Ch6 Practice Leader Answeronly

Topics: Manufacturing, Generally Accepted Accounting Principles, Variable cost Pages: 5 (299 words) Published: May 2, 2015
1.
A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

  

What is the absorption costing unit product cost for the month?   

A. 
$96 per unit

B. 
$83 per unit

C. 
$87 per unit

D. 
$100 per unit

Solution: A

F-MOH / Units Produced = 94,900 / 7,300 = 13
29 + 49 + 5 + 13 = 96

2.
A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

  

What is the total period cost for the month under variable costing?   

A. 
$124,200

B. 
$123,200

C. 
$168,200

D. 
$45,000

Solution: C

45,000 + 79,200 + (10 * 4,400 = 44,000) = 168,200

3.
Swifton Corporation produces a single product. Last year, the company had net operating income of $40,000 using variable costing. Beginning and ending inventories were 22,000 and 27,000 units, respectively. If the fixed manufacturing overhead cost was $3 per unit both last year and this year, what was the income using absorption costing?   

A. 
$15,000

B. 
$25,000

C. 
$40,000

D. 
$55,000

Solution: D

Produce > Sold -> Absorption NI > Variable NI
40,000 + 3 * (27,000 – 22,000 = 5,000) = 15,000 = 55,000

4.
Gough Corporation has two divisions: Domestic and Foreign. Data from the most recent month appear below:

  

The break-even in sales dollars for the company as a whole is closest to:   

A. 
$609,794

B. 
$502,579

C. 
$107,216

D. 
$436,424

Solution: A
WORK BACKWARDS
BE Point (Use Total Company)
FC / CM Ratio = 408,480 / ((447,470 / 668,000) = 67%) = 609,794 5.
Warburton Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below:

  

The company's common fixed expenses total $85,690. The break-even in sales dollars for Alpha Division is closest to:   

A. 
$273,623

B. 
$162,338

C. 
$420,116

D. 
$217,117
Solution: B
170,940 / 222,000 = 77%
DC / CM Ratio = 125,000 / 77% = 162,338
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