $3,000)

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

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Question 23

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For short-run production planning, information in the absorption costing format is more useful to management than is information in the variable costing format.

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what is the amount of the contribution margin that would be reported on the variable costing income statement?

If variable cost of goods sold totaled $80,000 for the year 16,000 units at $5.00 each) and the planned variable cost of goods sold totaled $86,250 15,000 units at $5.75 each) , the effect of the unit cost factor on the change in contribution margin is:

Companies prepare contribution margin reports by market segments and product segments because products contribute to profitability in various ways.

Fixed costs are $10 per unit and variable costs are $25 per unit. Production was 13,000 units, while sales were 12,000 units. Determine a) whether variable costing income from operations is less than or greater than absorption costing income from operations, and b) the difference in variable costing and absorption costing income from operations.

The amount of income under absorption costing will be less than the amount of income under variable costing when units manufactured:

On the variable costing income statement, the amounts representing the difference between the contribution margin and income from operations is the fixed manufacturing costs and fixed selling and administrative expenses.

Managers in service firms do not find contribution margin analysis reports useful because their firms do not sell inventory.

Presented below are the major categories or captions that would appear on an income statement prepared in the variable costing format: Contribution margin Fixed costs Income from operations Manufacturing margin Sales Variable cost of goods sold Variable selling and administrative expenses a) Arrange the above captions in the proper order in accordance with the variable costing concept. b) Which of the captions represents 1) the difference between sales and the total of all the variable costs and expenses and 2) the remaining amount of revenue available for fixed manufacturing costs, fixed expenses, and net income?

For short-run production planning, information in the variable costing format is more useful to management than is information in the absorption costing concept format.

MATCHING -Includes gross profit on the income statement.

In variable costing, fixed costs do not become part of the cost of goods manufactured, but are considered an expense of the period.

Service firms can only have one activity base for analyzing changes in costs.

The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured:

If sales totaled $800,000 for the year 80,000 units at $10.00 each) and the planned sales totaled $799,500 78,000 units at $10.25 each) , the effect of the unit price factor on the change in sales is:

The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available: What would be the effect on income from operations if variable costing is used rather than absorption costing?

If sales totaled $200,000 for the current year 10,000 units at $20 each) and planned sales totaled $212,500 12,500 units at $17 each) , the effect of the unit price factor on the change in sales is a:

The beginning inventory is 5,000 units. All of the units manufactured during the period and 3,000 units of the beginning inventory were sold. The beginning inventory fixed costs are $25 per unit, and variable costs are $55 per unit. Determine a) whether variable costing income from operations is less than or greater than absorption costing income from operations, and b) the difference in variable costing and absorption income from operations.