Comparison of Variable and Full-Absorption Costing Multiple-Choice: The following questions are based on JV Company, which produces a single product selling for $7 per unit. One hundred thousand units were produced, and 80,000 units were sold during the year.

JV had no inventory at the beginning of the year.

Required:

a. In presenting inventory on the balance sheet at December 31, the unit cost under full-absorption costing is:

(1) $2.50. (2) $3.00. (3) $3.50. (4) $4.50.

b. In presenting inventory on a variable costing balance sheet, the unit cost would be:

(1) $2.50. (2) $3.00. (3) $3.50. (4) $4.50.

c. What is the operating profit using variable costing?

(1) $50,000. (2) $80.000. (3) $90,000. (4) $120,000.

d. What is the operating profit using full-absorption costing?

(1) $50,000. (2) $80,000. (3) $90,000. (4) $120,000.

e. What is the ending inventory using full-absorption costing?

(1) $60,000. (2) $90,000. (3) $120,000. (4) $150,000.

f. What is the ending inventory under variable costing?

(1) $60,000. (2) $90,000. (3) $120,000. (4) $150,000.

Transcribed Image Text:

Direct materials Direct labor Factory overhead Marketing and administrative Fixed Costs -0- -0- $150,000 80,000 Variable Costs $1.50 per unit produced 1.00 per unit produced .50 per unit produced .50 per unit sold