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241
198) Moskowitz Corporation has provided the following data for its two most recent years of
operation:
Selling price per unit
$
91
Manufacturing costs:
Variable manufacturing cost per unit produced:
Direct materials
$
13
Direct labor
$
7
Variable manufacturing overhead
$
3
Fixed manufacturing overhead per year
$
480,000
Selling and administrative expenses:
Variable selling and administrative expense per unit sold
$
6
Fixed selling and administrative expense per year
$
84,000
Year 1
Year 2
Units in beginning inventory
0
3,000
Units produced during the year
12,000
10,000
Units sold during the year
9,000
10,000
Units in ending inventory
3,000
3,000
Which of the following statements is true for Year 2?
A) The amount of fixed manufacturing overhead released from inventories is $686,000
B) The amount of fixed manufacturing overhead released from inventories is $24,000
C) The amount of fixed manufacturing overhead deferred in inventories is $686,000
D) The amount of fixed manufacturing overhead deferred in inventories is $24,000
199) Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000
units and sold 15,000 units. Production costs for the year were as follows:
Direct materials
$
170,000
Direct labor
$
110,000
Variable manufacturing overhead
$
200,000
Fixed manufacturing overhead
$
240,000
Sales totaled $825,000 for the year, variable selling and administrative expenses totaled
$108,000, and fixed selling and administrative expenses totaled $165,000. There was no
beginning inventory. Assume that direct labor is a variable cost.
The contribution margin per unit was:
A) $23.80 per unit
B) $31.00 per unit
C) $25.60 per unit
D) $19.00 per unit
200) Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000
units and sold 15,000 units. Production costs for the year were as follows:
Direct materials
$
170,000
Direct labor
$
110,000
Variable manufacturing overhead
$
200,000
Fixed manufacturing overhead
$
240,000
Sales totaled $825,000 for the year, variable selling and administrative expenses totaled
$108,000, and fixed selling and administrative expenses totaled $165,000. There was no
beginning inventory. Assume that direct labor is a variable cost.
Under absorption costing, the ending inventory for the year would be valued at:
A) $0
B) $216,000
C) $248,250
D) $180,000
201) Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000
units and sold 15,000 units. Production costs for the year were as follows:
Direct materials
$
170,000
Direct labor
$
110,000
Variable manufacturing overhead
$
200,000
Fixed manufacturing overhead
$
240,000
Sales totaled $825,000 for the year, variable selling and administrative expenses totaled
$108,000, and fixed selling and administrative expenses totaled $165,000. There was no
beginning inventory. Assume that direct labor is a variable cost.
Under variable costing, the company's net operating income for the year would be:
A) $101,250 lower than under absorption costing.
B) $60,000 lower than under absorption costing.
C) $101,250 higher than under absorption costing.
D) $60,000 higher than under absorption costing.
246
202) Kern Corporation produces a single product. Selected information concerning the
operations of the company follow:
Units in beginning inventory
0
Units produced
10,000
Units sold
9,000
Direct materials
$
40,000
Direct labor
$
20,000
Variable manufacturing overhead
$
12,000
Fixed manufacturing overhead
$
25,000
Variable selling and administrative expenses
$
4,500
Fixed selling and administrative expenses
$
30,000
Assume that direct labor is a variable cost.
Under absorption costing, the value of the ending finished goods inventory would be:
A) $7,200
B) $7,650
C) $8,000
D) $9,700
248
203) Kern Corporation produces a single product. Selected information concerning the
operations of the company follow:
Units in beginning inventory
0
Units produced
10,000
Units sold
9,000
Direct materials
$
40,000
Direct labor
$
20,000
Variable manufacturing overhead
$
12,000
Fixed manufacturing overhead
$
25,000
Variable selling and administrative expenses
$
4,500
Fixed selling and administrative expenses
$
30,000
Assume that direct labor is a variable cost.
Which costing method, absorption or variable costing, would show a higher operating income for
the year and by what amount?
A) Absorption costing net operating income would be higher than variable costing net operating
income by $2,500.
B) Variable costing net operating income would be higher than absorption costing net operating
income by $2,500.
C) Absorption costing net operating income would be higher than variable costing net operating
income by $5,500.
D) Variable costing net operating income would be higher than absorption costing net operating
income by $5,500.
204) Clemeson Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
Selling price
$
145
Units in beginning inventory
0
Units produced
3,600
Units sold
3,400
Units in ending inventory
200
Variable costs per unit:
Direct materials
$
36
Direct labor
$
57
Variable manufacturing overhead
$
3
Variable selling and administrative expenses
$
5
Fixed costs:
Fixed manufacturing overhead
$
79,200
Fixed selling and administrative expense
$
64,600
The total contribution margin for the month under variable costing is:
A) $70,400
B) $149,600
C) $166,600
D) $91,800
205) Clemeson Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
Selling price
$
145
Units in beginning inventory
0
Units produced
3,600
Units sold
3,400
Units in ending inventory
200
Variable costs per unit:
Direct materials
$
36
Direct labor
$
57
Variable manufacturing overhead
$
3
Variable selling and administrative expenses
$
5
Fixed costs:
Fixed manufacturing overhead
$
79,200
Fixed selling and administrative expense
$
64,600
The total gross margin for the month under the absorption costing approach is:
A) $149,600
B) $10,200
C) $115,400
D) $91,800
206) McCoy Corporation manufactures a computer monitor. Shown below is McCoy's cost
structure:
Variable cost per
monitor
Total fixed cost for the
year
Manufacturing cost
$
75.20
$
912,000
Selling and administrative
$
14.60
$
456,000
In its first year of operations, McCoy produced 100,000 monitors but only sold 95,000. McCoy's
gross margin in this first year was $2,629,600. McCoy's contribution margin in this first year was
$2,109,000.
Under variable costing, what is McCoy's net operating income for its first year?
A) $266,000
B) $741,000
C) $1,261,600
D) $2,173,600
207) McCoy Corporation manufactures a computer monitor. Shown below is McCoy's cost
structure:
Variable cost per
monitor
Total fixed cost for the
year
Manufacturing cost
$
75.20
$
912,000
Selling and administrative
$
14.60
$
456,000
In its first year of operations, McCoy produced 100,000 monitors but only sold 95,000. McCoy's
gross margin in this first year was $2,629,600. McCoy's contribution margin in this first year was
$2,109,000.
Under absorption costing, what is McCoy's net operating income for its first year?
A) $266,000
B) $786,600
C) $1,261,600
D) $2,173,600
208) Danahy Corporation manufactures a single product. The following data pertain to the
company's operations over the last two years:
Variable costing net operating income, last year
$
52,000
Variable costing net operating income, this year
$
68,000
Fixed manufacturing overhead costs released from inventory under
absorption costing, last year
$
4,000
Fixed manufacturing overhead costs deferred in inventory under
absorption costing, this year
$
6,000
What was the absorption costing net operating income last year?
A) $50,000
B) $48,000
C) $52,000
D) $56,000
209) Danahy Corporation manufactures a single product. The following data pertain to the
company's operations over the last two years:
Variable costing net operating income, last year
$
52,000
Variable costing net operating income, this year
$
68,000
Fixed manufacturing overhead costs released from inventory under
absorption costing, last year
$
4,000
Fixed manufacturing overhead costs deferred in inventory under
absorption costing, this year
$
6,000
What was the absorption costing net operating income this year?
A) $62,000
B) $74,000
C) $70,000
D) $66,000
210) Helmers Corporation manufactures a single product. Variable costing net operating income
last year was $86,000 and this year was $103,000. Last year, $32,000 in fixed manufacturing
overhead costs were released from inventory under absorption costing. This year, $12,000 in
fixed manufacturing overhead costs were deferred in inventory under absorption costing.
What was the absorption costing net operating income last year?
A) $106,000
B) $86,000
C) $54,000
D) $118,000
211) Helmers Corporation manufactures a single product. Variable costing net operating income
last year was $86,000 and this year was $103,000. Last year, $32,000 in fixed manufacturing
overhead costs were released from inventory under absorption costing. This year, $12,000 in
fixed manufacturing overhead costs were deferred in inventory under absorption costing.
What was the absorption costing net operating income this year?
A) $81,000
B) $83,000
C) $115,000
D) $123,000
212) Norenberg Corporation manufactures a single product. The following data pertain to the
company's operations over the last two years:
Variable costing net operating income, last year
$
88,600
Variable costing net operating income, this year
$
96,100
Beginning inventory, last year
0
units
Ending inventory, last year
3,600
units
Ending inventory, this year
1,300
units
Fixed manufacturing overhead cost per unit this year and last
year
$
7
per unit
What was the absorption costing net operating income last year?
A) $113,800
B) $88,600
C) $94,400
D) $76,700
213) Norenberg Corporation manufactures a single product. The following data pertain to the
company's operations over the last two years:
Variable costing net operating income, last year
$
88,600
Variable costing net operating income, this year
$
96,100
Beginning inventory, last year
0
units
Ending inventory, last year
3,600
units
Ending inventory, this year
1,300
units
Fixed manufacturing overhead cost per unit this year and last
year
$
7
per unit
What was the absorption costing net operating income this year?
A) $80,000
B) $100,500
C) $108,000
D) $112,200
214) Azuki Corporation operates in two sales territories, Urban and Rural. Data concerning last
year's operations appear below:
Urban
Rural
Sales
$
320,000
$
80,000
Variable expenses
208,000
56,000
Contribution margin
112,000
24,000
Traceable fixed expenses
48,000
30,000
Segment margin
$
64,000
$
(6,000
)
Azuki's common fixed expenses were $25,000 last year.
What was Azuki Corporation's overall net operating income for last year?
A) $33,000
B) $45,000
C) $58,000
D) $83,000
