Question 16

Helton Company has the following information for the current year:

Beginning fixed manufacturing overhead in inventory	$95,000
Fixed manufacturing overhead in production	375,000
Ending fixed manufacturing overhead in inventory	25,000
Beginning variable manufacturing overhead in inventory	$10,000
Variable manufacturing overhead in production	50,000
Ending variable manufacturing overhead in inventory	15,000

What is the difference between operating incomes under absorption costing and variable costing?

Select one:

A. $5,000

B. $65,000

C. $70,000

D. $50,000

E. $40,000

Question 17

A manufacturing firm is able to produce 1,000 pairs of shoes per hour, at maximum efficiency. There are three eight-hour shifts each day. Due to unavoidable operating interruptions, production averages 800 units per hour. In the month of June the plant actually operated only 25 days due to avoidable shut downs. What is the theoretical capacity for the month of April?

Select one:

A. 600,000 units

B. 720,000 units

C. 480,000 units

D. 576,000 units

E. 744,400 units

Question 18

Variable costing regards fixed manufacturing overhead as

Select one:

A. a product cost.

B. a period expense.

C. an unexpired cost.

D. an inventoriable cost.

E. a deferred asset.

Question 19

Peggy's Pillows produces and sells a decorative pillow for $75.00 per unit. In the first month of operation, 2,000 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:

Variable manufacturing costs	$20.00 per unit
Variable marketing costs	$3.00 per unit
Fixed manufacturing costs	$7.00 per unit
Administrative expenses, all fixed	$15.00 per unit
Ending inventories:
Direct materials	-0-
WIP	-0-
Finished goods	250 units

What is operating income using variable costing?

Select one:

A. $78,750

B. $52,500

C. $40,000

D. $65,750

E. $47,000

Question 20

Peggy's Pillows produces and sells a decorative pillow for $75.00 per unit. In the first month of operation, 2,000 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:

Variable manufacturing costs	$20.00 per unit
Variable marketing costs	$3.00 per unit
Fixed manufacturing costs	$7.00 per unit
Administrative expenses, all fixed	$15.00 per unit
Ending inventories:
Direct materials	-0-
WIP	-0-
Finished goods	250 units

What is cost of goods sold using variable costing?

Select one:

A. $78,750

B. $35,000

C. $40,250

D. $47,250

E. $52,500