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“45. During 19×5, Craft Company had a net income of $80,000 using absorption costing and $74,500 using variable costing. The fixed overhead application rate has been $5 per unit for the last three years. If 21,500 units were produced during 19×5, then sales in units for 19×5 were a. 16,000 units. b. 20,400 units. c. 22,600 units. d. 27,000 units.”,”2Difference in Net Income = (Diff in Production and Sales Units x Fixed Overhead Rate per unit $5,500 = ????? x 5 5,500/5 = 1,100 unitsSo …………… 21,500 units – 1,100 units = 20
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Read more“46. During 19×4, Roberts Company’s income under absorption costing was $2,000 lower than its income under variable costing. The company sold 8,000 units during the year, and its variable costs were $8 per unit, of which $2 was variable selling expense. If production cost was $10 per unit under absorption costing, then how many units did the company produce during the year? a. 7,500 units. b. 7,000 units. c. 9,000 units. d. 8,500 units.”,”1Production cost per unit under absorption = $10- Variable production cost per unit (8-2) = 6Fix MOH per unit 4Then the difference in income of $2000 is for 500 units (2000 / 4) Absorption income < variable income when units sold is > units produced.Units produced = 8,000 – 500 = 7
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Read more47. A single-product company prepares income statements using both absorption and variable costing methods. Manufacturing overhead cost applied per unit produced in 1995 was the same as in 1994. The 1995 variable costing statement reported a profit whereas the 1995 absorption costing statement reported a loss. The difference in reported income could be explained by units produced in 1995 being a. Less than units sold in 1995. b. Less than the activity level used for allocating overhead to the product. c. In excess of the activity level used for allocating overhead to the product. d. In excess of units sold in 1995.
Average Rating 0 out of 5 stars. 0 votes.You must log in to submit a review.47. A single-product company prepares[…]
Read more48. The budgeted amount of raw materials to be purchased is determined by a. adding the desired ending inventory of raw materials to the raw materials needed to meet the production schedule. b. subtracting the beginning inventory of raw materials from the raw materials needed to meet the production schedule. c. adding the desired ending inventory of raw materials to the raw materials needed to meet the production schedule and subtracting the beginning inventory of raw materials. d. adding the beginning inventory of raw materials to the raw materials needed to meet the production schedule and subtracting the desired ending inventory of raw materials.
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Read more49. The standard rate per hour for direct labor should be established such that: a. a standard rate exists for each employee in each department. b. employment taxes are excluded from the standard rate per hour. c. both employment taxes and fringe benefits are excluded from the standard rate per hour. d. a single rate exists for all employees in a department that reflects an expected mix of workers.
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Read more50. Which of the following statements is false? a. The size of a variance relative to the amount of spending involved is one factor in determining which variances to investigate. b. Focusing on variances that are above a certain dollar amount is the only way to identify variances that are true exceptions. c. Some random fluctuations in variances from period to period are normal and to be expected even when costs are well under control. d. A variance should only be investigated when it is unusual relative to the normal level of fluctuation in the variance.
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Read more51. Which of the following is not an advantage typically associated with standard costs? a. Standard costs facilitate cash planning and inventory planning. b. Standard costs facilitate income determination and record keeping. c. Standard costs are equally applicable to companies operating in an automated environment as to companies where automation is not a major factor. d. Standard costs are fundamental to responsibility accounting.
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Read more152. A company operating in an automated environment would expect its inventory turnover rate to do which of the following: a. increase. b. decrease. c. remain the same. d. become irrelevant due to changes in operations resulting from the increased use of automation.
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Read more53. The variable overhead spending variance is most effective in measuring: a. price changes for overhead items during a period. b. the efficiency with which the activity base was utilized in production. c. excessive use of overhead materials. d. the utilization of plant facilities.
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