1. Under absorption costing, a company had the following unit costs when 8,000 units were

produced.

Direct labor	$	8.50	per unit
Direct material	$	9.00	per unit
Variable overhead	$	6.75	per unit
Fixed overhead ($60,000/8,000 units)	$	7.50	per unit
Total production cost	$	31.75	per unit

Compute the total production cost per unit under variable costing if 25,000 units had been produced.

A) $31.75

B) $27.25

C) $26.25

D) $24.25

E) $17.50

2. When evaluating a special order, management should:

A) Only accept the order if the incremental revenue exceeds all product costs.

B) Only accept the order if the incremental revenue exceeds fixed product costs.

C) Only accept the order if the incremental revenue exceeds total variable product costs.

D) Only accept the order if the incremental revenue exceeds full absorption product costs.

E) Only accept the order if the incremental revenue exceeds regular sales revenue.

3. Which of the following best describes costs assigned to the product under the absorption

costing method?

Direct labor (DL)

Direct materials (DM)

Variable selling and administrative (VSA)

Variable manufacturing overhead (VOH)

Fixed selling and administrative (FSA)

Fixed manufacturing overhead (FOH)

A) DL, DM, VSA, and VOH.

B) DL, DM, and VOH.

C) DL, DM, VOH, and FOH.

D) DL and DM.

E) DL, DM, FSA, and FOH.

4. Which of the following best describes costs assigned to the product under the variable

costing method?

Direct labor (DL)

Direct materials (DM)

Variable selling and administrative (VSA)

Variable manufacturing overhead (VOH)

Fixed selling and administrative (FSA)

Fixed manufacturing overhead (FOH)

A) DL, DM, VSA, and VOH.

B) DL, DM, and VOH.

C) DL, DM, VOH, and FOH.

D) DL and DM.

E) DL, DM, FSA, and FOH.

12. Howley Company has the following information for April:

Sales $912,000

VC of goods sold 474,000

FC mfg. 82,000

VC selling & adm. 238,000

FC selling & adm. 54,700

a, Operating Income for Howley during the month of April.