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Managerial Accounting, 16e (Garrison)
Appendix 6A Super-Variable Costing
1) The super-variable costing net operating income period can be computed by multiplying the
number of units sold by the gross margin per unit.
2) All differences between super-variable costing and variable costing net operating income are
explained by the accounting for manufacturing overhead costs.
3) Super-variable costing is a costing method mat treats direct labor and manufacturing overhead
costs as product costs.
4) Under super-variable costing, which of the following is treated as a period cost?
Direct material
Variable manufacturing
overhead
A)
Yes
Yes
B)
No
Yes
C)
Yes
No
D)
No
No
A) Choice A
B) Choice B
C) Choice C
D) Choice D
5) Super-variable costing is most appropriate where:
A) direct labor is a fixed cost.
B) it is easy to accurately separate the variable and fixed components of manufacturing
overhead.
C) direct labor is a variable cost.
D) manufacturing overhead consists entirely of variable cost.
6) Grandin Corporation manufactures and sells one product. The following information pertains
to the company's first year of operations:
Variable costs per unit:
Direct materials
$
97
Fixed costs per year:
Direct labor
$
1,056,000
Fixed manufacturing overhead
$
2,288,000
Fixed selling and administrative expenses
$
1,435,000
The company does not have any variable manufacturing overhead costs or variable selling and
administrative expenses. During its first year of operations, the company produced 44,000 units
and sold 41,000 units. The company's only product is sold for $242 per unit.
The company is considering using either super-variable costing or a variable costing system that
assigns $24 of direct labor cost to each unit that is produced. Which of the following statements
is true regarding the net operating income in the first year?
A) Super-variable costing net operating income exceeds variable costing net operating income by
$72,000.
B) Variable costing net operating income exceeds super-variable costing net operating income by
$156,000.
C) Super-variable costing net operating income exceeds variable costing net operating income by
$156,000.
D) Variable costing net operating income exceeds super-variable costing net operating income
by $72,000.
7) Paparelli Corporation manufactures and sells one product. The following information pertains
to the company's first year of operations:
Variable costs per unit:
Direct materials
$
80
Fixed costs per year:
Direct labor
$
800,000
Fixed manufacturing overhead
$
2,720,000
Fixed selling and administrative expenses
$
1,452,000
The company does not have any variable manufacturing overhead costs or variable selling and
administrative expenses. During its first year of operations, the company produced 40,000 units
and sold 33,000 units. The company's only product is sold for $240 per unit.
The net operating income for the year under super-variable costing is:
A) $308,000
B) $(252,000)
C) $924,000
D) $448,000
8) Souffront Corporation manufactures and sells one product. In the company's first year of
operations, the variable cost consisted solely of direct materials of $97 per unit. The annual fixed
costs were $1,416,000 of direct labor cost, $3,776,000 of fixed manufacturing overhead expense,
and $1,650,000 of fixed selling and administrative expense. The company does not have any
variable manufacturing overhead costs or variable selling and administrative expenses. During its
first year of operations, the company produced 59,000 units and sold 55,000 units. The
company's only product is sold for $251 per unit. The net operating income for the year under
super-variable costing is:
A) $1,628,000
B) $1,724,000
C) $1,240,000
D) $1,980,000
9) Michelman Corporation manufactures and sells one product. The following information
pertains to the company's first year of operations:
Variable costs per unit:
Direct materials
$
89
Fixed costs per year:
Direct labor
$
952,000
Fixed manufacturing overhead
$
2,550,000
Fixed selling and administrative expenses
$
992,000
The company does not have any variable manufacturing overhead costs or variable selling and
administrative expenses. During its first year of operations, the company produced 34,000 units
and sold 31,000 units. The company's only product is sold for $254 per unit.
The company is considering using either super-variable costing or an absorption costing system
that assigns $28 of direct labor cost and $75 of fixed manufacturing overhead to each unit that is
produced. Which of the following statements is true regarding the net operating income in the
first year?
A) Absorption costing net operating income exceeds super-variable costing net operating income
by $309,000.
B) Absorption costing net operating income exceeds super-variable costing net operating income
by $225,000.
C) Super-variable costing net operating income exceeds absorption costing net operating income
by $309,000.
D) Super-variable costing net operating income exceeds absorption costing net operating income
by $225,000.
10) Buckbee Corporation manufactures and sells one product. The following information
pertains to the company's first year of operations:
Variable costs per unit:
Direct materials
$
97
Fixed costs per year:
Direct labor
$
629,000
Fixed manufacturing overhead
$
2,849,000
Fixed selling and administrative expenses
$
1,056,000
The company does not have any variable manufacturing overhead costs or variable selling and
administrative expenses. During its first year of operations, the company produced 37,000 units
and sold 32,000 units. The company's only product is sold for $261 per unit.
The unit product cost under super-variable costing is:
A) $97 per unit
B) $191 per unit
C) $224 per unit
D) $114 per unit
11) Buckbee Corporation manufactures and sells one product. The following information
pertains to the company's first year of operations:
Variable costs per unit:
Direct materials
$
97
Fixed costs per year:
Direct labor
$
629,000
Fixed manufacturing overhead
$
2,849,000
Fixed selling and administrative expenses
$
1,056,000
The company does not have any variable manufacturing overhead costs or variable selling and
administrative expenses. During its first year of operations, the company produced 37,000 units
and sold 32,000 units. The company's only product is sold for $261 per unit.
The net operating income for the year under super-variable costing is:
A) $799,000
B) $229,000
C) $714,000
D) $1,184,000
12) Buckbee Corporation manufactures and sells one product. The following information
pertains to the company's first year of operations:
Variable costs per unit:
Direct materials
$
97
Fixed costs per year:
Direct labor
$
629,000
Fixed manufacturing overhead
$
2,849,000
Fixed selling and administrative expenses
$
1,056,000
The company does not have any variable manufacturing overhead costs or variable selling and
administrative expenses. During its first year of operations, the company produced 37,000 units
and sold 32,000 units. The company's only product is sold for $261 per unit.
Assume that the company uses a variable costing system that assigns $17 of direct labor cost to
each unit that is produced. The unit product cost under this costing system is:
A) $114 per unit
B) $191 per unit
C) $97 per unit
D) $224 per unit
13) Buckbee Corporation manufactures and sells one product. The following information
pertains to the company's first year of operations:
Variable costs per unit:
Direct materials
$
97
Fixed costs per year:
Direct labor
$
629,000
Fixed manufacturing overhead
$
2,849,000
Fixed selling and administrative expenses
$
1,056,000
The company does not have any variable manufacturing overhead costs or variable selling and
administrative expenses. During its first year of operations, the company produced 37,000 units
and sold 32,000 units. The company's only product is sold for $261 per unit.
Assume that the company uses a variable costing system that assigns $17 of direct labor cost to
each unit that is produced. The net operating income under this costing system is:
A) $1,184,000
B) $229,000
C) $714,000
D) $799,000
14) Leheny Corporation manufactures and sells one product. The following information pertains
to the company's first year of operations:
Variable costs per unit:
Direct materials
$
85
Fixed costs per year:
Direct labor
$
1,155,000
Fixed manufacturing overhead
$
3,190,000
Fixed selling and administrative expenses
$
2,300,000
The company does not have any variable manufacturing overhead costs or variable selling and
administrative expenses. During its first year of operations, the company produced 55,000 units
and sold 50,000 units. The company's only product is sold for $238 per unit.
The net operating income for the year under super-variable costing is:
A) $1,400,000
B) $1,110,000
C) $1,005,000
D) $580,000
15) Leheny Corporation manufactures and sells one product. The following information pertains
to the company's first year of operations:
Variable costs per unit:
Direct materials
$
85
Fixed costs per year:
Direct labor
$
1,155,000
Fixed manufacturing overhead
$
3,190,000
Fixed selling and administrative expenses
$
2,300,000
The company does not have any variable manufacturing overhead costs or variable selling and
administrative expenses. During its first year of operations, the company produced 55,000 units
and sold 50,000 units. The company's only product is sold for $238 per unit.
Assume that the company uses a variable costing system that assigns $21 of direct labor cost to
each unit that is produced. The net operating income under this costing system is:
A) $1,400,000
B) $1,005,000
C) $1,110,000
D) $580,000
16) Leheny Corporation manufactures and sells one product. The following information pertains
to the company's first year of operations:
Variable costs per unit:
Direct materials
$
85
Fixed costs per year:
Direct labor
$
1,155,000
Fixed manufacturing overhead
$
3,190,000
Fixed selling and administrative expenses
$
2,300,000
The company does not have any variable manufacturing overhead costs or variable selling and
administrative expenses. During its first year of operations, the company produced 55,000 units
and sold 50,000 units. The company's only product is sold for $238 per unit.
Assume that the company uses an absorption costing system that assigns $21 of direct labor cost
and $58 of fixed manufacturing overhead to each unit that is produced. The net operating income
under this costing system is:
A) $580,000
B) $1,400,000
C) $1,005,000
D) $1,110,000
17) Union Corporation manufactures and sells one product. The following information pertains
to the company's first year of operations:
Variable costs per unit:
Direct materials
$
82
Fixed costs per year:
Direct labor
$
528,000
Fixed manufacturing overhead
$
1,632,000
Fixed selling and administrative expenses
$
646,000
The company does not have any variable manufacturing overhead costs or variable selling and
administrative expenses. During its first year of operations, the company produced 24,000 units
and sold 17,000 units. The company's only product is sold for $232 per unit.
The net operating income for the year under super-variable costing is:
A) $(256,000)
B) $(830,000)
C) $(102,000)
D) $374,000
18) Union Corporation manufactures and sells one product. The following information pertains
to the company's first year of operations:
Variable costs per unit:
Direct materials
$
82
Fixed costs per year:
Direct labor
$
528,000
Fixed manufacturing overhead
$
1,632,000
Fixed selling and administrative expenses
$
646,000
The company does not have any variable manufacturing overhead costs or variable selling and
administrative expenses. During its first year of operations, the company produced 24,000 units
and sold 17,000 units. The company's only product is sold for $232 per unit.
Assume that the company uses an absorption costing system that assigns $22 of direct labor cost
and $68 of fixed manufacturing overhead to each unit that is produced. The net operating income
under this costing system is:
A) $(102,000)
B) $374,000
C) $(830,000)
D) $(256,000)
