Site MapHelpFeedbackPractice Exam
Practice Exam
(See related pages)

1
The Barley Company produces chocolate candies. Their cost information includes the following:
Annual production10,000 units
Variable costs per unit:
Direct materials$ 2.00
Direct labour$ 3.00
Variable manufacturing overhead$ 1.00
Variable selling and admin. expenses$ 3.00
Fixed costs:
Fixed manufacturing overhead$20,000
Fixed selling and admin. expenses$ 5,00

The chocolates sell for $12.00 per box. Assuming the company sells 9000 boxes of the candies, compute the unit product cost under absorption and variable costing, and prepare an income statement under both methods.
2
In the Barley problem above, explain the difference of $2,000 in the net operating income determined under the absorption and variable costing methods.
3
X Corp Inc. produces and sells a single product for $12 per unit. Variable manufacturing costs amount to $4 per unit. Variable selling costs amount to $1 per unit. Fixed selling costs total $5,000 per year. Budgeted overhead costs amount to $50,000 per year, based on a practical capacity of 25,000 units. X Corp produced 25,000 units in each of years 1 and 2. The company sold 15,000 and 27,000 units in Years 1 and 2 respectively. What is X Corp’s net income for Year 1 under the Absorption Method?
4
Describe the major advantages of the absorption and variable cost methods
5
X Corp Inc. produces and sells a single product for $12 per unit. Variable manufacturing costs amount to $4 per unit. Variable selling costs amount to $1 per unit. Fixed selling costs total $5,000 per year. Budgeted overhead costs amount to $50,000 per year, based on a practical capacity of 25,000 units. X Corp produced 25,000 units in each of years 1 and 2. The company sold 15,000 and 27,000 units in Years 1 and 2 respectively. What is X Corp’s net income for Year 1 under the Absorption Method?
6
X Corp Inc. produces and sells a single product for $12 per unit. Variable manufacturing costs amount to $4 per unit. Variable selling costs amount to $1 per unit. Fixed selling costs total $5,000 per year. Budgeted overhead costs amount to $50,000 per year, based on a practical capacity of 25,000 units. X Corp produced 25,000 units in each of years 1 and 2. The company sold 15,000 and 27,000 units in Years 1 and 2 respectively. What is X Corp’s net income for Year 1 under the Variable Costing Method?
7
X Corp Inc. produces and sells a single product for $12 per unit. Variable manufacturing costs amount to $4 per unit. Variable selling costs amount to $1 per unit. Fixed selling costs total $5,000 per year. Budgeted overhead costs amount to $50,000 per year, based on a practical capacity of 25,000 units. X Corp produced 25,000 units in each of years 1 and 2. The company sold 15,000 and 27,000 units in Years 1 and 2 respectively. What is X Corp’s net income for Year 2 under the Variable Costing Method?







Managerial AccountingOnline Learning Center

Home > Chapter 7 > Practice Exam