The following information relates to Charlin Industries for the year ending December 31, 2014, the company’s first year of operations: Units in ending inventory 20,000Fixed manufacturing
Trang 1Variable CostingSummary of Questions by Objectives and Bloom’s Taxonomy
Trang 21 The cost of ending inventory using variable costing is always greater than or equal to full costing
ending inventory
2 The cost of goods sold is always greater using variable costing than when full costing is used
3 During pPeriods in which inventory levels increase, sales revenue will be larger when using full
costing than if variable costing is used
4 Absorption costing is another name for variable costing
5 If a company has no fixed costs, variable costing income will equal full costing income, regardless
of any increase or decrease in inventory levels during the period
6 Variable costing income is more useful for decision making because costs are separated by function
7 Absorption costing is required for external reporting under generally accepted accounting principles
8 Under full costing, all fixed costs of production are included in Finished Goods Inventory and
remain there until all inventory units are sold
9 The total amount reported on an income statement for selling and administrative expense, reported
on the income statement, adds to is the same amount using regardless if variable of full costing is used as determined if by using full costing is used
10 In variable costing, fixed manufacturing overhead is considered a period cost
11 Income statements of manufacturing firms prepared for external purposes use variable costing
because it provides higher profits for making decisions
12 Under full costing, ending inventory includes both fixed and variable manufacturing and
nonmanufacturing costs
13 Under variable costing, ending inventory reported on a company’s balance sheet includes variable
production costs and variable selling and administrative costs
14 Contribution margin is reported on an absorption costing income statement
15 If the number of units sold is equal to the number of units produced, then contribution margin will
equal gross margin
16 Full costing income can be increased by decreasing production even though the additional inventory
items will not be sold during the current period
17 When the number of units produced exceeds the number of units sold, variable costing yields a
lower net income than if full costing had been used
18 Under variable costing, net income can be increased by increasing production without increasing
sales
Trang 319 The inventoriable cost per unit can be reduced, under variable costing, by decreasing the number of
units produced
20 When the number of units produced is greater than the number of units sold, variable costing yields
higher income than full costing
21 A full costing income statement will display a higher net income than variable costing as long as
inventory levels continue to increase
22 If a company increases production levels without increasing its units sold, both its full costing
income and cash flows will be larger than if production were at a lower level
23 Just-in-time (JIT) inventory management systems cause the difference between variable costing
income and full costing income to be much greater than if standard inventory levels had been maintained by the company
24 The use of variable costing encourages management of earnings by adjusting production volume
25 Variable costing facilitates CVP analysis
Trang 4MULTIPLE CHOICE
26 Full costing
A is another name for variable costing
B considers fixed manufacturing overhead as an inventory cost
C often provides the information needed for CVP analysis
D considers fixed production cost as period cost
27 Which of the following is accounted for differently in full costing compared to variable costing?
A Direct material
B Fixed manufacturing overhead
C Direct labor
D Variable manufacturing overhead
28 Which of the following is accounted for as a product cost in variable costing?
A Product delivery costs to customers
B Variable manufacturing overhead
C Fixed manufacturing overhead
D Product advertising costs
29 Which of the following is treated as a product cost in full costing?
A Sales commissions
B Product advertising
C Depreciation on factory machines
D Security at corporate headquarters
30 Full costing is
A more useful for decision making than variable costing because it treats all costs of
production as an inventory cost
B required for financial reporting under generally accepted accounting principles
C less likely to enable managers to manipulate income by increasing production
D based on cost behavior
31 In variable costing, when does fixed manufacturing overhead become an expense?
B In the period when the product is sold
C In the period when the expense is incurred
D At the time when units are produced
32 In full costing, when does fixed manufacturing overhead become an expense?
A In the period when all other fixed costs are expensed
B In the period when the product is sold
C In the period when the expense is incurred
D At the time units when are produced
33 In variable costing, which of the following will be included as part of inventory on a company’s
balance sheet?
A Fixed production cost
B Variable selling cost
C Fixed selling costs
D None of the answer choices will be part of inventory in variable costing
Trang 534 In full costing, which of the following will be included as part of inventory on a company’s balance
sheet?
A Fixed production cost
B Variable selling cost
C Fixed selling costs
D None of the answer choices will be in inventory in full costing
35 Rango Enterprises’ manufacturing costs for 2014 are as follows:
A $183,000
B $192,000
C $257,000
D $248,000
36 Sticker Creations’ fixed manufacturing overhead costs totaled $68,000 and its variable selling costs
totaled $45,000 Under full costing, how should these costs be classified?
A $220,000
B $293,000
C $402,000
D $372,000
38 Robley Company’s fixed manufacturing overhead costs totaled $235,000 and fixed corporate
operating costs totaled $116,000 Under full costing, how should these costs be classified?
Trang 639 Cold City Blowers produces snow blowers The selling price per snow blower is $80 Costs involved
in production are:
Variable manufacturing overhead per unit 6Fixed manufacturing overhead per year 206,400
In addition, the company has fixed selling and administrative costs of $88,000 per year During the year, Cold City Blowers produced 8,600 snow blowers and sold 8,000 snow blowers There is no beginning inventory Ignoring taxes, how much will full costing net income differ from variable costing net income?
A $15,480
B $14,400
C $206,400
D $192,000
40 Which of the following items appears on a variable costing income statement but not on a full
costing income statement?
A Sales
B Gross margin
C Net income
D Contribution margin
41 Variable costing income is a function of
A only units sold
B only units produced
C both units sold and units produced
D neither units sold nor units produced
42 Which of the following items on a variable costing income statement will change in direct
proportion to a change in sales?
A Sales, contribution margin, and net income
B Sales, variable costs, and contribution margin
C Sales, variable costs, contribution margin, fixed costs, and net income
D Sales, variable costs, and fixed costs
43 If a company’s income is positive and fixed costs exist, which of the following items will increase or
decrease at a greater rate than the change in the amount of sales on a variable costing income statement?
A Variable costs
B Fixed costs
C Contribution margin
D Net income
Trang 744 Ranger Productions experienced the following costs in 2014:
Variable manufacturing overhead $1.20 per unitVariable selling costs $4.40 per unitFixed manufacturing overhead $84,000
During 2014, the company manufactured 65,000 units and sold 62,000 units The unit cost is the same throughout the year Beginning inventory is zero How much will the company report as total variable product costs on its 2014 contribution income statement?
A $328,600
B $601,400
C $344,500
D $630,500
45 Anders Supply experienced the following costs in May:
Manufacturing overhead costs
Selling & administrative costsVariable selling costs $1.50 per unit
Fixed administrative costs $16,000During May, the company manufactured 22,000 units and sold 24,000 units Beginning inventory totaled 3,400 units If the average selling price per unit was $28, how much is the company’s
46 Roger Excavating Company experienced the following costs in 2014:
Variable manufacturing overhead $2.50 per unit
Fixed manufacturing overhead $50,000
Trang 847 Data from Rannier Metals for 2014 is as follows:
Fixed manufacturing overhead $85,000Variable selling & administrative costs ??
Fixed selling & administrative costs $150,000The company produced 145,000 units during the year and sold 130,000 units Variable production costs per unit and fixed costs have remained constant all year Net income for the year was
$1,000,000 How much was the company’s contribution margin?
A $765,000
B $1,235,000
C $1,365,000
D Not enough information is provided to determine the answer
48 During the past year, Waxman Electronics manufactured 25,000 speakers during 2014 and sold
26,000 speakers Production costs during the year were as follows:
Fixed manufacturing overhead $546,000Variable manufacturing overhead 234,000
Sales totaled $3,120,000, variable selling and administrative costs totaled $182,000, and fixed selling and administrative costs totaled $114,000 There were 2,200 speakers in beginning inventory.How much is the contribution margin per unit?
D None of these answer choices are correct
49 Cold City Blowers produces snow blowers The selling price per snow blower is $100 Costs
involved in production are:
Variable manufacturing overhead per unit 6Fixed manufacturing overhead per year 23,400
In addition, the company has fixed selling and administrative costs of $9,360 per year During the year, Cold City Blowers produced 780 snow blowers and sold 800 snow blowers Beginning inventory consisted of 50 snow blowers How much is variable cost of goods sold?
Trang 950 Cold City Blowers produces snow blowers The selling price per snow blower is $100 Costs
involved in production are:
Variable manufacturing overhead per unit 6Fixed manufacturing overhead per year 23,400
In addition, the company has fixed selling and administrative costs of $9,360 per year During the year, Cold City Blowers produced 780 snow blowers and sold 800 snow blowers Beginning
inventory consisted of 50 snow blowers How much is net income using variable costing?
A $11,700
B $12,240
C $12,840
D $45,600
51 The following information relates to Charlin Industries for the year ending December 31, 2014, the
company’s first year of operations:
Units in ending inventory 20,000Fixed manufacturing overhead $650,000How much fixed manufacturing overhead would be expensed in 2014 using variable costing?
Less variable costs:
Selling & administrative costs 18,000 118,000
Trang 1053 Acosta Supplies experienced the following costs in 2014:
Variable manufacturing overhead $2.00 per unit
Fixed manufacturing overhead $70,000Fixed selling and administrative $80,000During 2014, the company manufactured 4,000 units and sold 4,200 units Assume the same unit costs in all years Beginning inventory consists of 800 units How much are total variable costs on the company’s 2014 contribution margin income statement?
A $37,800
B $36,000
C $33,600
D $32,000
54 Beiber Boxers contribution income statement utilizing variable costing for 2014 appears below:
Less variable costs:
Selling & administrative 9,750 35,750
D None of these answer choices are correct
55 When the number of units sold is equal to the number of units produced, the net income be using
absorption costing will be
A greater than net income using variable costing
B equal to net income using variable costing
C less than net income using variable costing
D None of the answer choices is always correct
56 If the number of units sold is greater than the number of units produced,
A full costing and variable costing will yield the same net income
B variable costing will assign some fixed manufacturing costs to the units in ending inventory
C net income will be higher under variable costing than under full costing
D inventory levels will increase
Trang 1157 Meow Foods had 2,000 25-pound bags of cat food in beginning inventory During 2014, the
company manufactured 16,000 bags and sold 15,000 units Assume the same unit costs in all years Each bag of food is sold for $17 The company experienced the following costs:
Variable manufacturing overhead $1.90 per unit
Fixed manufacturing overhead $48,000
58 Meow Foods had 2,000 25-pound bags of cat food in beginning inventory During 2014, the
company manufactured 16,000 bags and sold 15,000 units Each bag of food is sold for $17 Assumethe same unit costs in all years The company experienced the following costs:
Variable manufacturing overhead $1.90 per unit
Fixed manufacturing overhead $48,000
59 Macho Enterprises experienced the following costs in 2014:
Variable manufacturing overhead $3.25 per unit
Fixed manufacturing overhead $94,000
Trang 1260 Ranger Roadsters experienced the following costs in 2014 (Assume the same unit costs in all years):
Manufacturing overhead costs
Selling & administrative costs
There were 6,000 units in beginning inventory During the year, the company manufactured 45,500 units and sold 48,000 units If net income using variable costing was $82,500, how much is net income using full costing?
A $78,375
B $86,625
C $76,725
D $88,275
61 The Crab Shack experienced the following costs in 2014 (Assume the same unit costs in all years):
Manufacturing overhead costs
Selling & administrative costs
There were 1,800 units in beginning inventory During the year, the company manufactured 24,000 units and sold 25,000 units If net income using variable costing was $76,250, how much is net income using full costing?
B $79,250
C $73,750
D $74,350
62 If a company’s levels of total fixed costs and unit variable costs remain unchanged from one year to
the next, under which costing method is it possible for managers to manipulate net income through production?
A Variable costing
B Full costing
C Both variable and full costing
D Neither variable nor full costing
63 Full costing income is a function of
A units sold only
B units produced only
C both units sold and units produced
D neither units sold nor units produced
Trang 1364 Which of the following is true when units produced exceed units sold?
A Full costing and variable costing will yield the same net income
B Full costing will assignssome a portion of the fixed manufacturing costs to the units in
ending inventory
C Net income will be higher under variable costing than under full costing
D Inventory levels will decrease
65 Futon Delight experienced the following costs in 2014 (Assume the same unit costs in all years):
Manufacturing Overhead Costs:
There were 600 units in beginning inventory During the year, the company manufactured 18,000 units and sold 17,600 units If net income for the year was $54,000 using full costing, how much willnet income be if the company uses variable costing?
A $53,000
B $50,000
C $55,000
D More information is needed to determine the answer
66 Radial Fuel Cells experienced the following costs in 2014 (Assume the same unit costs in all years):
Manufacturing Overhead Costs
During the year, the company manufactured 50,000 units and sold 45,000 units Beginning inventory
is zero If net income for the year was $265,000 using full costing, what would net income be if the company used variable costing?
A $250,000
B $265,000
C $270,000
D $450,000
67 If a company employs JIT inventory techniques, which statement is true?
A Variable and full costing income will differ very little since there is almost no inventory on
D Variable and full costing income will differ greatly since there will be a large difference
between gross margin and contribution margin
Trang 1468 Waterloo Skyline experienced the following costs in 2014:
Variable manufacturing overhead $1.45 per unitFixed manufacturing overhead $12.60 per unitThere was no beginning inventory During the year, the company sold 190,000 units If net income using full and variable costing was $939,020 and $905,000, respectively, how many units did the company produce in 2014?
70 Which method provides an incentive for managers to produce more units in order to increase income
for performance evaluations?
A Full costing
B Variable costing
C Both full costing and variable costing
D Neither full costing nor variable costing
71 Last month, Brand Products manufactured 25,000 calculators and sold 23,000 of these calculators at
a price of $10.00 each Manufacturing costs consisted of direct labor, $30,000; direct materials,
$32,000; variable manufacturing overhead, $3,500; fixed manufacturing overhead, $21,500 Selling and administrative costs are all fixed and totaled $24,000 Beginning inventory consists of no units What is Brand Products’ net income using variable costing?
A $125,960
B $149,960
C $169,740
D $124,240
72 Last month, Brand Products manufactured 25,000 calculators and sold 23,000 of these calculators at
a price of $10.00 each Manufacturing costs consisted of direct labor, $30,000; direct materials,
$32,000; variable manufacturing overhead, $3,500; fixed manufacturing overhead, $21,500 Selling and administrative costs are all fixed and totaled $24,000 Beginning inventory consists of no units What is Brand Products’ net income using full costing?
A $124,240
B $125,960
C $169,740
D $149,960
Trang 1573 Last month, Brand Products manufactured 25,000 calculators and sold 23,000 of these calculators at
a price of $10.00 each Manufacturing costs consisted of direct labor, $30,000; direct materials,
$32,000; variable manufacturing overhead, $3,500; fixed manufacturing overhead, $21,500 Selling and administrative costs are all fixed and totaled $24,000 Beginning inventory consists of no units Brand Products uses variable costing How much will the company’s contribution margin increase if sales increase 10%?
A $16,974
B $23,000
C $14,996
D $12,420
74 Last month, Brand Products manufactured 25,000 calculators and sold 23,000 of these calculators at
a price of $10.00 each Manufacturing costs consisted of direct labor, $30,000; direct materials,
$32,000; variable manufacturing overhead, $3,500; fixed manufacturing overhead, $21,500 Selling and administrative costs are all fixed and totaled $24,000 Beginning inventory consists of no units Brand Products uses full costing How much will the company’s gross margin increase if sales increase 10%?
A Less than 10%
B More than 10%
D It depends on other factors not given
75 Affinity makes a single product, pool pumps Information for 2014 appears below:
Fixed selling and administrative cost per year $24,000
How much is the contribution margin per unit of inventory?
Trang 1676 Affinity makes a single product, pool pumps Information for 2014 appears below (Assume the same
unit costs in all years):
Fixed selling and administrative cost per year $24,000
How much is the full cost per unit of inventory?
77 Affinity makes a single product, pool pumps Information for 2014 appears below (Assume the same
unit costs in all years):
Fixed selling and administrative cost per year $24,000
How much is net income for the year under variable costing?
A $78,400
B $87,600
C $80,400
D None of these answer choices are correct
78 Affinity makes a single product, pool pumps Information for 2014 appears below (Assume the same
unit costs in all years):
Fixed selling and administrative cost per year $24,000
How much is net income for the year under full costing?
Trang 1779 Affinity makes a single product, pool pumps Information for 2014 appears below (Assume the same
unit costs in all years):
Fixed selling and administrative cost per year $24,000
Under which method will net income be larger?
A Variable costing
B Full costing
C Net income under both the variable and full costing methods will be the same
D The answer cCannot be determined from the information provided
80 Affinity makes a single product, pool pumps Information for 2014 appears below (Assume the
same unit costs in all years):
Fixed selling and administrative cost per year $24,000
How much will be reported for inventory on the balance sheet if variable costing is used?
A $87,400
B $96,900
C $108,300
D $118,400
81 Leesburg Bags produces backpacks The costs and prices for the backpacks follow (Assume the
same unit costs in all years):
Variable costs:
Fixed Costs:
Selling and administrative $540,000 per yearLeesburg Bags produced 250,000 backpacks for the year and sold 200,000 There was no beginning inventory, and costs throughout the year were stable How much is the cost of ending inventory under variable costing?
A $550,000
B $650,000
C $730,000
D $1,450,000
Trang 1982 Leesburg Bags produces backpacks The costs and prices for the backpacks follow (Assume the
same unit costs in all years):
Variable costs:
Fixed Costs:
Selling and administrative $540,000 per yearLeesburg Bags produced 250,000 backpacks for the year and sold 200,000 There was no beginning inventory, and costs throughout the year were stable How much is the cost of ending inventory under full costing?
A $730,000
B $550,000
C $650,000
D $938,000
83 Leesburg Bags produces backpacks The costs and prices for the backpacks follow (Assume the
same unit costs in all years):
Variable costs:
Fixed Costs:
Selling and administrative $540,000 per yearLeesburg Bags produced 250,000 backpacks for the year and sold 200,000 There was no beginning inventory, and costs throughout the year were stable How much is net income under variable costing?
A $740,000
B $848,000
C $560,000
D $2,000,000
Trang 2084 Leesburg Bags produces backpacks The costs and prices for the backpacks follow (Assume the
same unit costs in all years):
Variable costs:
Fixed Costs:
Selling and administrative $540,000 per yearLeesburg Bags produced 250,000 backpacks for the year and sold 200,000 There was no beginning inventory, and costs throughout the year were stable How much is net income under full costing?
A $560,000
B $380,000
C $340,000
D $740,000
85 Leesburg Bags produces backpacks The costs and prices for the backpacks follow (Assume the
same unit costs in all years):
Variable costs:
Fixed Costs:
Selling and administrative $540,000 per yearLeesburg Bags produced 250,000 backpacks for the year and sold 200,000 There was no beginning inventory, and costs throughout the year were stable How much higher or lower will variable costing be than full costing income?
A $180,000 higher
B $320,000 higher
C $320,000 lower
D $180,000 lower
Trang 2186 Leesburg Bags produces backpacks The costs and prices for the backpacks follow (Assume the
same unit costs in all years):
Variable costs:
Fixed costs:
Selling and administrative $540,000 per yearLeesburg Bags produced 250,000 backpacks for the year and sold 200,000 There was no beginning inventory, and costs throughout the year were stable What would be the difference in income between variable costing income and full costing income if the company had produced 215,000 backpacks instead of 250,000?
A $62,791
B $54,000
C $46,400
D $77,400
87 WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it
sells for $8.00 each The following information is available (Assume the same unit costs in all years):
Trang 2287 WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it
sells for $8.00 each The following information is available (Assume the same unit costs in all years):
Selling and administration $130,000 per monthDuring June, 160,000 DVDs were produced and 144,000 were sold There were 17,000 DVDs in beginning inventory How much is net income per month under variable costing?
Trang 2388 WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it
sells for $8.00 each The following information is available (Assume the same unit costs in all years):
Selling and administration $130,000 per monthDuring June, 160,000 DVDs were produced and 144,000 were sold There were 17,000 DVDs in beginning inventory How much is net income per month under full costing?
A $143,600
B $130,640
C $130,800
D None of these answer choices are correct
89 WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it
sells for $8.00 each The following information is available (Assume the same unit costs in all years):
Selling and administration $130,000 per monthDuring June, 160,000 DVDs were produced and 144,000 were sold There were 17,000 DVDs in beginning inventory How much is inventory at the end of the month under variable costing?
A $72,000
B $148,500
C $174,900
D $84,800
Trang 2490 WebFlicks is an online DVD company that produces its own DVD copies of first-run movies that it
sells for $8.00 each The following information is available (Assume the same unit costs in all years):
Selling and administration $130,000 per monthDuring June, 160,000 DVDs were produced and 144,000 were sold There were 17,000 DVDs in beginning inventory How much is inventory at the end of the month under full costing?
A $72,000
B $148,500
C $174,900
D $84,800
91 Aerotrino produces and sells popular t-shirts Following is information about its t-shirts for 2014:
Variable costs:
Production (manufacturing costs) $3.00 per t-shirt
Fixed costs:
Production (manufacturing costs) $1,000,000 per year
During 2014, the company produced 400,000 t-shirts and sold 350,000 of them Assume that there was no beginning inventory How much is the net income under variable costing?
A $975,000
B $1,400,000
C $850,000
D $2,250,000
92 Aerotrino produces and sells popular t-shirts Following is information about its t-shirts for 2014:
Variable costs:
Production (manufacturing costs) $3.00 per t-shirt
Fixed costs:
Production (manufacturing costs) $1,000,000 per year
During 2014, the company produced 400,000 t-shirts and sold 350,000 of them Assume that there was no beginning inventory How much is the net income under full costing?
A $975,000
B $1,400,000
C $850,000
D $2,250,000
Trang 2593 Aerotrino produces and sells popular t-shirts Following is information about its t-shirts for 2014:
Variable costs:
Production (manufacturing costs) $3.00 per t-shirt
Fixed costs:
Production (manufacturing costs) $1,000,000 per year
During 2014, the company produced 400,000 t-shirts and sold 350,000 of them Assume that there was no beginning inventory How much is the inventory under variable costing at December 31, 2014?
A $150,000
B $275,000
C $200,000
D $325,000
94 Aerotrino produces and sells popular t-shirts Following is information about its t-shirts for 2014:
Variable costs:
Production (manufacturing costs) $3.00 per t-shirt
Fixed costs:
Production (manufacturing costs) $1,000,000 per year
During 2014, the company produced 400,000 t-shirts and sold 350,000 of them Assume that there was no beginning inventory How much is the inventory under full costing at December 31, 2014?
A $150,000
B $275,000
C $200,000
D $325,000