38. A.

1. The level of inventory of a manufactured product has increased by 8,070 units during a period. The following data are also available:

   	Variable	Fixed
   Unit manufacturing costs of the period	$10	$4
   Unit operating expenses of the period	$1	$5

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

   a. $72,630 decrease

   b. $72,630 increase

   c. $32,280 increase

   d. $32,280 decrease

38. B.

1. Consider Derek's budget information: materials to be used totals $65,800; direct labor totals $201,100; factory overhead totals $394,000; work in process inventory January 1, $189,300; and work in progress inventory on December 31, $197,100. What is the budgeted cost of goods manufactured for the year?

   a. $660,900

   b. $653,100

   c. $197,100

   d. $850,200

38. C.

1. Below is budgeted production and sales information for Flushing Company for the month of December:

   	Product XXX	Product ZZZ
   Estimated beginning inventory	31,300 units	18,800 units
   Desired ending inventory	35,800 units	15,200 units
   Region I, anticipated sales	305,000 units	254,000 units
   Region II, anticipated sales	193,000 units	142,000 units

   The unit selling price for product XXX is $5 and for product ZZZ is $15. Budgeted production for product ZZZ during the month is

   a. 396,000 units

   b. 565,100 units

   c. 411,200 units

   d. 392,400 units