ACCT 526 EAXM QUESTIONS
AND VERIFIED CORRECT
ANSWERS GRADED A+
LATEST 100% GUARANTEED
PASS
Characteristics of Absorption Costing - CORRECT ANSWER-1. All product costs are attached to
units
2. Acceptable for GAAP
3. Useful information for outsiders (external reporting)
Characteristics of Variable Costing - CORRECT ANSWER-1. Only variable product costs attaches
to units
2. Not acceptable for GAAP
3. Useful for management decision making (internal reporting)
Income Statement for Absorption Costing - CORRECT ANSWER-Sales - COGS = Gross Margin -
Variable -Fixed = Operating Income
,Amiens Company produced 20,000 units during its first year of operations and sold 19,000 at
$20 per unit. The company chose practical activity—at 20,000 units—to compute its
predetermined overhead rate. Manufacturing costs are as follows:
Direct materials$ 80,000
Direct labor $100,000
Variable overhead $15,000
Fixed overhead $54,000
What is total per unit cost under the absorption costing?
a.$10.75
b. $9.75
c. $12.45
d.$8.45 - CORRECT ANSWER-c. $12.45
Absorption Costing takes into account fixed overhead.
Total per unit cost = Direct Materials per unit + Direct Labor per unit + Variable Overhead per
unit + Fixed Overhead per unit or
Total cost per unit = Total Cost / Total Units
Total Cost = $80,000 + $100,000 + $15,000 + $54,000 = $249,000
Total cost per unit = $249,000/20,000 units = $12.45/unit
Lane Company produced 50,000 units during its first year of operations and sold 45,000 at $15
per unit. The company chose practical activity—at 50,000 units—to compute its predetermined
overhead rate. Manufacturing costs are as follows:
,Direct materials $120,000
Direct labor $90,000
Variable overhead $65,000
Fixed overhead $50,000
What is total per unit cost under the variable costing vs absorption costing?
a. $5.50 and $6.50
b. $6.50 and $7.50
c. $5.00 and $3.00
d. $2.40 and $3.00 - CORRECT ANSWER-a. $5.50 and $6.50
Variable costing does not include fixed overhead unit cost and Absorption costing does.
Absorption:
Total per unit cost = Direct Materials per unit + Direct Labor per unit + Variable Overhead per
unit + Fixed Overhead per unit
Variable per unit cost = Direct Materials per unit + Direct Labor per unit + Variable Overhead per
unit
Total cost per unit = Total Cost / Total Units
Absorption Costing:
Total Cost = $120,000 + $90,000 + $65,000 = $275,000
Total per unit cost = $275,000/50,000 units = $5.50/unit
, Variable Costing:
Total Cost = $120,000 + $90,000 + $65,000 + $50,000 = $325,000
Total per unit cost = $325,000/50,000 units = $6.50/unit
Income Statement for Variable Costing - CORRECT ANSWER-Sales - Variable COGS - (other
Variable activities) = Contribution Margin - (Fixed Activities) = Operating Income
Amiens Company produced 20,000 units during its first year of operations and sold 19,000 at
$20 per unit. The company chose practical activity—at 20,000 units—to compute its
predetermined overhead rate. Manufacturing costs are as follows:
Direct materials$ 80,000
Direct labor $101,400
Variable overhead $15,600
Fixed overhead $54,600
What is the cost of ending inventory under the absorption method
Round your answer to the nearest cent.
a. $19,000
b. $20,000
c. $9,750
d.$12,450 - CORRECT ANSWER-d. $12,450
Absorption Costing takes into account fixed overhead.
AND VERIFIED CORRECT
ANSWERS GRADED A+
LATEST 100% GUARANTEED
PASS
Characteristics of Absorption Costing - CORRECT ANSWER-1. All product costs are attached to
units
2. Acceptable for GAAP
3. Useful information for outsiders (external reporting)
Characteristics of Variable Costing - CORRECT ANSWER-1. Only variable product costs attaches
to units
2. Not acceptable for GAAP
3. Useful for management decision making (internal reporting)
Income Statement for Absorption Costing - CORRECT ANSWER-Sales - COGS = Gross Margin -
Variable -Fixed = Operating Income
,Amiens Company produced 20,000 units during its first year of operations and sold 19,000 at
$20 per unit. The company chose practical activity—at 20,000 units—to compute its
predetermined overhead rate. Manufacturing costs are as follows:
Direct materials$ 80,000
Direct labor $100,000
Variable overhead $15,000
Fixed overhead $54,000
What is total per unit cost under the absorption costing?
a.$10.75
b. $9.75
c. $12.45
d.$8.45 - CORRECT ANSWER-c. $12.45
Absorption Costing takes into account fixed overhead.
Total per unit cost = Direct Materials per unit + Direct Labor per unit + Variable Overhead per
unit + Fixed Overhead per unit or
Total cost per unit = Total Cost / Total Units
Total Cost = $80,000 + $100,000 + $15,000 + $54,000 = $249,000
Total cost per unit = $249,000/20,000 units = $12.45/unit
Lane Company produced 50,000 units during its first year of operations and sold 45,000 at $15
per unit. The company chose practical activity—at 50,000 units—to compute its predetermined
overhead rate. Manufacturing costs are as follows:
,Direct materials $120,000
Direct labor $90,000
Variable overhead $65,000
Fixed overhead $50,000
What is total per unit cost under the variable costing vs absorption costing?
a. $5.50 and $6.50
b. $6.50 and $7.50
c. $5.00 and $3.00
d. $2.40 and $3.00 - CORRECT ANSWER-a. $5.50 and $6.50
Variable costing does not include fixed overhead unit cost and Absorption costing does.
Absorption:
Total per unit cost = Direct Materials per unit + Direct Labor per unit + Variable Overhead per
unit + Fixed Overhead per unit
Variable per unit cost = Direct Materials per unit + Direct Labor per unit + Variable Overhead per
unit
Total cost per unit = Total Cost / Total Units
Absorption Costing:
Total Cost = $120,000 + $90,000 + $65,000 = $275,000
Total per unit cost = $275,000/50,000 units = $5.50/unit
, Variable Costing:
Total Cost = $120,000 + $90,000 + $65,000 + $50,000 = $325,000
Total per unit cost = $325,000/50,000 units = $6.50/unit
Income Statement for Variable Costing - CORRECT ANSWER-Sales - Variable COGS - (other
Variable activities) = Contribution Margin - (Fixed Activities) = Operating Income
Amiens Company produced 20,000 units during its first year of operations and sold 19,000 at
$20 per unit. The company chose practical activity—at 20,000 units—to compute its
predetermined overhead rate. Manufacturing costs are as follows:
Direct materials$ 80,000
Direct labor $101,400
Variable overhead $15,600
Fixed overhead $54,600
What is the cost of ending inventory under the absorption method
Round your answer to the nearest cent.
a. $19,000
b. $20,000
c. $9,750
d.$12,450 - CORRECT ANSWER-d. $12,450
Absorption Costing takes into account fixed overhead.
