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esgbebsb Page 3 of 6 WRAP-UP EXERCISES 1.

The fundamental difference between variable and

absorntories were 13,000 units and 18,000 units, respectively. If the fixed factory overhead

sdbvsdbdbcosting. How many units does the company have in its ending inventory? a. 22,000 units c.

6,000 units b. 10,000 units d. 4,000 units 12. Pink Company had a net idbdb sdncome of P 85,500

using variable costing and net income of P 90,000 using absorption costing. Total fixed

manufacturing overhead cost was P 150,000, and production was 100,000 units. How did the

inventory level change during the year? a. 3,000 units increase c. 4,500 units increase b. 3,000 units

decrease d. 4,500 units decrease 13. Under a just-in-time (JIT) production environment, profit under

absorption costing tends to be a. Higher than that of variable costing c. Equal to that of variable

costing b. Lower than that of variable costing d. Not equal to that of variable costing 14. Variable

costing profit fluctuates with (A) and does not react to changes in (B). a. (A) sales (B) production c.

(A) sales (B) demand b. (A) production (B) sales d. (A) production (B) supply 15. When using the

absorption approach to cost-plus pricing, a. All costs are included in the cost base. b. The cost base is

made up of the unit manufacturing costs. c. The “plus” or markup figure contains fixed ption costing

is the expensing of: a. Direct manufacturing costs c. Variable marketing costs b. Fixed manufacturing

costs d. Fixed marketing costs 2. Under absorption costing, fixed manufacturing ntories were 13,000

units and 18,000 units, respectively. If the fixed factory overhead application rate is P 2 per unit, then

what is the operating income under the absorption costing? a. P 70,000 c. P 50,000 b. P 60,000 d. P

40,000 11. Black Company had 16,000 units in its beginning inventory. The company’s variable

production costs were P 6 per unit and its fixed mandvsdbdsbufacturing overhead costs were P 4 per

unit. The company’s net income for the year was P 24,000 lower under absorption costing than it was

under variable costing. How many units does the company have in its ending inventory? a. 22,000

units c. 6,000 units b. 10,000 units d. 4,000 units 12. Pink Company had a net income of P 85,500
using variable costing and net income of P 90,000 using absorption costing. Total fixed

manufacturing overhead cost was P 150,000, and production was 100,000 units. How did the

inventory level change during the year? a. 3,000 units increase c. 4,500 units increase b. 3,000 units

decrease d. 4,500 units decrease 13. Under a just-in-time (JIT) production environment, profit under

absorption costing tends to be a. Higher than that of variable costing c. Equal to that of variable

costing b. Lower than that of variable costing d. Not equal to that of variable costing 14. Variable

costing profit fluctuates with (A) and does not react to changes in (B). a. (A) sales (B) production c.

(A) sales (B) demand b. (A) production (B) sales d. (A) production (B) supply 15. When using the

absorption approach to cost-plus pricing, a. All costs are included in the cost base. b. The cost base is

made up of the unit manufacturing costs. c. The “plus” or markup figure contains fixed d. All product

costs are fixed 4. As compared to absorption costing inventory cost, inventory cost under variable

costing is typically a. Lower c. The same b. Higher d. The same but higher in certain cases Items 5 to

7 are based on the following information White Company manufactures a single product. Unit

variable production costs are P 20 a single product. Unit variable production costs are P 20 and fixed

production costs are P 150,000. White uses a normal activity of 10,000 units. White began the year

with no inventory, produced 12,000 units, and sold 7,500 units. 5. How much is the unit product cost

under variable costing? a. P 20.00 c. P 35.00 b. P 32.50

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