Variable Costing

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Variable Costing Questions and Answers

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Matt Company had the following costs. Calculate the unit product cost using variable costing. Round answer to the nearest cent. Show the labels and enter the amounts to compute the unit product cos...
Give ONE argument either in favor of treating fixed manufacturing costs as product costs, or in favor of treating them as period costs.
How do you find the variable cost per bill mailed under the current paper-based system?
Discuss the use of variable costing for decision making in a manufacturing company and a service company.
Vernon Inc. manufactures and sells one product. Sales and production information is contained below. a) Prepare the income statement using variable costing. b) Prepare the income statement using ab...
When the activity level is expected to increase within the relevant range, what effects would be anticipated with respect to each of the following? a) Fixed costs per unit decrease and variable cos...
Assume the company uses variable costing. Determine its product cost per unit. Cool Sky reports the following costing data on its product for its first year of operations. During this first year,...
Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 42,000 units and sold 34,000 units at a price of $120 per u...
1. How does variable costing help a company make good management decisions? 2. List some examples of ways in which a business would report items that utilize variable costing models.
A firm operated at 90% capacity for the past year, during which fixed costs were $320,000, variable costs were 60% of sales, and sales were $1,000,000. Income from Operations was: a. $680,000. b. $...
Company produces 4,000 chocolate bars. Sold 3,500. No bars at the beginning. Variable Cost per unit: Production $4 Selling and administrative $1 Fixed Cost in total: Production $12,000 Sell...
Assume that Winter Sports' reputation has diminished and other resorts in the vicinity are charging only $65 per lift ticket. Winter Sports has become a price-taker and won't be able to charge more...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $602,100 and has $348,100 of accumulated depreciation to date, with a new machine that costs $...
Mop and Broom Manufacturing has decided to produce a new type of mop. The mop can be made with the current equipment in place. Estimates of fixed costs per year are $40,000, and the variable cost f...
Which is the correct answer on the 3 questions below? Division 1 of Ace Company makes and sells wheels that can either be sold to outside customers or transferred to Division 2. The following data...
1. Board averaging leads to: a) variable product costs; b) accurate service costs; c) inaccurate product costs; d) service product cost; e) accurate product costs. 2. Which of the following is not...
Determine how variable costs change as activity measures change. How can this information be applied?
All of the following are potential advantages of variable costing except that: a. its use is consistent with cost-volume-profit and incremental analysis. b. variable costing net income is affected...
Ruth Company incurred the following costs in July: Units produced 1,000 units Direct materials $30 per unit Direct labor $25 per unit Variable manufacturing overhead $10 per unit Fixed manufacturi...
Willis Company had an operating profit of $75,000 using variable costing and an operating profit of $57,000 using absorption costing. Variable production costs were $15 per unit. Total fixed manufa...
Use your own example or graph to show: a) the difference between variable cost and fixed cost b) the difference between a financial income statement and a managerial (contribution-format) income st...
Callander Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $203 per...
Garson Company sells a product for $90 per unit. Variable costs are $50 per unit, and fixed costs are $2,500 per month. The company expects to sell 610 units in September. Calculate the contributio...
Besse, Ltd. manufactures a single product that had the following cost structure this year: Variable Manufacturing Cost per unit: $12 Variable Selling and Administrative cost per unit: $8 Fixed M...
Concord Corporation sells its product for $80 per unit. During 2016, it produced 60,000 units and sold 50,000 units (there was no beginning inventory).
In selecting between production of two different products, the best course of action is to: a. select the option which produces the highest per unit contribution margin. b. None of these choices. c...
Solid Company manufactures and sells specialty items. The following representative direct labor hours and production costs are provided for a four month period:
Review the income statements on the Absorption Statement andVariable Statement panels, then complete the table below. The company?s sales price per unit is $80.00, and the number of units in ending...
1)A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (5,000 units): Direct materials: $70,000 Direct labor: 20,000 Variable factor...
Two costs at Simpson, Inc. appear below for specific months of operation. Which type of costs are these? a. Delivery costs and utilities are both variable. b. Delivery costs and utilities are b...
During its first year of operations, Carlos Manufacturing Corporation incurred the following costs to produce 8,000 units of its only product:
1. A variable is a factor that: A. is not affected by changes in other factors. B. cannot be measured. C. takes different values at different points of time. D. is independent and cannot be det...
Trio Company reports the following information for the current year, which is its first year of operations: Direct materials $12 per unit Direct labor $19 per unit Overhead costs for the year Var...
Trio Company reports the following information for the current year, which is its first year of operations. Direct materials $ 9.50 per unit Direct labor $ 10.50 per unit Overhead costs for the ye...
Supplies Expense of $4,000 was recorded for 20x7. Assuming that $2,200 in supplies were purchased during the year and $640 in supplies remained at year end, what was the cost of supplies at the beg...
Red and White Company reported the following monthly data: Units produced 3,100 units, Sales price $36 per unit, Direct materials $6 per unit, Direct labor $7 per unit, Variable overhead $8 per uni...
Which of the following statements is true for a firm that uses "direct" (variable) costing? a. Product costs include "direct" (variable) administrative costs. b. Profits fluctuate with sales. c....
At the start of the year, Finished good Goods Inventory=$1,000,000. At the end of the year, the company had a Finished Good Inventory=$1,400,000. During the year, the company incurred $400,000 of d...
Do differences in production and sales levels affect income under absorption and variable costing?
Suppose that production for good X is characterized by the following production function, Q=4(K)^{0.5} (L)^{0.5}, where K is the fixed input set at K=9 in the short run.If the per-unit rental rate...
Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing basis are as follows: Manufacturing costs (per unit): Direct materials (3 lbs. @ 1.40) $4.20 Di...
Below is a variable costing income statement for Wilner Glass Company, a maker of bottles for the b
Round corporation had the following slogs and production for the past four years: Year 1 Year 2 Year 3 Year 4 Production in units 5,000 6,000 5,000 5,000 Sales in units 4,000 5,000 5,000 7,000 Sol...
Journalize the following transactions for Shelton, Inc (a) Incurred direct labor costs of $24,300 for 4,590 hours. The standard labor cost was $25,888. (b) Assigned 4,590 direct labor hours costing...
The following data were adapted from a recent income statement of Procter & Gamble Company. Assume that the variable amount of each category of operating costs is as follows: a. Based on the data...
During its first year of operations, Snobegon, Inc. (located in Lake Snobegon, Minnesota), Produced 40,000 plastic snow scoops. Snow scoops are oversized shovel-type scoops that are used to push sn...
Leigh Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $100 Units in beginning inventory 300 Units produced 1,200 U...
Your hospital has been approached by a major HMO to perform all their MSDRG 505 cases (foot surgeries). They have offered a flat payment of $8,000 per case. You have reviewed your charges for MSDRG...
Which of the following best describes costs assigned to the product under the variable costing method? Direct labor (DL) Direct materials (DM) Variable selling and administrative Variable manuf...
Whirlpool Corporation had the following abbreviated income statement for a recent year: (in millions) Net sales $18,666 Cost of goods sold $16,089 Selling, administrative, and other expenses 1,621...
Champion Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2014 are as follows: The selling price per vehicle is $27,000. The budgeted leve...
Jorgansen Light manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for Internal management reports and absorption costing for external reports to...
What are the advantages of Variable Costing and the Contribution Approach? Explain each and provide examples. 2) Absorption Costing meets the requirement Matching Principal; explain how and compare
A flexible budget expresses variable costs on a per unit basis and fixed costs on a total basis. True False
During the first month of operations ended May 31, 2016, Frost Point Fridge Company manufactured 40,000 mini-refrigerators, of which 36,000 were sold. Operating data for the month are summarized as...
The following information applies to the products of Kaiser Company. Product A Product B Selling price per unit $20 $16 Variable price per unit 12 8 (Consider each constraint separately.) a-1. On...
Marwick s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,498 each from the manufacturer. Marwick s Pianos, Inc., se...
It is the end of 2011. Ginnungagap Oy began operations in January 2010. The company is so named because it has no variable costs. All its costs are fixed; they do not vary with output. Ginnungagap...
Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. To aid in planning, the company has decided to start using a contributio...
Temperance, Inc, is studying marketing cost and sales volumes, and has generated the following information by use of a scatter diagram and a least squares regression analysis. Temperance is now pre...
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