Under variable costing, which of the following costs would be included in finished goods inventory?

·        Question 1

0 out of 1 points

	What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost?
	Selected Answer: d.  Variable costing Answers: a.  Standard costing b.  Marginal costing c.  Absorption costing d.  Variable costing

·        Question 2

0 out of 1 points

	The level of inventory of a manufactured product has increased by 5,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $24.00 $10.00 Unit operating expenses of the period   8.00   3.00 What would be the effect on income from operations if variable costing is used rather than absorption costing?
	Selected Answer: d.  $65,000 increase Answers: a.  $50,000 decrease b.  $65,000 decrease c.  $50,000 increase d.  $65,000 increase Response Feedback: Rationale: Under variable costing, only variable manufacturing costs are included in the cost of the product manufactured, whereas under absorption costing, both variable and fixed manufacturing costs are included in the cost of the product manufactured. Therefore, if variable costing is used and the inventory level increases by 5,000 units, income from operations would decrease by $10 × 5,000 units = $50,000.

·        Question 3

1 out of 1 points

	Which of the following causes the difference between the planned and actual contribution margin?
	Selected Answer: d.  all of the above Answers: a.  an increase or decrease in the amount of sales b.  an increase in the amount of variable costs and expenses c.  a decrease in the amount of variable costs and expenses d.  all of the above

·        Question 4

1 out of 1 points

	Under variable costing, which of the following costs would be included in finished goods inventory?
	Selected Answer: b.  wages of carpenters in a furniture factory Answers: a.  straight-line depreciation on factory equipment b.  wages of carpenters in a furniture factory c.  salary of vice-president of finance d.  salary of salesperson

·        Question 5

0 out of 1 points

	If sales totaled $800,000 for the year (80,000 units at $10.00 each) and the planned sales totaled $799,500 (78,000 units at $10.25 each), the effect of the quantity factor on the change in sales is:
	Selected Answer: c.  $20,000 decrease Answers: a.  $20,000 increase b.  $20,500 decrease c.  $20,000 decrease d.  $20,500 increase Response Feedback: Rationale: The effect of the quantity factor on the change in sales is as follows: Sales Quantity Factor = (Actual Units Sold – Planned Units of Sales) × Planned Sales Price Sales Quantity Factor = (80,000 units – 78,000 units) × $10.25 = $20,500

·        Question 6

1 out of 1 points

	Under absorption costing, which of the following costs would not be included in finished goods inventory?
	Selected Answer: d.  the salaries for salespeople Answers: a.  straight-line depreciation on factory equipment b.  hourly wages of assembly worker c.  overtime wages paid to factory workers d.  the salaries for salespeople

·        Question 7

1 out of 1 points

	The contribution margin ratio is computed as:
	Selected Answer: b.  contribution margin divided by sales Answers: a.  sales divided by contribution margin b.  contribution margin divided by sales c.  contribution margin divided by variable cost of sales d.  contribution margin divided by cost of sales

·        Question 8

1 out of 1 points

	In the contribution margin analysis, the effect of a change in the number of units sold, assuming no change in unit sales price or unit cost, is referred to as the:
	Selected Answer: a.  quantity factor Answers: a.  quantity factor b.  sales factor c.  price factor d.  cost of goods sold factor

·        Question 9

1 out of 1 points

	Under variable costing, which of the following costs would not be included in finished goods inventory?
	Selected Answer: a.  salary of factory supervisor Answers: a.  salary of factory supervisor b.  electricity used by factory machinery c.  wages of machine operator d.  steel costs for a machine tool manufacturer

·        Question 10

1 out of 1 points

	In which of the following types of firms would it be appropriate to prepare contribution margin reporting and analysis?
	Selected Answer: d.  all of the above Answers: a.  boat manufacturing b.  a chain of beauty salons c.  home building d.  all of the above

·        Question 11

1 out of 1 points

	Accountants prefer the variable costing method over absorption costing method for evaluating the performance of a company because
	Selected Answer: a.  by using the absorption costing method, income could appear to be higher by producing more inventory. Answers: a.  by using the absorption costing method, income could appear to be higher by producing more inventory. b.  by using the variable costing method, all fixed and variable costs are included in the unit cost of the product manufactured. c.  by using the absorption costing method, income could appear to be lower by producing more inventory. d.  by using the variable costing method, the cost of goods sold will be higher as more units are manufactured and sales remain the same.

·        Question 12

1 out of 1 points

	Edna’s Chocolates had planned to sell chocolate-covered strawberries for $3.00 each. Due to various factors, the actual price was $2.75. Edna’s was able to sell 1,000 more strawberries than the anticipated 4,000. What is (1) the quantity factor and (2) the price factor for sales?
	Selected Answer: c.  (1) $3,000, (2) $(1,250) Answers: a.  (1) $(4,000) (2) $(3,000) b.  (1) $3,000, (2) $(3,000) c.  (1) $3,000, (2) $(1,250) d.  (1) $1,250, (2) $3,000 Response Feedback: Rationale: The quantity factor and the price factor for sales are as follows: Number of strawberries sold = 4,000 strawberries + 1,000 strawberries = 5,000  strawberries Sales Quantity Factor = (Actual Units Sold – Planned Units of Sales) × Planned Sales Price Sales Quantity Factor = (5,000 strawberries – 4,000 strawberries) × $3.00 = $3,000 Therefore, the sales quantity factor is $3,000. Unit Price Factor = (Actual Selling Price per Unit – Planned Selling Price per Unit) × Actual Units Sold Unit Price Factor = ($2.75 – $3.00) × 5,000 strawberries = –$1,250 Therefore, the sales price factor is –$1,250.

·        Question 13

1 out of 1 points

	Management should focus its sales and production efforts on the product or products that will provide
	Selected Answer: a.  the maximum contribution margin Answers: a.  the maximum contribution margin b.  the lowest product costs c.  the lowest direct labor hours d.  the highest sales revenue

·        Question 14

0 out of 1 points

	If variable cost of goods sold totaled $80,000 for the year (16,000 units at $5.00 each) and the planned variable cost of goods sold totaled $86,250 (15,000 units at $5.75 each), the effect of the unit cost factor on the change in contribution margin is:
	Selected Answer: d.  $5,750 increase Answers: a.  $12,000 increase b.  $12,000 decrease c.  $5,750 decrease d.  $5,750 increase Response Feedback: Rationale: The effect of the unit price factor on the change in sales is as follows: Unit Cost Factor = (Planned Cost per Unit – Actual Cost per Unit) × Actual Units Sold Unit Cost Factor = ($5.75 – $5.00) × 16,000 units = $12,000

·        Question 15

1 out of 1 points

	On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is the:
	Selected Answer: c.  variable selling and administrative expenses Answers: a.  variable cost of goods sold b.  fixed manufacturing costs c.  variable selling and administrative expenses d.  fixed selling and administrative expenses

·        Question 1

1 out of 1 points

	If sales totaled $200,000 for the current year (10,000 units at $20 each) and planned sales totaled $212,500 (12,500 units at $17 each), the effect of the unit price factor on the change in sales is a:
	Selected Answer: c.  $30,000 increase Answers: a.  $7,500 increase b.  $30,000 decrease c.  $30,000 increase d.  $12,500 increase Response Feedback: Rationale: The effect of the unit price factor on the change in sales is as follows: Unit Price Factor = (Actual Selling Price per Unit – Planned Selling Price per Unit) × Actual Units Sold Unit Price Factor = ($20 – $17) × 10,000 units = $30,000

·        Question 2

1 out of 1 points

	The contribution margin ratio is computed as:
	Selected Answer: c.  contribution margin divided by sales Answers: a.  contribution margin divided by variable cost of sales b.  sales divided by contribution margin c.  contribution margin divided by sales d.  contribution margin divided by cost of sales

·        Question 3

1 out of 1 points

	A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (20,000 units):   Direct materials $180,000   Direct labor 240,000   Variable factory overhead 280,000   Fixed factory overhead   100,000 $800,000 Operating expenses:   Variable operating expenses $130,000   Fixed operating expenses     50,000 180,000 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?
	Selected Answer: c.  $52,500 Answers: a.  $62,500 b.  $73,500 c.  $52,500 d.  $60,000 Response Feedback: Rationale: Cost of the finished goods inventory reported = $35* × 1,500 units = $52,500 Total Cost Number of Units Unit Cost Manufacturing costs: Direct materials $180,000 20,000 $ 9 Direct labor 240,000 20,000 12 Variable factory overhead 280,000 20,000 14 Total variable manufacturing costs $700,000 $35*

·        Question 4

1 out of 1 points

	Which of the following is(are) reason(s) for easy identification and control of variable manufacturing costs under the variable costing method?
	Selected Answer: d.  All of the above are true. Answers: a.  variable and fixed costs are reported separately. b.  variable costs can be controlled by the operating management. c.  fixed costs, such as property insurance, are normally the responsibility of higher management not the operating management. d.  All of the above are true.

·        Question 5

1 out of 1 points

	If variable selling and administrative expenses totaled $124,000 for the year (80,000 units at $1.55 each) and the planned variable selling and administrative expenses totaled $136,500 (78,000 units at $1.75 each), the effect of the quantity factor on the change in contribution margin is:
	Selected Answer: a.  $3,500 decrease Answers: a.  $3,500 decrease b.  $3,000 increase c.  $3,000 decrease d.  $3,500 increase Response Feedback: Rationale: The effect of the quantity factor on the change in the contribution margin is as follows: Variable Cost Quantity Factor = (Planned Units of Sales – Actual Units Sold) × Planned Unit Cost Variable Cost Quantity Factor = (78,000 units – 80,000 units) × $1.75 = –$3,500

·        Question 6

0 out of 1 points

	A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (10,000 units):   Direct materials $140,000   Direct labor 40,000   Variable factory overhead 20,000   Fixed factory overhead      4,000 $204,000 Operating expenses:   Variable operating expenses $ 34,000   Fixed operating expenses      2,000 36,000 If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, what would be the amount of income from operations reported on the variable costing income statement?
	Selected Answer: c.  $140,000 Answers: a.  $100,000 b.  $114,800 c.  $140,000 d.  $100,800 Response Feedback: Rationale: Variable Costing Income Statement Sales (10,000 units – 2,000 units = 8,000 units) $300,000 Variable cost of goods sold: Variable cost of goods manufactured (10,000 × $20*) $200,000 Less ending inventory (2,000 × $20*) 40,000 Variable cost of goods sold 160,000 Manufacturing margin $140,000 Variable operating expenses 34,000 Contribution margin $106,000 Fixed costs: Fixed factory overhead $ 4,000 Fixed operating expenses 2,000 6,000 Income from operations $100,000 Total Cost Number of Units Unit Cost Production costs: Direct materials $140,000 10,000 $14.00 Direct labor 40,000 10,000 4.00 Variable factory overhead 20,000 10,000 2.00 Total $200,000 $20.00*

·        Question 7

1 out of 1 points

	The level of inventory of a manufactured product has increased by 5,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $24.00 $10.00 Unit operating expenses of the period   8.00   3.00 What would be the effect on income from operations if variable costing is used rather than absorption costing?
	Selected Answer: b.  $50,000 decrease Answers: a.  $65,000 decrease b.  $50,000 decrease c.  $50,000 increase d.  $65,000 increase Response Feedback: Rationale: Under variable costing, only variable manufacturing costs are included in the cost of the product manufactured, whereas under absorption costing, both variable and fixed manufacturing costs are included in the cost of the product manufactured. Therefore, if variable costing is used and the inventory level increases by 5,000 units, income from operations would decrease by $10 × 5,000 units = $50,000.

·        Question 8

1 out of 1 points

	S&P Enterprises sold 10,000 units of inventory during a given period.  The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Variable Fixed Unit manufacturing costs of the period $11.00 $7.00 Unit operating expenses of the period   3.00  2.50 Which of the following statements is true?
	Selected Answer: a.  Net income will be the same under both variable and absorption costing. Answers: a.  Net income will be the same under both variable and absorption costing. b.  Net income under absorption costing will be $40,000 more than under variable costing. c.  Net income under variable costing will be $45,000 less than net income under absorption costing d.  The difference in net income cannot be determined. Response Feedback: Rationale: As the level of inventory of the manufactured product remained unchanged, the number of units manufactured is equal to the number of units sold. Therefore, the income from operations will remain the same under both variable and absorption costing.

·        Question 9

0 out of 1 points

	If sales totaled $800,000 for the year (80,000 units at $10.00 each) and the planned sales totaled $799,500 (78,000 units at $10.25 each), the effect of the quantity factor on the change in sales is:
	Selected Answer: a.  $20,500 decrease Answers: a.  $20,500 decrease b.  $20,000 decrease c.  $20,000 increase d.  $20,500 increase Response Feedback: Rationale: The effect of the quantity factor on the change in sales is as follows: Sales Quantity Factor = (Actual Units Sold – Planned Units of Sales) × Planned Sales Price Sales Quantity Factor = (80,000 units – 78,000 units) × $10.25 = $20,500

·        Question 10

1 out of 1 points

	A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (20,000 units):   Direct materials $180,000   Direct labor 240,000   Variable factory overhead 280,000   Fixed factory overhead  100,000 $800,000 Operating expenses:   Variable operating expenses $130,000   Fixed operating expenses    50,000 180,000 If 1,600 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?
	Selected Answer: d.  $56,000 Answers: a.  $78,400 b.  $66,400 c.  $64,000 d.  $56,000 Response Feedback: Rationale: Cost of the finished goods inventory reported = $35* × 1,600 units = $56,000 Total Cost Number of Units Unit Cost Manufacturing costs: Direct materials $180,000 20,000     $  9 Direct labor 240,000 20,000 12 Variable factory overhead 280,000 20,000 14 Total variable manufacturing costs $700,000 $35*

·        Question 11

1 out of 1 points

	Accountants prefer the variable costing method over absorption costing method for evaluating the performance of a company because
	Selected Answer: b.  by using the absorption costing method, income could appear to be higher by producing more inventory. Answers: a.  by using the variable costing method, the cost of goods sold will be higher as more units are manufactured and sales remain the same. b.  by using the absorption costing method, income could appear to be higher by producing more inventory. c.  by using the absorption costing method, income could appear to be lower by producing more inventory. d.  by using the variable costing method, all fixed and variable costs are included in the unit cost of the product manufactured.

·        Question 12

1 out of 1 points

	The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $24.00 $10.00 Unit operating expenses of the period   8.00   3.00 What would be the effect on income from operations if absorption costing is used rather than variable costing?
	Selected Answer: c.  $80,000 increase Answers: a.  $80,000 decrease b.  $104,000 decrease c.  $80,000 increase d.  $104,000 increase Response Feedback: Rationale: Under absorption costing, both variable and fixed manufacturing costs are included in the cost of the product manufactured, whereas under variable costing, only variable manufacturing costs are included in the cost of the product manufactured. Therefore, if absorption costing is used and the inventory level increases by 8,000 units, income from operations would increase by $10 × 8,000 units = $80,000.

·        Question 13

1 out of 1 points

	The systematic examination of the differences between planned and actual contribution margin is
	Selected Answer: d.  contribution margin analysis Answers: a.  volume variance analysis b.  sales mix analysis c.  gross profit analysis d.  contribution margin analysis

·        Question 14

1 out of 1 points

	In which of the following types of firms would it be appropriate to prepare contribution margin reporting and analysis?
	Selected Answer: d.  all of the above Answers: a.  boat manufacturing b.  a chain of beauty salons c.  home building d.  all of the above

·        Question 15

1 out of 1 points

	Edna’s Chocolates had planned to sell chocolate-covered strawberries for $3.00 each. Due to various factors, the actual price was $2.75. Edna’s was able to sell 1,000 more strawberries than the anticipated 4,000. What is (1) the quantity factor and (2) the price factor for sales?
	Selected Answer: c.  (1) $3,000, (2) $(1,250) Answers: a.  (1) $1,250, (2) $3,000 b.  (1) $(4,000) (2) $(3,000) c.  (1) $3,000, (2) $(1,250) d.  (1) $3,000, (2) $(3,000) Response Feedback: Rationale: The quantity factor and the price factor for sales are as follows: Number of strawberries sold = 4,000 strawberries + 1,000 strawberries = 5,000  strawberries Sales Quantity Factor = (Actual Units Sold – Planned Units of Sales) × Planned Sales Price Sales Quantity Factor = (5,000 strawberries – 4,000 strawberries) × $3.00 = $3,000 Therefore, the sales quantity factor is $3,000. Unit Price Factor = (Actual Selling Price per Unit – Planned Selling Price per Unit) × Actual Units Sold Unit Price Factor = ($2.75 – $3.00) × 5,000 strawberries = –$1,250 Therefore, the sales price factor is –$1,250.

·        uestion 1

1 out of 1 points

	In the contribution margin analysis, the effect of a change in the number of units sold, assuming no change in unit sales price or unit cost, is referred to as the:
	Selected Answer: b.  quantity factor Answers: a.  price factor b.  quantity factor c.  sales factor d.  cost of goods sold factor

·        Question 2

1 out of 1 points

	The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $24.00 $10.00 Unit operating expenses of the period   8.00   3.00 What would be the effect on income from operations if absorption costing is used rather than variable costing?
	Selected Answer: d.  $80,000 increase Answers: a.  $104,000 decrease b.  $80,000 decrease c.  $104,000 increase d.  $80,000 increase Response Feedback: Rationale: Under absorption costing, both variable and fixed manufacturing costs are included in the cost of the product manufactured, whereas under variable costing, only variable manufacturing costs are included in the cost of the product manufactured. Therefore, if absorption costing is used and the inventory level increases by 8,000 units, income from operations would increase by $10 × 8,000 units = $80,000.

·        Question 3

1 out of 1 points

	The level of inventory of a manufactured product has increased by 5,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $24.00 $10.00 Unit operating expenses of the period   8.00   3.00 What would be the effect on income from operations if variable costing is used rather than absorption costing?
	Selected Answer: d.  $50,000 decrease Answers: a.  $50,000 increase b.  $65,000 decrease c.  $65,000 increase d.  $50,000 decrease Response Feedback: Rationale: Under variable costing, only variable manufacturing costs are included in the cost of the product manufactured, whereas under absorption costing, both variable and fixed manufacturing costs are included in the cost of the product manufactured. Therefore, if variable costing is used and the inventory level increases by 5,000 units, income from operations would decrease by $10 × 5,000 units = $50,000.

·        Question 4

1 out of 1 points

	Which of the following is(are) reason(s) for easy identification and control of variable manufacturing costs under the variable costing method?
	Selected Answer: d.  All of the above are true. Answers: a.  variable and fixed costs are reported separately. b.  variable costs can be controlled by the operating management. c.  fixed costs, such as property insurance, are normally the responsibility of higher management not the operating management. d.  All of the above are true.

·        Question 5

1 out of 1 points

	Under variable costing, which of the following costs would not be included in finished goods inventory?
	Selected Answer: a.  salary of factory supervisor Answers: a.  salary of factory supervisor b.  steel costs for a machine tool manufacturer c.  wages of machine operator d.  electricity used by factory machinery

·        Question 6

1 out of 1 points

	The systematic examination of the differences between planned and actual contribution margin is
	Selected Answer: c.  contribution margin analysis Answers: a.  gross profit analysis b.  sales mix analysis c.  contribution margin analysis d.  volume variance analysis

·        Question 7

1 out of 1 points

	Which of the following causes the difference between the planned and actual contribution margin?
	Selected Answer: d.  all of the above Answers: a.  an increase or decrease in the amount of sales b.  an increase in the amount of variable costs and expenses c.  a decrease in the amount of variable costs and expenses d.  all of the above

·        Question 8

1 out of 1 points

	If variable cost of goods sold totaled $90,000 for the year (18,000 units at $5.00 each) and the planned variable cost of goods sold totaled $86,400 (16,000 units at $5.40 each), the effect of the unit cost factor on the change in contribution margin is:
	Selected Answer: b.  $7,200 increase Answers: a.  $6,400 decrease b.  $7,200 increase c.  $7,200 decrease d.  $6,400 increase Response Feedback: Rationale: The effect of the unit cost factor on the change in the contribution margin is as follows: Unit Cost Factor = (Planned Cost per Unit – Actual Cost per Unit) × Actual Units Sold Unit Cost Factor = ($5.40 – $5.00) × 18,000 units = $7,200

·        Question 9

1 out of 1 points

	What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost?
	Selected Answer: a.  Absorption costing Answers: a.  Absorption costing b.  Standard costing c.  Variable costing d.  Marginal costing

·        Question 10

1 out of 1 points

	The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured:
	Selected Answer: a.  exceed units sold Answers: a.  exceed units sold b.  are less than units sold c.  equal units sold d.  are equal to or greater than units sold

·        Question 11

0 out of 1 points

	In contribution margin analysis, the quantity factor is computed as:
	Selected Answer: b.  the increase or decrease in unit sales price or unit cost multiplied by the planned number of units to be sold Answers: a.  the increase or decrease in the number of units sold multiplied by the actual unit sales price or unit cost b.  the increase or decrease in unit sales price or unit cost multiplied by the planned number of units to be sold c.  the increase or decrease in the unit sales price or unit cost multiplied by the actual number of units sold d.  the increase or decrease in the number of units sold multiplied by the planned unit sales price or unit cost

·        Question 12

1 out of 1 points

	A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (2,500 units):   Direct materials $42,500   Direct labor 85,000   Variable factory overhead 47,500   Fixed factory overhead   12,500 $187,500 Operating expenses:   Variable operating expenses $15,000   Fixed operating expenses     4,500 19,500 If 75 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?
	Selected Answer: d.  $5,625 Answers: a.  $5,760 b.  $5,250 c.  $6,210 d.  $5,625 Response Feedback: Rationale: Cost of the finished goods inventory reported = $75* × 75 units = $5,625 Manufacturing costs: Total Cost Number of Units Unit Cost Manufacturing costs: Direct materials $ 42,500 2,500 $17 Direct labor 85,000 2,500 34 Variable factory overhead 47,500 2,500 19 Fixed factory overhead 12,500 2,500 5 Total $187,500 $75*

·        Question 13

1 out of 1 points

	Accountants prefer the variable costing method over absorption costing method for evaluating the performance of a company because
	Selected Answer: c.  by using the absorption costing method, income could appear to be higher by producing more inventory. Answers: a.  by using the absorption costing method, income could appear to be lower by producing more inventory. b.  by using the variable costing method, all fixed and variable costs are included in the unit cost of the product manufactured. c.  by using the absorption costing method, income could appear to be higher by producing more inventory. d.  by using the variable costing method, the cost of goods sold will be higher as more units are manufactured and sales remain the same.

·        Question 14

1 out of 1 points

	Edna’s Chocolates had planned to sell chocolate-covered strawberries for $3.00 each. Due to various factors, the actual price was $2.75. Edna’s was able to sell 1,000 more strawberries than the anticipated 4,000. What is (1) the quantity factor and (2) the price factor for sales?
	Selected Answer: a.  (1) $3,000, (2) $(1,250) Answers: a.  (1) $3,000, (2) $(1,250) b.  (1) $3,000, (2) $(3,000) c.  (1) $(4,000) (2) $(3,000) d.  (1) $1,250, (2) $3,000 Response Feedback: Rationale: The quantity factor and the price factor for sales are as follows: Number of strawberries sold = 4,000 strawberries + 1,000 strawberries = 5,000  strawberries Sales Quantity Factor = (Actual Units Sold – Planned Units of Sales) × Planned Sales Price Sales Quantity Factor = (5,000 strawberries – 4,000 strawberries) × $3.00 = $3,000 Therefore, the sales quantity factor is $3,000. Unit Price Factor = (Actual Selling Price per Unit – Planned Selling Price per Unit) × Actual Units Sold Unit Price Factor = ($2.75 – $3.00) × 5,000 strawberries = –$1,250 Therefore, the sales price factor is –$1,250.

·        Question 15

1 out of 1 points

	A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (20,000 units):   Direct materials $180,000   Direct labor 240,000   Variable factory overhead 280,000   Fixed factory overhead   100,000 $800,000 Operating expenses:   Variable operating expenses $130,000   Fixed operating expenses     50,000 180,000 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?
	Selected Answer: c.  $52,500 Answers: a.  $62,500 b.  $60,000 c.  $52,500 d.  $73,500 Response Feedback: Rationale: Cost of the finished goods inventory reported = $35* × 1,500 units = $52,500 Total Cost Number of Units Unit Cost Manufacturing costs: Direct materials $180,000 20,000 $ 9 Direct labor 240,000 20,000 12 Variable factory overhead 280,000 20,000 14 Total variable manufacturing costs $700,000 $35*

·        Question 16

1 out of 1 points

	Which of the following would be included in the cost of a product manufactured according to variable costing?
	Selected Answer: a.  direct materials Answers: a.  direct materials b.  interest expense c.  office supply costs d.  sales commissions

·        Question 17

1 out of 1 points

	If variable selling and administrative expenses totaled $120,000 for the year (80,000 units at $1.50 each) and the planned variable selling and administrative expenses totaled $136,500 (78,000 units at $1.75 each), the effect of the unit cost factor on the change in contribution margin is:
	Selected Answer: b.  $20,000 increase Answers: a.  $20,000 decrease b.  $20,000 increase c.  $19,500 increase d.  $19,500 decrease Response Feedback: Rationale: The effect of the unit cost factor on the change in the contribution margin is as follows: Unit Cost Factor = (Planned Cost per Unit – Actual Cost per Unit) × Actual Units Sold Unit Cost Factor = ($1.75 – $1.50) × 80,000 units = $20,000

·        Question 18

1 out of 1 points

	If sales totaled $800,000 for the year (80,000 units at $10.00 each) and the planned sales totaled $799,500 (78,000 units at $10.25 each), the effect of the unit price factor on the change in sales is:
	Selected Answer: c.  $20,000 decrease Answers: a.  $19,500 increase b.  $20,000 increase c.  $20,000 decrease d.  $19,500 decrease Response Feedback: Rationale: The effect of the unit price factor on the change in sales is as follows: Unit Price Factor = (Actual Selling Price per Unit – Planned Selling Price per Unit) × Actual Units Sold Unit Price Factor = ($10 – $10.25) × 80,000 units = –$20,000

·        Question 19

1 out of 1 points

	The contribution margin ratio is computed as:
	Selected Answer: c.  contribution margin divided by sales Answers: a.  contribution margin divided by cost of sales b.  contribution margin divided by variable cost of sales c.  contribution margin divided by sales d.  sales divided by contribution margin

·        Question 20

1 out of 1 points

	What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and variable factory overhead cost?
	Selected Answer: d.  Variable costing Answers: a.  Absorption costing b.  Differential costing c.  Standard costing d.  Variable costing

·        Question 21

1 out of 1 points

	On what effects does contribution margin analysis focus?
	Selected Answer: d.  all of the above Answers: a.  the quantity factor b.  the unit cost factor c.  the unit sales price factor d.  all of the above

·        Question 22

1 out of 1 points

	Costs that can be influenced by management at a specific level of management are called:
	Selected Answer: a.  controllable costs. Answers: a.  controllable costs. b.  noncontrollable costs. c.  direct costs. d.  variable costs.

·        Question 23

1 out of 1 points

	Management will use both variable and absorption costing in all of the following activities except:
	Selected Answer: c.  controlling inventory levels Answers: a.  product pricing b.  controlling costs c.  controlling inventory levels d.  production planning

·        Question 24

1 out of 1 points

	Under absorption costing, which of the following costs would not be included in finished goods inventory?
	Selected Answer: b.  variable and fixed selling and administrative expenses Answers: a.  direct labor cost b.  variable and fixed selling and administrative expenses c.  variable and fixed factory overhead cost d.  direct materials cost

·        Question 25

1 out of 1 points

	Under variable costing, which of the following costs would be included in finished goods inventory?
	Selected Answer: b.  only variable factory overhead cost Answers: a.  neither variable nor fixed factory overhead cost b.  only variable factory overhead cost c.  only fixed factory overhead cost d.  both variable and fixed factory overhead cost