Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 7, Problem 2BE
(a)
To determine
Calculate the variable costing income from operations is greater than or lesser than the absorption costing income from operations.
(b)
To determine
State the difference between variable costing income from operations and absorption costing income from operations.
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Students have asked these similar questions
How is operating income affected if the number of units sold exceeds the number of units produced?
Select one:
a. Operating income would be higher under a variable costing income statement.
b. Operating income would be lower under a variable costing income statement.
c. Operating income would be higher under an absorption costing income statement.
d. Operating income would be the same under both a variable costing and absorption costing income
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When units manufactured exceed units sold, variable costing income
Oa. is less than absorption costing income
Ob. is greater by the number of units produced multiplied by the variable cost ratio
Oc. is greater than absorption costing income
Od. equals absorption costing income
Net operating income computed under variable costing would exceed net operating income computed using absorption costing if:
Multiple Choice
units sold exceed units produced.
units sold are less than units produced.
units sold equal units produced.
the average fixed cost per unit is zero.
Chapter 7 Solutions
Managerial Accounting
Ch. 7 - What types of costs are customarily included in...Ch. 7 - Which type of manufacturing cost (direct...Ch. 7 - Which of the following costs would be included in...Ch. 7 - In the variable costing income statement, how are...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Discuss how financial data prepared on the basis...Ch. 7 - Prob. 8DQCh. 7 - Explain why rewarding sales personnel on the basis...Ch. 7 - Explain why service companies use different...
Ch. 7 - Variable costing Marley Company has the following...Ch. 7 - Prob. 2BECh. 7 - Variable costingsales exceed production The...Ch. 7 - Prob. 4BECh. 7 - Contribution margin by segment The following...Ch. 7 - At the end of the first year of operations, 21,500...Ch. 7 - Gallatin County Motors Inc. assembles and sells...Ch. 7 - Fresno Industries Inc. manufactures and sells...Ch. 7 - On March 31, the end of the first month of...Ch. 7 - On April 30, the end of the first month of...Ch. 7 - On October 31, the end of the first month of...Ch. 7 - The following data were adapted from a recent...Ch. 7 - Estimated income statements, using absorption and...Ch. 7 - The following data were adapted from a recent...Ch. 7 - Prob. 10ECh. 7 - Explain why service companies use different...Ch. 7 - Galaxy Sports Inc. manufactures and sells two...Ch. 7 - Prob. 13ECh. 7 - Sales territory and salesperson profitability...Ch. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Variable costing income statement for a service...Ch. 7 - Variable costing income statement for a service...Ch. 7 - Prob. 1PACh. 7 - The demand for solvent, one of numerous products...Ch. 7 - During the first month of operations ended May 31,...Ch. 7 - Salespersons report and analysis Walthman...Ch. 7 - Segment variable costing income statement and...Ch. 7 - Absorption and variable costing income statements...Ch. 7 - Income statements under absorption costing and...Ch. 7 - Absorption and variable costing income statements...Ch. 7 - Prob. 4PBCh. 7 - Variable costing income statement and effect on...Ch. 7 - Prob. 1MADCh. 7 - Prob. 2MADCh. 7 - Prob. 3MADCh. 7 - Segment disclosure by Apple Inc. (AAPL) provides...Ch. 7 - Prob. 1TIFCh. 7 - Inventory effects under absorption costing BendOR,...Ch. 7 - Communication Bon Jager Inc. manufactures and...Ch. 7 - Prob. 1CMACh. 7 - Chassen Company, a cracker and cookie...Ch. 7 - Prob. 3CMACh. 7 - Bethany Company has just completed the first month...
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- When the number of units in ending inventory increases through the year, which of the following is true? A. Net income is the same for variable and absorption costing. B. Net income is higher for variable costing than for absorption costing. C. Net income is higher for absorption costing than for variable costing. D. There is no relationship between net Income and the costing method.arrow_forwardThe contribution margin is the a. amount by which sales exceed total fixed cost. b. difference between sales and total cost. c. difference between sales and operating income. d. difference between sales and total variable cost. e. difference between variable cost and fixed cost.arrow_forwardVariable Costing—Production Exceeds Sales Fixed manufacturing costs are $44 per unit, and variable manufacturing costs are $100 per unit. Production was 67,200 units, while sales were 50,400 units. a. Determine whether variable costing operating income is less than or greater than absorption costing operating income. b. Determine the difference in variable costing and absorption costing operating income.$fill in the blank 2arrow_forward
- Potter Corporation produces one product. The following per unit cost information is available: Direct materials $ 7.00 Direct labor 15.00 Variable overhead 8.00 Variable Selling and Admin. 2.00 Fixed overhead costs are $100,000 per peiod and fixed selling and administrative costs are $70,000 per period. The selling price is $70 per unit. REQUIRED: A. Prepare an absorption costing (traditional) income statement assuming: 1. Production is 8,000 units and sales are 8,000 units. 2. Production is 8,000 units and salesa are 9,000 units. 3. Production is 8,000 units and sales are 6,000 units. Unit Sales 8,000 Sales Cost of Goods Sold Gross Profit Selling and Admin Net Income 9,000 6,000arrow_forwardVariable Costing—Production Exceeds Sales Fixed manufacturing costs are $47 per unit, and variable manufacturing costs are $141 per unit. Production was 98,000 units, while sales were 94,080 units. a. Determine whether variable costing operating income is less than or greater than absorption costing operating income. b. Determine the difference in variable costing and absorption costing operating income.$arrow_forwardWhich one of the following is not considered an assumption of cost-volume-profit analysis? O a. Sales mix of products sold does not remain constant O b. Costs are linear O c. Costs can be divided into variable and fixed components O d. Fixed cost per unit is not constant O e. Selling price per unit does not change with volumearrow_forward
- When units manufactured exceed units sold: variable costing income is greater than absorption costing income variable costing income is greater by the number of units produced multiplied by the variable cost ratio. variable costing income is less than absorption costing income variable costing income equals absorption costing incomearrow_forwardIf unit costs remain unchanged and sales volume and sales price per unit both increase from the preceding period when operating profits were earned,operating profits must A. Increase under the absorption costing method.B. Increase under the variable costing method.C. Decrease under the absorption costing method.D. Decrease under the variable costing method.arrow_forwardThe net income under variable costing would be: * a. P64,000 b. P60,000 c. P56,000 d. P52,000 The net income under absorption costing would be: * a. The same as the income under variable costing. b. P8,000 greater than the income under variable costing. c. P12,000 greater than the income under variable costing. d. P8,000 less than the income under variable costing.arrow_forward
- In the CVP analysis, at the point of breakeven O a. total contribution margin minus total fixed costs is equal to profits earned O b. total contribution margin for a company is equal to zero O c. breakeven sales revenues equal total fixed costs divided by the variable cost per unit OC. O d. None of the given answers O e. total sales revenues equal total fixed costs plus total variable costsarrow_forwardWhen units produced exceeds units sold,a. net income under absorption costing is higher than net income under variable costing.b. net income under absorption costing is lower than net income under variable blo costingc. net income under absorption costing equals net income under variable costing.d. the relationship between net income under absorption costing and net income under variable costing cannot be predicted.arrow_forward1. The total variable costs charged to expense for the year, assuming that NUBD uses variable costing would be? 2. The total fixed costs charged against the current year’s operations assuming that NUBD uses absorption costing is?arrow_forward
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