| E.None of the answer choices is correct. 2. If the number of units produced is less than the number of units sold, which of the following statements is true when comparing operating profit under absorption versus variable costing? | A.Sales revenue will be less when absorption costing is used. | | | B.Absorption costing will produce a higher operating profit. | | | C.Operating profit is the same under both methods. | | | D.Variable costing will produce a higher operating profit. | | | E.None of the answer choices is correct. 3. All of the following are steps used to find the target profit for companies that incur income taxes except: | A.convert the desired target profit after taxes to target profit before taxes. | | | B.determine the desired target profit after taxes. | | | C.convert the desired target profit before taxes to target profit after taxes. | | | D.use the target profit before taxes to calculate target profit in units or in sales dollars. | | | E.None of the answer choices is correct. 4. If the number of units produced is more than the number of units sold, which of the following statements is true when comparing overhead costs under absorption versus variable costing? | A.Variable costing will produce higher fixed overhead costs on the income statement. | | | B.Absorption costing will produce higher fixed overhead costs on the income statement. | | | C.Overhead costs on the income statement are the same under both methods. | | | D.Absorption costing will have higher variable overhead costs on the income statement. | | | E.None of the answer choices is correct. 5.Exhibit 6-2 Victor Company makes a single product. The company has monthly fixed costs totaling $200,000 and variable costs of $20 per unit. Each unit of product is sold for $35. Brevard expects to sell 25,000 units each month. Refer to Exhibit 6-2. What is the monthly operating profit? | A.$275,000 | | | B.$375,000 | | | C.$175,000 | | | D.$675,000 | | | E.None of the answer choices is correct. 6. Exhibit 6-1 Larimer Company has monthly fixed costs totaling $90,000 and variable costs of $5 per unit. Each unit of product is sold for $20. Refer to Exhibit 6-1. Assume that Larimer Company expects to sell 5,000 units of product this coming month. What is the margin of safety in sales dollars? | A.$1,000 | | | B.$20,000 | | | C.$260,000 | | | D.$15,000 | | | E.None of the answer choices is correct. 7. Exhibit 6-4 Sanchez Company produces two different remote control products with the following monthly data for the most recent month: Plane Boat Total Selling price per unit $300 $100 Variable cost per unit $240 $ 60 Expected unit sales 28,000 7,000 35,000 Sales mix 80% 20% 100% Fixed costs $1,400,000 Refer to Exhibit 6-4. Assume the sales mix remains the same at all levels of sales. How many units in total must be sold to break even? | A.25,000 | | | B.28,000 | | | C.14,000 | | | D.70,000 | | | E.None of the answer choices is correct. | | | | | | |
