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81. Which of the following statements correct using the direct costing

Question : 81. Which of the following statements correct using the direct costing : 1373224

 

81. Which of the following statements is correct using the direct costing concept? 

A. All manufacturing costs are included in the calculation of cost of goods manufactured.

B. Only fixed costs are included in the calculation of cost of goods manufactured while variable costs are considered period costs.

C. Only variable manufacturing costs are included in the calculation of cost of goods manufactured while fixed costs are considered period costs.

D. All manufacturing costs are considered period costs.

82. The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured: 

A. exceed units sold

B. equal units sold

C. are less than units sold

D. are equal to or greater than units sold

83. The level of inventory of a manufactured product has increased by 7,000 units during a period. The following data are also available:

 

Variable

Fixed

Unit manufacturing costs of the period

$12.00

$6.00

Unit operating expenses of the period

  4.00

 1.50

 

 

 

 

What would be the effect on income from operations if absorption costing is used rather than variable costing? 

A. $42,000 decrease

B. $42,000 increase

C. $52,500 increase

D. $52,500 decrease

84. 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 variable costing is used rather than absorption costing? 

A. $80,000 decrease

B. $80,000 increase

C. $104,000 decrease

D. $104,000 increase

85. S&P Enterprises sold 10,000 units of inventory during a given period.  The level of inventory of a 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?

A. Net income will be the same under both variable and absorption costing.

B. Net income under variable costing will be $45,000 less than net income under absorption costing

C. Net income under absorption costing will be $40,000 more than under variable costing.

D. The difference in net income cannot be determined.

86. 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? 

A. $80,000 decrease

B. $80,000 increase

C. $104,000 increase

D. $104,000 decrease

87. 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? 

A. $50,000 decrease

B. $50,000 increase

C. $65,000 increase

D. $65,000 decrease

88. The level of inventory of a manufactured product has increased by 4,000 units during a period. The following data are also available:

 

Variable

Fixed

Unit manufacturing costs of the period

$22.00

$11.00

Unit operating expenses of the period

  7.00

  5.00

 

 

 

 

What would be the effect on income from operations if absorption costing is used rather than variable costing? 

A. $44,000 decrease

B. $44,000 increase

C. $64,000 increase

D. $64,000 decrease

89. 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? 

A. $64,000

B. $56,000

C. $66,400

D. $78,400

90. A business operated at 100% of capacity during its first month and incurred the following costs:

Production costs (10,000 units):

 

 

  Direct materials

$ 80,000

 

  Direct labor

120,000

 

  Variable factory overhead

140,000

 

  Fixed factory overhead

  40,000

$380,000

Operating expenses:

 

 

  Variable operating expenses

$ 65,000

 

  Fixed operating expenses

  25,000

90,000

 

 

 

 

If 1,000 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? 

A. $38,000

B. $40,500

C. $34,000

D. $47,000

 

Solution
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