Orbach Company sells its product for $40 per unit. During 2007, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $10, direct labor $6, and variable overhead $2. Fixed costs are: $480,000 manufacturing overhead, and $60,000 selling and administrative expenses.

___B__5. The per unit manufacturing cost under absorption costing is:

a. $16.

b. $18.

c. $26.

d. $27.

______6. The per unit manufacturing cost under variable costing is:

a. $16.

b. $18.

c. $26.

d. $27.

______7. Cost of goods sold under absorption costing is:

a. $ 900,000.

b. $1,080,000.

c. $1,300,000.

d. $1,560,000.

______8. Ending inventory under variable costing is:

a. $ 180,000.

b. $ 260,000.

c. $ 400,000.

d. $ 900,000.

______9. Under absorption costing, what amount of fixed overhead is deferred to a future

period?

a. $ 20,000.

b. $ 80,000.

c. $ 100,000.

d. $ 480,000.

______10. Net income under absorption costing is gross profit less:

a. cost of goods sold.

b. fixed manufacturing overhead and fixed selling and administrative expenses.

c. fixed manufacturing overhead and variable manufacturing overhead.

d. variable selling and administrative expenses and fixed selling and administrative expenses.

______11. Net income under variable costing is contribution margin less:

a. cost of goods sold.

b. fixed manufacturing overhead and fixed selling and administrative expenses.

c. fixed manufacturing overhead and variable manufacturing overhead.

d. variable selling and administrative expenses and fixed selling and administrative expenses.

______12. The primary difference between variable costing and absorption costing is the

treatment of:

a. direct materials.

b. direct labor.

c. variable manufacturing overhead.

d. fixed manufacturing overhead.

______13. Net income under absorption costing is higher than net income under variable costing

when:

a. units produced exceed units sold.

b. units produced equal units sold.

c. units produced are less than units sold.

4. regardless of the relationship between units produced and units sold.