95) Given Advanced Company’s data, and the knowledge that the product is sold for $50 per unit
and operating expenses are $200,000, compute the net income under absorption costing.
A) $55,000
B) $67,500
C) $80,500
D) $122,500
E) $205,000
96) Given Advanced Company’s data, and the knowledge that the product is sold for $50 per unit
and operating expenses are $200,000, compute the net income under variable costing.
A) $55,000
B) $67,500
C) $80,500
D) $122,500
E) $205,000
97) Clear Company reports the following information for its first year of operations:
Units produced this year
50,000
units
Units sold this year
49,000
units
Direct materials
$
7
per unit
Direct labor
$
3
per unit
Variable overhead
$
4.20
per unit
Fixed overhead
?
in total
If the company’s cost per unit of finished goods using absorption costing is $19.30, what is total
fixed overhead?
A) $350,000
B) $255,000
C) $150,000
D) $249,900
E) $147,000
98) Milton Company reports the following information for the current year:
Units produced this year
45,000
units
Units sold this year
53,000
units
Direct materials
$
5
per unit
Direct labor
$
2
per unit
Variable overhead
$
6
per unit
Fixed overhead
?
in total
If the company’s cost per unit of finished goods using absorption costing is $18, what is total
fixed overhead?
A) $225,000
B) $180,000
C) $270,000
D) $315,000
E) $720,000
99) Gage Company reports the following information for its first year of operations:
Units produced this year
7,000
units
Units sold this year
6,500
units
Direct materials
$
22
per unit
Direct labor
$
30
per unit
Variable overhead
?
in total
Fixed overhead
$
56,000
in total
If the company’s cost per unit of finished goods using variable costing is $63, what is total
variable overhead?
A) $21,000
B) $71,500
C) $77,000
D) $19,500
E) $16,590
100) A company reports the following information for its first year of operations:
Units produced this year
650
Units sold this year
500
Direct materials
$
750
Direct labor
$
1,000
Variable overhead
?
Fixed overhead
$
308,750
If the company’s cost per unit of finished goods using variable costing is $2,375, what is total
variable overhead?
A) $237,500
B) $75,000
C) $312,500
D) $406,250
E) $97,500
101) Magenta Inc. reports the following information for the current year, which is its first year of
operations:
Units produced this year
750,000
units
Units sold this year
740,000
units
Direct materials
$
18.30
per unit
Direct labor
$
14.20
per unit
Variable overhead
?
in total
Fixed overhead
$
4,500,000
in total
If the company’s cost per unit of finished goods using absorption costing is $39.75, what is total
variable overhead?
A) $925,000
B) $877,500
C) $937,500
D) $865,800
E) $5,437,500
102) A company reports the following information for its first year of operations:
Units produced this year
43,000
units
Units sold this year
39,000
units
Direct materials
$
0.57
per unit
Direct labor
$
0.83
per unit
Variable overhead
$
26,660
in total
Fixed overhead
?
in total
If the company’s cost per unit of finished goods using variable costing is $2.02, what is the
amount of total fixed overhead?
A) $26,660
B) $35,690
C) $24,510
D) $60,200
E) Cannot be determined from the given data.
103) A company reports the following information for its first year of operations:
Units produced this year
?
units
Units sold this year
1,500
units
Direct materials
$
9
per unit
Direct labor
$
5
per unit
Variable overhead
$
7
per unit
Fixed overhead
$
24,000
in total
If the company’s cost per unit of finished goods using absorption costing is $27, how many units
were produced?
A) 4,000 units.
B) 3,600 units.
C) 1,846 units.
D) 2,667 units.
E) 2,000 units.
104) Accurate Metal Company sold 32,000 units of its product at a price of $250 per unit. Total
variable cost per unit is $150, 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.
A) $8,000,000
B) $4,960,000
C) $4,800,000
D) $3,360,000
E) $3,200,000
105) Chance, Inc. sold 3,000 units of its product at a price of $72 per unit. Total variable cost per
unit is $51, consisting of $32 in variable production cost and $19 in variable selling and
administrative cost. Compute the manufacturing margin for the company under variable costing.
A) $96,000
B) $63,000
C) $120,000
D) $216,000
E) ($90,000)
106) 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:
Production costs
Direct materials
$
0.80
per unit
Direct labor
$
0.70
per unit
Variable overhead
$
500,000
in total
Fixed overhead
$
450,000
in total
Non-production costs
Variable selling and administrative
$
30,000
in total
Fixed selling and administrative
$
490,000
in total
Given this information, which of the following is true?
A) Net income under variable costing will exceed net income under absorption costing by
$50,000.
B) Net income under absorption costing will exceed net income under variable costing by
$50,000.
C) Net income will be the same under both absorption and variable costing.
D) Net income under variable costing will exceed net income under absorption costing by
$60,000.
E) Net income under absorption costing will exceed net income under variable costing by
$60,000.
[The following information applies to the questions displayed below.]
Galaxy, Inc., a manufacturer of telescopes, began operations on June 1 of the current year.
During this time, the company produced 60,000 units and sold 40,000 units at a sales price of
$600 per unit. Cost information for this year is shown in the following table:
Production costs
Direct materials
$
90
per unit
Direct labor
$
75
per unit
Variable overhead
$
4
per unit
Fixed overhead
$
420,000
in total
Non-production costs
Variable selling and administrative
$
80,000
in total
Fixed selling and administrative
$
520,000
in total
107) Given the Galaxy, Inc. data, what is net income using absorption costing?
A) $11,275,000
B) $17,400,000
C) $16,360,000
D) $16,800,000
E) $16,220,000
108) Given the Galaxy Inc. data, what is net income using variable costing?
A) $16,220,000
B) $17,400,000
C) $16,360,000
D) $11,275,000
E) $16,800,000
[The following information applies to the questions displayed below.]
Scavenger Company, a manufacturer of recycling bins, began operations on January 1 of the
current year. During this time, the company produced 60,000 units and sold 55,000 units at a
sales price of $15 per unit. Cost information for this year is shown in the following table:
Production costs
Direct materials
$
2.50
per unit
Direct labor
$
3.00
per unit
Variable overhead
$
0.75
per unit
Fixed overhead
$
240,000
in total
Non-production costs
Variable selling and administrative
$
10,000
in total
Fixed selling and administrative
$
50,000
in total
109) Given the Scavenger Company data, what is net income using absorption costing?
A) $201,250
B) $181,250
C) $150,000
D) $177,600
E) $276,250
110) Given the Scavenger Company data, what is net income using variable costing?
A) $201,250
B) $181,250
C) $150,000
D) $177,600
E) $276,250
111) Brush Industries reports the following information for May:
Sales
$
900,000
Fixed cost of goods sold
100,000
Variable cost of goods sold
250,000
Fixed selling and administrative costs
100,000
Variable selling and administrative costs
125,000
Calculate the operating income for May under absorption costing.
A) $650,000
B) $325,000
C) $525,000
D) $550,000
E) $350,000
[The following information applies to the questions displayed below.]
Cool Pools, a manufacturer of above ground pools, began operations on January 1 of the current
year. During this time, the company produced 45,000 units and sold 44,000 units at a sales price
of $60 per unit. Cost information for this year is shown in the following table:
Production costs
Direct materials
$
11.25
per unit
Direct labor
$
3.20
per unit
Variable overhead
$
7
per unit
Fixed overhead
$
39,600
in total
Non-production costs
Variable selling and administrative
$
2,000
in total
Fixed selling and administrative
$
6,000
in total
112) Given the Cool Pools Company data, what is net income using absorption costing?
A) $1,649,480
B) $1,648,600
C) $1,627,150
D) $1,709,480
E) $1,708,600
113) Given the Cool Pools Company data, what is net income using variable costing?
A) $1,649,480
B) $1,648,600
C) $1,627,150
D) $1,709,480
E) $1,708,600
114) Brush Industries reports the following information for May:
Sales
$
900,000
Fixed cost of goods sold
100,000
Variable cost of goods sold
250,000
Fixed selling and administrative costs
100,000
Variable selling and administrative costs
125,000
Calculate the gross margin for May under absorption costing.
A) $650,000
B) $325,000
C) $525,000
D) $550,000
E) $575,000
115) Reliance Corporation sold 4,000 units of its product at a price of $15 per unit. Total
variable cost per unit is $8.50, consisting of $7.75 in variable production cost and $0.75 in
variable selling and administrative cost. Compute the contribution margin for the company.
A) $26,000
B) $34,000
C) $60,000
D) $31,000
E) $36,900
116) Quaker Corporation sold 6,600 units of its product at a price of $42.40 per unit. Total
variable cost per unit is $19.25, consisting of $10.15 in variable production cost and $9.10 in
variable selling and administrative cost. Compute contribution margin for the company.
A) $279,840
B) $119,130
C) $66,990
D) $152,790
E) $60,060
117) Geneva Co. reports the following information for July:
Sales
$
750,000
Variable costs
225,000
Fixed costs
100,000
Calculate the contribution margin for July.
A) $525,000
B) $425,000
C) $650,000
D) $750,000
118) Alexis Co. reported the following information for May:
Part A
Units sold
5,000
units
Selling price per unit
$
800
Variable manufacturing cost per unit
520
Sales commission per unit – Part A
80
What is the manufacturing margin for Part A?
A) $1,000,000
B) $1,400,000
C) $3,600,000
D) $2,600,000
E) $2,400,000
Sales (5,000 units × $800/unit)
Variable costs:
Variable manufacturing costs (5,000 × $520/unit)
Manufacturing margin
119) Alexis Co. reported the following information for May:
Part A
Units sold
5,000
units
Selling price per unit
$
800
Variable manufacturing cost per unit
520
Sales commission per unit – Part A
80
What is the contribution margin for Part A?
A) $1,000,000
B) $1,400,000
C) $3,600,000
D) $2,600,000
E) $3,000,000
Sales (5,000 units × $800/unit)
Variable costs:
Variable manufacturing costs (5,000 × $520/unit)
Manufacturing margin
Variable selling expenses (5,000 units × $80 per unit)
Contribution margin