1. What is the key difference between Absorption Costing and Marginal Costing? CLO3

a. Absorption Costing treats Manufacturing Overhead as a period cost.

b. Absorption Costing only considers variable costs to calculate net income.

c. Marginal Costing only considers variable costs to calculate net income.

d. Marginal Costing treats Fixed Manufacturing Overhead as a period cost.

2. Budgeted production is 180 units and based on this capacity fixed overhead is $4 per unit. Assume that actual production was 100 units and overheads are absorbed at the same predetermined rate of $4 per unit. CLO3

a) Overheads would be under absorbed by $320

b) Overheads would be under absorbed by $80

c) Overheads would be over absorbed by $80

d) Overheads would be over absorbed by $320

3. ABC company sells shoes for $450. The variable cost is $200 per unit. The fixed costs are $750,000. The company wants to have a profit of $250,000. How many units do they have to sell to achieve this goal? CLO3 a) 3,000 units b) 4,000 units c) 5,000 units d) 6,000 units

4. A company sells 900 units/month at $49.99 each, with an $18.12 per-unit cost and $2,175 monthly fixed costs. Calculate the profit of the company. CLO3

a. $25,000

b. $25,608

c. $26,508

d. $26,000