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38. A. The level of inventory of a manufactured product has increased by 8,070 units during...

38. A.

  1. The level of inventory of a manufactured product has increased by 8,070 units during a period. The following data are also available:

    Variable Fixed
    Unit manufacturing costs of the period $10 $4
    Unit operating expenses of the period $1 $5

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

    a. $72,630 decrease

    b. $72,630 increase

    c. $32,280 increase

    d. $32,280 decrease

38. B.

  1. Consider Derek's budget information: materials to be used totals $65,800; direct labor totals $201,100; factory overhead totals $394,000; work in process inventory January 1, $189,300; and work in progress inventory on December 31, $197,100. What is the budgeted cost of goods manufactured for the year?

    a. $660,900

    b. $653,100

    c. $197,100

    d. $850,200

38. C.

  1. Below is budgeted production and sales information for Flushing Company for the month of December:

    Product XXX Product ZZZ
    Estimated beginning inventory 31,300 units 18,800 units
    Desired ending inventory 35,800 units 15,200 units
    Region I, anticipated sales 305,000 units 254,000 units
    Region II, anticipated sales 193,000 units 142,000 units

    The unit selling price for product XXX is $5 and for product ZZZ is $15.

    Budgeted production for product ZZZ during the month is

    a. 396,000 units

    b. 565,100 units

    c. 411,200 units

    d. 392,400 units

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Answer #1
A
Increase in inventory 8070
X Fixed Unit manufacturing costs 4
Decrease in income from operations 32280
Option D $32,280 decrease is correct
B
Direct materials 65800
Direct labor 201100
Factory overhead 394000
Total manufacturing costs 660900
Add: Work in process inventory January 1 189300
850200
Less: Work in progress inventory on December 31 197100
Budgeted cost of goods manufactured 653100
Option B $653,100 is correct
C
Budgeted sales 396000 =254000+142000
Add :Desired ending inventory 15200
Less: Estimated beginning inventory (18800)
Budgeted production for product ZZZ 392400
Option D 392,400 units is correct
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