Western Technologies Inc. produces dashboard displays. Actual fixed manufacturing overhead is the same as the budgeted amount, $687,500. Production in September increased by 10% over the previous month's production. August production was 25,000 displays. The production level is the same as the budgeted denominator level. At the end of September, 2,000 displays remained in stock. In August, all of the displays were sold by the end of the month and there was no remaining work in process inventory.

6. What are Western Technologies' appropriate period costs for September if variable costing is used?

a. $668,380

b. $726,500

c. $632,500

d. $687,500

e. $637,500

7. What is the Western Technologies' September cost of goods sold amount if absorption costing is used?

a. $668,380

b. $726,500

c. $632,500

d. $687,500

e. $637,500

8. 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?

a. $65,000

b. $50,000

c. $40,000

d. $5,000

e. $70,000

9. Which of the following is an example of a drawback of using absorption costing?

a. It allows management the ability to manipulate operating income via production schedules.

b. An inventoried cost will eventually become part of cost of goods sold.

c. The company's sales level drives the production schedules.

d. A manager may increase maintenance activities above the budgeted level for the current period.

e. Expensing fixed costs as period costs reducing operating income.

10. Zany Brainy projected current year sales of 50,000 units at a unit sale price of $20.00. Actual current year sales were 55,000 units at $22.00 per unit. Variable costs were budgeted at $14.00 per unit and actually totaled $15.00 per unit. Budgeted fixed costs totaled $400,000, while actual fixed costs amounted to $420,000.

What is the Zany Brainy's sales volume variance for total revenue?

a. $110,000 favourable

b. $100,000 unfavourable

c. $110,000 unfavourable

d. $100,000 favourable