If the company\'s cost per unit of finished geodes using absorption costing is $
ID: 2465262 • Letter: I
Question
If the company's cost per unit of finished geodes using absorption costing is $39.75, what is total variable overhead Magenta Inc, reports the following information for the current year, which is its first year of operations: $925,000 $877,500 $937,500 $865,800 $5,437,500 Accurate Metal Company sold 32,000 units of its product at a price of $250 per unit. Total variable cast per unit is $155. consisting of $145 in variable production cost and $5 in variable selling and administrative cost. Compute the manufacturing margin for the company under variable costing. $8,000,000 $4,960,000 $4,800,000 $3,360,000 $3,200,000 Given this information, which of the following is true Vision Tester. Inc., a manufacturer of optical glass, began operations on February 1 of the current year. During this time, the company produced 900,000 units and sold 800.000 units at a sales price of $12 per unit. Cost information for this year is shown in the following table: Net income under variable costing will exceed net income under absorption costing by $50,000. Net income under absorption costing will exceed net income under variable costing by $50,000. Net income will be the same under both absorption and variable costing. Net income under variable costing will exceed net income under absorption costing by $60,000. Net income under absorption costing will exceed net income under variable costing by $60,000.Explanation / Answer
68. The correct answer is C. $ 937,500.
Workings: Fixed overhead cost per unit = $ 4,500,000 / 750,000 = $ 6
Variable manufacturing overhead cost per unit = $ ( 39.75 - 6) = $ 33.75
Variable overhead cost per unit = Variable manufacturing cost per unit - Direct material cost - Direct labor cost = $ 33.75 - $ 18.30 - $ 14.20 = $ 1.25
Total variable overhead cost = $ 1.25 x 750,000 = $ 937,500
69. The correct option is D. $ 3,360,000
Manufacturing margin per unit =Selling price per unit - Variable production cost = $ 250 - $ 145 = $ 105
Total manufacturing margin = 32,000 x $ 105 = $ 3,360,000
70. The correct option is B. Net income under absorption costing will exceed net income under variable costing by $ 50,000.
Reason: Fixed manufacturing overhead cost per unit = $ 450,000 / 900,000 = $ 0.50
As there is an ending inventory of 100,000 units, $ 0.50 per unit gets deferred to the next accounting period as part of ending inventory. Total fixed manufacturing overhead deferred is 100,000 x $ 0.50 or $ 50,000. To that extent, the net income under absorption costing will exceed the net income under variable costing.
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