Question
Clinton's Engine Company manufactures part AT168 used in several of its engine models. Monthly unit production costs for 1,000 units are as follows: Direct materials
Clinton's Engine Company manufactures part AT168 used in several of its engine models. Monthly unit production costs for 1,000 units are as follows:
Direct materials | $ 40 |
Direct labor | 10 |
Variable overhead costs | 30 |
Fixed overhead costs | 20 |
Total | $100 |
It is estimated that 10% of the fixed overhead costs assigned to AT168 will no longer be incurred if the company purchases AT168 from the outside supplier. Clinton's Engine Company has the option of purchasing the part from an outside supplier at $85 per unit.
If Clinton's Engine Company purchases 1,000 AT168 parts from the outside supplier per month, then its monthly operating income will
Group of answer choices
decrease by $85,000
increase by $2,000
decrease by $3,000
increase by $80,000
ABC company uses a standard costing system. In April 2019, $1,000 of unfavorable price variance and $2,000 of favorable efficiency variance for direct labor were recorded. In addition, the company recorded $2,500 of unfavorable variable overhead flexible budget variance and $3,000 of favorable fixed overhead variance. The company makes year-end adjustments to close all variances into the cost of goods sold account. Which of the following journal entries would have been recorded for April?
Group of answer choices
Debit cost of goods sold for $1,500
Credit cost of goods sold for $1,500
Credit direct labor efficiency variance for $2,000
Debit cost of goods sold for $8,500
Haier Corporation incurred fixed manufacturing costs of $6,000 during 2019. Other information for 2019 includes:
The budgeted denominator level is 1,000 units.
Units produced total 750 units.
Units sold total 600 units.
Beginning inventory was zero.
The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold.
Operating income using absorption costing will be ________ than operating income if using variable costing
Group of answer choices
$2,400 lower
$3,600 lower
$900 higher
$2,400 higher
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