3). A business operated at 100% of capacity during its first month and incurred

Question

3). A business operated at 100% of capacity during its first month and incurred the following costs:

If 1,800 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet?

a.$67,475

b.$95,511

c.$77,274

d.$81,030

6). If sales totaled $230,307 for the current year (10,967 units at $21 each) and planned sales totaled $152,472 (12,706 units at $12 each), the effect of the unit price factor on the change in sales is a:

a.$77,835 increase

b.$114,354 increase

c.$98,703 increase

d.$98,703 decrease

8). The level of inventory of a manufactured product has increased by 8,453 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?

a.$67,624 increase

b.$67,624 decrease

c.$92,983 decrease

d.$92,983 increase

13). A business operated at 100% of capacity during its first month and incurred the following costs:

If 1,500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

a.$70,811

b.$50,865

c.$58,098

d.$60,000

15).The following data relate to direct labor costs for the current period:

What is the direct labor time variance?

a.$12,650 unfavorable

b.$11,770 favorable

c.$11,770 unfavorable

d.$12,650 favorable

18).The level of inventory of a manufactured product has increased by 8,292 units during a period. The following data are also available:

What would be the effect on income from operations if absorption costing is used rather than variable costing?

a.$82,920 decrease

b.$82,920 increase

c.$49,752 increase

d.$49,752 decrease

Production costs (17,900 units): ??? Direct materials $173,200 ??? Direct labor 237,200 ??? Variable factory overhead 260,600 ??? Fixed factory overhead 97,300 $768,300 Operating expenses: ??? Variable operating expenses $134,800 ??? Fixed operating expenses 46,700 181,500

Explanation / Answer

Answer

3) c.$77,274

Working

3)

Ending Inventory in unit = 1800 Unit (given)

Under the absorption costing

Unit Product Cost = Direct materials + Direct labor + Variable factory Overhead + Fixed factory Overhead

Unit Product Cost = 173200/17900 + 237200/17900 + 260600/17900 + 97300/17900

Unit Product Cost = 9.68 + 13.25 + 14.56 + 5.44

Unit Product Cost = 42.93

Amount of inventory that would be reported on the absorption costing balance sheet = Ending Inventory in unit * Unit Product Cost

Amount of inventory that would be reported on the absorption costing balance sheet = 1800*42.93

Amount of inventory that would be reported on the absorption costing balance sheet = 77274

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