Chapter 3
144. Zeklen Company had the following data for the month:
Variable costs per unit:
Direct materials $6.00
Direct labor 2.00
Variable overhead 1.00
Variable selling expenses 0.60
Fixed overhead is $2,000 per month; it is applied to production based on normal activity of 1,000 units. During the month,
3,000 units were produced. Zeklen started the month with 200 units in beginning inventory, with unit product cost equal
to this month’s unit product cost. A total of 1,200 units were sold during the month at price of $10. Selling and
administrative expense for the month, all fixed, totaled $2,400.
What is the unit product cost under variable costing?
a. $7
b. $3
c. $9
d. $12
e. $13
Chapter 3
145. Loring Company had the following data for the month:
Variable costs per unit:
Direct materials $4.00
Direct labor 3.20
Variable overhead 1.00
Variable selling expenses 0.40
What is operating income under absorption costing?
a. $3,540
b. $7,980
c. $11,340
d. −$540
e. $3,740
Chapter 3
146. The following information pertains to Mayberry Corporation:
Beginning inventory 1,000 units
Ending inventory 6,000 units
Direct labor per unit $40
Direct materials per unit 20
Variable overhead per unit 10
Fixed overhead per unit 30
Variable selling and admin. costs per unit 6
Fixed selling and admin. costs per unit 14
What is the value of the ending inventory using the absorption costing method?
a. $240,000
b. $360,000
c. $600,000
d. $420,000
147. The following information pertains to Mayberry Corporation:
Beginning inventory 1,000 units
Ending inventory 6,000 units
Direct labor per unit $40
Direct materials per unit 20
Variable overhead per unit 10
Fixed overhead per unit 30
Chapter 3
Variable selling and admin. costs per unit 6
Fixed selling and admin. costs per unit 14
Absorption costing income would be ____ variable costing income.
a. $150,000 greater than
b. $150,000 less than
c. $240,000 less than
d. $240,000 greater than
148. The following information pertains to Mayberry Corporation:
Beginning inventory 1,000 units
Ending inventory 6,000 units
Direct labor per unit $40
Direct materials per unit 20
Variable overhead per unit 10
Fixed overhead per unit 30
Variable selling and admin. costs per unit 6
Fixed selling and admin. costs per unit 14
What is the value of the ending inventory using the variable costing method?
a. $240,000
b. $360,000
c. $350,000
d. $420,000
Chapter 3
149. Sanders Company has the following information for last year
Selling price $190 per unit
Variable production costs $52 per unit produced
Variable selling and admin. expenses $18 per unit sold
Fixed production costs $240,000
Fixed selling and admin. expenses $180,000
Units produced 12,000
Units sold 7,000
There were no beginning inventories.
What is the value of ending inventory for Sanders using the absorption costing method?
a. $360,000
b. $280,000
c. $220,000
d. $380,000
Chapter 3
150. Sanders Company has the following information for last year:
Selling price $190 per unit
Variable production costs $52 per unit produced
Variable selling and admin. expenses $18 per unit sold
Fixed production costs $240,000
Fixed selling and admin. expenses $180,000
Units produced 12,000
Units sold 7,000
There were no beginning inventories. What is the income for Sanders using the absorption costing method?
a. $520,000
b. $480,000
c. $1,200,000
d. $500,000
151. Sanders Company has the following information for last year:
Selling price $190 per unit
Variable production costs $52 per unit produced
Variable selling and admin. expenses $18 per unit sold
Fixed production costs $240,000
Chapter 3
Fixed selling and admin. expenses $180,000
Units produced 12,000
Units sold 7,000
There were no beginning inventories.
What is the cost of ending inventory for Sanders using the variable costing method?
a. $300,000
b. $280,000
c. $120,000
d. $260,000
152. Sanders Company has the following information for last year:
Selling price $190 per unit
Variable production costs $52 per unit produced
Variable selling and admin. expenses $18 per unit sold
Fixed production costs $240,000
Fixed selling and admin. expenses $180,000
Units produced 12,000
Units sold 7,000
There were no beginning inventories.
What is the income for Sanders using the variable costing method?
a. $420,000
b. $480,000
c. $520,000
d. $500,000
Chapter 3
153. Bailey Company incurred the following costs in manufacturing desk calculators:
Direct materials $18
Indirect materials (variable) 3
Direct labor 9
Indirect labor (variable) 7
Other variable factory overhead 13
Fixed factory overhead 34
Variable selling expenses 26
Fixed selling expenses 12
During the period, the company produced and sold 2,000 units.
What is the inventory cost per unit using absorption costing?
a. $104
b. $77
c. $84
d. $32
Chapter 3
154. Bailey Company incurred the following costs in manufacturing desk calculators:
Direct materials $18
Indirect materials (variable) 3
Direct labor 9
Indirect labor (variable) 7
Other variable factory overhead 13
Fixed factory overhead 34
Variable selling expenses 26
Fixed selling expenses 12
During the period, the company produced and sold 2,000 units.
What is the inventory cost per unit using variable costing?
a. $52
b. $66
c. $72
d. $50
155. Ramon Company reported the following units of production and sales for June and July:
Units
Month Produced Sold
June 100,000 90,000
July 100,000 105,000
Chapter 3
Income under absorption costing for June was $40,000; income under variable costing for July was $50,000. Fixed costs
were $600,000 for each month.
How much was income for July using absorption costing?
a. $50,000
b. $20,000
c. $80,000
d. $40,000
156. Ramon Company reported the following units of production and sales for June and July:
Units
Month Produced Sold
June 100,000 90,000
July 100,000 105,000
Income under absorption costing for June was $40,000; income under variable costing for July was $50,000. Fixed costs
were $600,000 for each month.
How much was income for June using variable costing?
a. $40,000
b. $20,000
c. $(40,000)
d. $(20,000)
Chapter 3
157. Steele Corporation has the following information for January, February, and March:
January February March
Units produced 10,000 10,000 10,000
Units sold 7,000 8,500 10,500
Production costs per unit (based on 10,000 units) are as follows:
Direct materials $12
Direct labor 8
Variable factory overhead 6
Fixed factory overhead 4
Variable selling and admin. expenses 10
Fixed selling and admin. expenses 4
There were no beginning inventories for January, and all units were sold for $50. Costs are stable over the three months.
What is the February ending inventory for Steele Corporation using the absorption costing method?
a. $39,000
b. $45,000
c. $135,000
d. $300,000
Chapter 3
158. Steele Corporation has the following information for January, February, and March:
January February March
Units produced 10,000 10,000 10,000
Units sold 7,000 8,500 10,500
Production costs per unit (based on 10,000 units) are as follows:
Direct materials $12
Direct labor 8
Variable factory overhead 6
Fixed factory overhead 4
Variable selling and admin. expenses 10
Fixed selling and admin. expenses 4
There were no beginning inventories for January, and all units were sold for $50. Costs are stable over the three months.
What is the January ending inventory for Steele Corporation using the variable costing method?
a. $260,000
b. $78,000
c. $108,000
d. $90,000
Chapter 3
159.
Steele Corporation has the following information for January, February, and March:
January February March
Units produced 10,000 10,000 10,000
Units sold 7,000 8,500 10,500
Production costs per unit (based on 10,000 units) are as follows:
Direct materials $12
Direct labor 8
Variable factory overhead 6
Fixed factory overhead 4
Variable selling and admin. expenses 10
Fixed selling and admin. expenses 4
There were no beginning inventories for January, and all units were sold for $50. Costs are stable over the three months.
What is the March ending inventory for Steele Corporation using the variable costing method?
a. $120,000
b. $104,000
c. $260,000
d. $15,000
160. Steele Corporation has the following information for January, February, and March:
Chapter 3
January February March
Units produced 10,000 10,000 10,000
Units sold 7,000 8,500 10,500
Production costs per unit (based on 10,000 units) are as follows:
Direct materials $12
Direct labor 8
Variable factory overhead 6
Fixed factory overhead 4
Variable selling and admin. expenses 10
Fixed selling and admin. expenses 4
There were no beginning inventories for January, and all units were sold for $50. Costs are stable over the three months.
What is the February contribution margin for Steele Corporation using the variable costing method?
a. $240,000
b. $170,000
c. $119,000
d. $204,000
161. The following information pertains to Stark Corporation:
Beginning inventory 0 units
Ending inventory 5,000 units
Direct labor per unit $20
Direct materials per unit 16
Variable overhead per unit 4
Fixed overhead per unit 10
Variable selling costs per unit 12
Fixed selling costs per unit 16
What is the value of ending inventory using the variable costing method?
Chapter 3
a. $310,000
b. $250,000
c. $200,000
d. $390,000
162. The following information pertains to Stark Corporation:
Beginning inventory 0 units
Ending inventory 5,000 units
Direct labor per unit $20
Direct materials per unit 16
Variable overhead per unit 4
Fixed overhead per unit 10
Variable selling costs per unit 12
Fixed selling costs per unit 16
Absorption costing income would be ____ the variable costing income.
a. $50,000 greater than
b. $70,000 greater than
c. $70,000 less than
d. $50,000 less than
Chapter 3
163. The following information pertains to Stark Corporation:
Beginning inventory 0 units
Ending inventory 5,000 units
Direct labor per unit $20
Direct materials per unit 16
Variable overhead per unit 4
Fixed overhead per unit 10
Variable selling costs per unit 12
Fixed selling costs per unit 16
What is the value of ending inventory using the absorption costing method?
a. $310,000
b. $250,000
c. $200,000
d. $390,000
Chapter 3
164. Lavandyr Company has two divisions with the following segment margins for the current year: Northern, $300,000
and Southern, $500,000. Common expenses of the company are $75,000. What is Lavandyr Company’s income?
a. $360,000
b. $725,000
c. $215,000
d. $420,000
165. Tecscin Company manufactures motorcycles. The company’s management accountant wants to calculate the fixed
and variable costs associated with utility cost incurred by the factory. Data for the past five months were collected as
follows:
Utility Machine
Month cost hours
March $4,000 300
April 3,300 240
May 4,100 310
June 3,200 256
July 3,050 278
Using a regression program, the value of the intercept (rounded to the nearest whole number) is calculated as:
a. $1,289.
b. $3,256.
c. $2,113.
d. $1,900.
Chapter 3
166. Blacken Company manufactures motorcycles. The company’s management accountant wants to calculate the fixed
and variable costs associated with utility cost incurred by the factory. Data for the past five months were collected.
Utility Machine
Month cost hours
March $30,255 2,200
April 32,750 2,525
May 34,712 2,710
June 31,850 2,410
July 30,720 2,290
Using a regression program, the forecasted utility cost at 2,600 machine hours (rounded to the nearest dollar) is
a. $28,288.
b. $33,589.
c. $45,945.
d. $10,631.
167. Blacken Company manufactures motorcycles. The company’s management accountant wants to calculate the fixed
and variable costs associated with utility cost incurred by the factory. Data for the past five months were collected.
Chapter 3
Utility Machine
Month cost hours
March $30,255 2,200
April 32,750 2,525
May 34,712 2,710
June 31,850 2,410
July 30,720 2,290
Using a regression program, the forecasted utility cost at 2,300 machine hours (rounded to the nearest dollar) is
a. $30,940.
b. $37,116.
c. $25,945.
d. $10,631.
168. Blacken Company manufactures motorcycles. The company’s management accountant wants to calculate the fixed
and variable costs associated with utility cost incurred by the factory. Data for the past five months were collected.
Utility Machine
Month cost hours
March $30,255 2,200
April 32,750 2,525
May 34,712 2,710
June 31,850 2,410
July 30,720 2,290
Using a regression program, the forecasted utility cost at 2,550 machine hours (rounded to the nearest dollar) is
a. $28,288.
b. $37,116.
c. $33,147.
d. $10,631.
Chapter 3
169. Tecscin Company manufactures motorcycles. The company’s management accountant wants to calculate the fixed
and variable costs associated with utility cost incurred by the factory. Data for the past five months were collected.
Utility Machine
Month cost hours
March $4,000 300
April 3.300 240
May 4,100 310
June 3,200 256
July 3,050 278
Using a regression program, the value of the X Variable 1 (round the answer to two decimal points) is:
a. $9.08.
b. $8.25.
c. $7.15.
d. $6.32.