Atlantic Company produces a single product. For the most recent year, the company's net operating income computed by the absorption costing method was $7,400, and its net operating income computed by the variable costing method was $10,100. The company's unit product cost was $17 under variable costing and $22 under absorption costing. If the ending inventory consisted of 1,460 units, the beginning inventory must have been:

 

 

 

Which of the following statements is true?

 

(A) Expenses are not usually separated into variable and fixed elements in externally reported income statements.

 

(B) Even if there is no change in units sold, selling price, or cost structure, a company can increase its absorption costing net operating income from one year to the next just by producing more units.

 

(C) When finished goods inventory decreases during a period, a manufacturing company's absorption costing net operating income for that period will usually be greater than its variable costing net operating income.

 

(D) Both A and B above.

 

 

 

Walsh Company produces a single product. Last year, the company manufactured 25,000 units and sold 22,000 units. Production costs were as follows:

 

Direct Material $100,000

 

Direct Labor$75000

 

Variable manufacturing Overhead$50,000

 

Fixed manufacturing Overhead$75,000

 

The net operating income under variable costing would be:

 

 

 

Charrd Corporation manufactures a gas operated barbecue grill. The following information relates to Charrd's operations for last year:

 

Unit product cost under absorption costing	$67 per unit
Fixed manufacturing overhead cost for the year	$130,500
Fixed selling and administrative cost for the year	$130,500
Units (grills) produced and sold	26,100

 

What is Charrd's variable costing unit product cost?

 

 

 

 

 

Silver Company produces a single product. Last year, the company's variable production costs totaled $7,500 and its fixed manufacturing overhead costs totaled $4,500. The company produced 3,000 units during the year and sold 2,400 units. There were no units in the beginning inventory. Which of the following statements is true?

 

-The ending inventory under variable costing will be $900 lower than the ending inventory under absorption costing.

 

-Under absorption costing, the units in ending inventory will be costed at $2.50 each.

 

-Under variable costing, the units in the ending inventory will be costed at $4 each.

 

-The net operating income under absorption costing for the year will be $900 lower than the net operating income under variable costing.

 

 

 

Caparros Corporation manufactures a variety of products. Variable costing net operating income was $62,800 last year and was $74,900 this year. Last year, ending inventory decreased by 3,300 units. This year, ending inventory increased by 1,900 units. Fixed manufacturing overhead cost is $7 per unit.

 

-$53,000

 

$61,600

 

$88,200

$65,100