MANAGERIAL ACCOUNTING IB CHAPTER 20 QUIZ Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Seven Seas Company operated at 100% of capacity during its first month and incurred the following costs: Production costs (5,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Operating expenses: Variable operating expenses Fixed operating expenses $85,000 180,000 Production costs (5,000 units): 95,000 25,000 $385,000 $ 30,000 If 450 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet? a. $37,350 b. $32,400 c. $34,650 d. $38,520 Direct materials Direct labori Variable factory overhead Fixed factory overhead Operating expenses: 9,000 39,000 2. JP Company operated at 100% of capacity during its first month and incurred the following costs: $140,000 40,000 71 20,000 1,000 $204,000 Variable operating expenses Fixed operating expenses $34,000 If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, what is the amount of the contribution margin that would be reported on the variable costing income statement? a. $146,000 b. $141,600 c. $148,000 d. $143,600 Production costs (20,000 units): Direct materials Direct labor 2,000 36,000 3. Arrow Company operated at 100% of capacity during its first month and incurred the following costs: Variable factory overhead Fixed factory overhead $360,000 480,000 560,000 200,000 $1,600,000 Operating expenses: Variable operating expenses Fixed operating expenses If 2,700 units remain unsold at the end of the month, what is the $260,000 100,000 360,000 amount of inventory that would be reported on the variable costing balance sheet? a. $216,000 b. $264,600 c. $189,000 d. $225,000 4. The level of inventory of a manufactured product has increased by 14,400 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $48.00 $20.00 Unit operating expenses of the period 16.00 6.00 What would be the effect on income from operations if absorption costing is used rather than variable costing? a $174,400 decrease b. $374,400 increase c. $288,000 increase d. $288,000 decrease 5. If variable cost of goods sold totaled $160,000 for the year (32,000 units at $10.00 each) and the planned variable cost of goods sold totaled $175,500 (30,000 units at $11.50 each), the effect of the unit cost factor on the change in variable cost of goods sold is: a. $23,000 decrease b. $48,000 increase c. $23,000 increase d. $48,000 decrease 6. Rowell Company operated at 100% of capacity during its first month and incurred the following costs: Production costs (10,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Operating expenses: Variable operating expenses Fixed operating expenses $70,000 20,000 10,000 2,000 $102,000 b. $25,000 c. $34,200 d.not reported $17,000 1,000 8,000 If 2,000 units remain unsold at the end of the month and sales total $150,000 for the month, what is the amount of the manufacturing margin that would be reported on the absorption costing income statement? a. $35,000 7. The level of inventory of a manufactured product has increased by 2,500 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $12.00 $5.00 Unit operating expenses of the period 4.00 1.50 What would be the effect on income from operations if variable costing is used rather than absorption costing? a. $16,250 increase b. $16,250 decrease c. $12,500 decrease d. $12,500 increase 8. Proper Company operated at 100% of capacity during its first month and incurred the following costs: Production costs (10,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Operating expenses: Variable operating expenses $ 17,000 Fixed operating expenses $70,000 20,000 10,000 2,000 $102,000 a $40,000 b. $60,000 c. $58,200 d. $47,400 If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what is the amount of the manufacturing margin that would be reported on the variable costing income statement? 1,000 18,000 a.Absorption costing b. Variable costing e. Differential costing d. Standard costing 9. What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and variable factory overhead cost? Change Company operated at 100% of capacity during its first month, with the following results: Sales (90 units) Production costs (100 units); Direct materials Direct labor Variable factory overhead Fixed factory overhead $160,000 $80,000 40,000 4,000 14,000 138,000 Operating expenses: Variable operating expenses S 16,000 Fixed operating expenses 2,000 18,000 b. $39,000 c. $32,400 d. $20,400 10. What is the amount of the contribution margin that would be reported on the variable costing income statement? a. $48,400 11. Wright Brothers Company operated at 100% of capacity during its first month and incurred the following costs: Production costs (30,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Operating expenses: Variable operating expenses Fixed operating expenses S 240,000 360,000 420,000 120,000 $1,140,000 $ 195,000 75,000 270,000 If 3,240 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet? Ja. J$152,280] b. $183,600 c. $131,220 d. $123,120 12. Fuller Company operated at 100% of capacity during its first month, with the following results: Sales (80 units) Production costs (100 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Operating expenses: Variable operating expenses Fixed operating expenses $40,000 $25,000 5,000 2.500 1,000 33,500 $3,000 500 3,500 What is the amount of the manufacturing margin that would be reported on the variable costing income statement? a. $11,000 b. $14,000 c. $7,500 d. $9,500