80. In an income statement prepared as an internal report using the variable costing method, fixed manufacturing overhead would a. not be used. b. be used in the computation of operating income but not in the computation of the contribution margin. c. be used in the computation of the contribution margin. d. be treated the same as variable manufacturing overhead. ANS: B 81. Variable costing has an advantage over absorption costing for which of the following purposes? a. analysis of profitability of products, territories, and other segments of a business b. determining the CVP relationship the major factors of selling price, sales mix, and sales volume c. minimizing the effects of inventory changes on net income d. all of the above ANS: D 82. In the variable costing income statement, line separates the variable and fixed costs? a. selling expenses b. general and administrative expense c. product contribution margin d. total contribution margin ANS: D 83. A firm presently has total sales of $100,000. If its sales rise, its a. net income on variable costing will go up more than its net income based on absorption costing. b. net income based on absorption costing will go up more than its net income based on variable costing. c. fixed costs will also rise. d. per unit variable costs will rise. ANS: A Langley Corporation Langley Corporation has the following standard costs associated with the manufacture and sale of one of its products: Direct material $3.00 per unit Direct 2.50 per unit Variable manufacturing overhead 1.80 per unit Fixed manufacturing overhead 4.00 per unit (based on an estimate of 50,000 units per year) Variable selling expenses .25 per unit SG&A expense $75,000 per year During its first year of operations Langley manufactured 51,000 units and sold 48,000. The selling price per unit was $25. All costs were equal to standard. 84. Refer to Langley Corporation. Under absorption costing, the standard production cost per unit for the current year was a. $11.30. b. $ 7.30. c. $11.55.
80. In an income statement prepared as an internal report using the variable costing method, fixed manufacturing overhead would a. not be used. b. be used in the computation of operating income but not in the computation of the contribution margin. c. be used in the computation of the contribution margin. d. be treated the same as variable manufacturing overhead. ANS: B 81. Variable costing has an advantage over absorption costing for which of the following purposes? a. analysis of profitability of products, territories, and other segments of a business b. determining the CVP relationship the major factors of selling price, sales mix, and sales volume c. minimizing the effects of inventory changes on net income d. all of the above ANS: D 82. In the variable costing income statement, line separates the variable and fixed costs? a. selling expenses b. general and administrative expense c. product contribution margin d. total contribution margin ANS: D 83. A firm presently has total sales of $100,000. If its sales rise, its a. net income on variable costing will go up more than its net income based on absorption costing. b. net income based on absorption costing will go up more than its net income based on variable costing. c. fixed costs will also rise. d. per unit variable costs will rise. ANS: A Langley Corporation Langley Corporation has the following standard costs associated with the manufacture and sale of one of its products: Direct material $3.00 per unit Direct 2.50 per unit Variable manufacturing overhead 1.80 per unit Fixed manufacturing overhead 4.00 per unit (based on an estimate of 50,000 units per year) Variable selling expenses .25 per unit SG&A expense $75,000 per year During its first year of operations Langley manufactured 51,000 units and sold 48,000. The selling price per unit was $25. All costs were equal to standard. 84. Refer to Langley Corporation. Under absorption costing, the standard production cost per unit for the current year was a. $11.30. b. $ 7.30. c. $11.55.
Ch03%20Predetermined%20Overhead%20Rates.docx