Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 9, Problem 9.18MCQ
King Tooling has produced and sold the following number of units of their only product during their first two years in business:
Produced | Sold | |
Year ended December 31, Year 1 | 50,000 | 40,000 |
Year ended December 31, Year 2 | 50,000 | 55,000 |
Production costs per unit have not changed over the two-year period. Under variable costing, what is the amount of cost of sales relative to the cost of sales shown on the GAAP income statement of the company?
Year 1 | Year 2 |
a. Higher | Higher |
b. Higher | Lower |
c. Lower | Higher |
d. Lower | Lower |
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number of units produced. Which of the following amounts are the same under both variable costing
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Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow.
Income Statements (Absorption Costing)
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Cost of goods sold ($49 per unit)
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Income
Additional Information
a. Sales and production data for these first two years follow.
Units
Units produced
Units sold
Year 1
51,000
30,000
b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $49 per unit product cost
using absorption costing consists of the following.
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Variable overhead
Fixed overhead ($459,000/51,000 units)
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c. Selling and administrative expenses consist of the following.
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51,000
72,000
Contribution margin
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Year 1
$ 1,860,000
1,470,000
390,000
275,000
$ 115,000
Variable cost of goods sold
Variable selling and administrative expenses…
Baraban Corporation has provided the following data for its most recent year of operation:
Selling price per unit
Manufacturing costs:
Variable manufacturing cost per unit produced:
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Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead per year
Selling and administrative expenses:
Variable selling and administrative expense per unit sold
Fixed selling and administrative expense per year
Units in beginning inventory
Units produced during the year
Units sold during the year
Units in ending inventory
The net operating income (loss) under absorption costing closest to:
0
10,000
9,000
1,000
$ 47
$ 10
$6
$5
$130,000
$ 5
$ 63,000
Chapter 9 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 9 - Differences in operating income between variable...Ch. 9 - Why is the term direct costing a misnomer?Ch. 9 - Do companies in either the service sector or the...Ch. 9 - Explain the main conceptual issue under variable...Ch. 9 - Companies that make no variable-cost/fixed-cost...Ch. 9 - The main trouble with variable costing is that it...Ch. 9 - Give an example of how, under absorption costing,...Ch. 9 - What are the factors that affect the breakeven...Ch. 9 - Critics of absorption costing have increasingly...Ch. 9 - What are two ways of reducing the negative aspects...
Ch. 9 - Prob. 9.11QCh. 9 - Describe the downward demand spiral and its...Ch. 9 - Will the financial statements of a company always...Ch. 9 - Prob. 9.14QCh. 9 - The difference between practical capacity and...Ch. 9 - In comparing the absorption and variable cost...Ch. 9 - Queen Sales, Inc. has just completed its first...Ch. 9 - King Tooling has produced and sold the following...Ch. 9 - The following information relates to Drexler Inc.s...Ch. 9 - Prob. 9.20MCQCh. 9 - Variable and absorption costing, explaining...Ch. 9 - Throughput costing (continuation of 9-21). The...Ch. 9 - Variable and absorption costing, explaining...Ch. 9 - Throughput costing (continuation of 9-23). The...Ch. 9 - Variable versus absorption costing. The Tomlinson...Ch. 9 - Absorption and variable costing. (CMA) Miami,...Ch. 9 - Absorption versus variable costing. Horace Company...Ch. 9 - Candyland uses standard costing to produce a...Ch. 9 - Capacity management, denominator-level capacity...Ch. 9 - Denominator-level problem. Thunder Bolt Inc., is a...Ch. 9 - Variable and absorption costing and breakeven...Ch. 9 - Variable costing versus absorption costing. The...Ch. 9 - Throughput Costing (continuation of 9-32) 1....Ch. 9 - Variable costing and absorption costing, the Z-Var...Ch. 9 - Comparison of variable costing and absorption...Ch. 9 - Effects of differing production levels on...Ch. 9 - Alternative denominator-level capacity concepts,...Ch. 9 - Motivational considerations in denominator-level...Ch. 9 - Denominator-level choices, changes in inventory...Ch. 9 - Variable and absorption costing and breakeven...Ch. 9 - Downward demand spiral. Market.com is about to...Ch. 9 - Absorption costing and production-volume...Ch. 9 - Operating income effects of denominator-level...Ch. 9 - Variable and absorption costing, actual costing....Ch. 9 - Prob. 9.45PCh. 9 - Cost allocation, responsibility accounting, ethics...Ch. 9 - Absorption, variable, and throughput costing....Ch. 9 - Costing methods and variances, comprehensive. Rob...
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