Question

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

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

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:

	Variable	Fixed
Unit manufacturing costs of the period	$14	$8
Unit operating expenses of the period	$4	$3

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:

Production costs (19,800 units):
??? Direct materials	$180,400
??? Direct labor	229,400
??? Variable factory overhead	261,500
??? Fixed factory overhead	95,600	$766,900
Operating expenses:
??? Variable operating expenses	$120,700
??? Fixed operating expenses	47,100	167,800

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:

Standard costs	7,300 hours at $11.50
Actual costs	6,200 hours at $10.70

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:

	Variable	Fixed
Unit manufacturing costs of the period	$12	$6
Unit operating expenses of the period	$1	$4

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

Answer 1

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