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Chapter 19: Variable Costing and Analysis

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Financial & Managerial Accounting
Pages: 848 - 881

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62 Questions for Chapter 19: Variable Costing and Analysis

  1. D’Souza Company sold 10,000 units of its product at a price of $80 per unit. Total variable cost is $50 per unit, consisting of $40 in variable production cost and $10 in variable selling and administrative cost. Compute the contribution margin.

    Found on Page 868
  2. Ming Company had net income of $772,200 based on variable costing. Beginning and ending inventories were 7,800 units and 5,200 units, respectively. Assume the fixed overhead per unit was $3.00 for both the beginning and ending inventory. What is net income under absorption costing?

    Found on Page 869
  3. Mortech had net income of $250,000 based on variable costing. Beginning and ending inventories were 50,000 units and 48,000 units, respectively. Assume the fixed overhead per unit was $0.75 for both the beginning and ending inventory. What is net income under absorption costing?

    Found on Page 869
  4. Hong Co. had net income of $386,100 under variable costing. Beginning and ending inventories were 2,600 units and 3,900 units, respectively. Fixed overhead cost was $4.00 per unit for both the beginning and ending inventory. What is net income under absorption costing?

    Found on Page 869
  5. E-Com had net income of $130,000 under variable costing. Beginning and ending inventories were 1,200 units and 4,900 units, respectively. Fixed overhead cost was $2.50 per unit for both the beginning and ending inventory. What is net income under absorption costing?

    Found on Page 869
  6. Under absorption costing a company had the following per unit costs when 10,000 units were produced.

    Found on Page 869
  7. A manufacturer reports the following information on its product. Compute the target selling price per unit under absorption costing.

    Found on Page 869
  8. Li Company produces a product that sells for $84 per unit. A customer contacts Li and offers to purchase 2,000 units of its product at a price of $68 per unit. Variable production costs with this order would be $30 per unit, and variable selling expenses would be $18 per unit. Assuming that this special order would not require any additional fixed costs, and that Li has sufficient capacity to produce the product without affecting regular sales, explain to Li’s management why it might be a good decision to accept this special order.

    Found on Page 869
  9. Refer to the information in QS 19-16. The company sells its product for $50 per unit. Due to new regulations, the company must now incur $2 per unit of hazardous waste disposal costs and $8,500 per year of fixed hazardous waste disposal costs. Compute the contribution margin per unit, including hazardous waste disposal costs.

    Found on Page 869
  10. Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow.

    Found on Page 874

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