Beauty Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs.

January February

Beginning inventory 0 0

Production 2,500 3,000

Sales 2,250 3,025

Other information:

Selling price $20.00

Standard variable manufacturing cost/unit $8.00

Standard variable market/admin. cost/unit $4.00

Standard fixed manufacturing overhead cost/month $40,000

Standard fixed market/admin. cost/month $20,000

Budgeted denominator level per month (output units) 4,000

There were no beginning or ending inventories of materials or work-in-process.

1) What is the per unit variable cost?

A.

$14.00

B.

$22.00

C.

$12.00

D.

$18.00

2) What is the per unit manufacturing cost using absorption costing?

A.

$27.00

B.

$12.00

C.

$23.00

D.

$18.00

3) What would Beauty Supply Company's operating income (loss) be for January and February, respectively, using the variable costing approach?

A.

$(42,000) and $(35,800)

B.

$(44,000) and $(33,809)

C.

$18,000 and $24,200

D.

$(45,000) and $(35,500)

4) What would Beauty Supply Company's operating income (loss) be for January and February, respectively, using the absorption costing approach?

A.

$(15,750) and $(21,175)

B.

$(24,500) and $(26,050)

C.

$(24,750) and $(33,275)

D.

$(22,000) and $(15,800)