Under the variable-costing concept, unit product cost would most likely be increased by A. A decrease in the remaining useful life of factory machinery depreciated on the units-of-production method. B. A decrease in the number of units produced. C. An increase in the remaining useful life of factory machinery depreciated on the sum-of-the-year’s digits method. D. An increase in the commission paid to salesman for each unit sold.

Under the variable-costing concept, unit product cost would most likely be increased by A. A decrease in the remaining useful life of factory machinery depreciated on the units-of-production method. B. A decrease in the number of units produced. C. An increase in the remaining useful life of factory machinery depreciated on the sum-of-the-year’s digits method. D. An increase in the commission paid to salesman for each unit sold.

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Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 19MC: When the number of units in ending inventory increases through the year, which of the following is...

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Which of the following would most likely decrease the product cost per unit under variable costing? adecrease in raw material cost per unit an increase in the number of units sold a decrease in the commission paid to salesmen for each unit sold a decrease in the remaining useful life of a factory equipment depreciated on the straigth-line method
Which TWO of the following statements concerning marginal costing are TRUE? A. Closing inventories are valued at full production cost. B. Fixed costs are treated as a period cost and are charged in full to the income statement of the accounting period in which they are incurred. O.C. Marginal cost is the cost of a unit which would be avoided if that unit were not produced. OD. Contribution is calculated as sales revenue plus all variable costs.
The computation of absorption costing gross profit always involves blow subtracting:a. all current-year fixed manufacturing overhead.b. some, but not all, current-year fixed manufacturing overhead.c. all fixed manufacturing overhead applied to units sold in the current year.d. no fixed manufacturing overhead.
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During Heaton Company's first two years of operations, the company reported absorption costing net operating income as follows: Year 2 $ 1,827,000 1,073,000 754,000 333,000 $ 421,000 Year 1 Sales (@ $63 per unit) Cost of goods sold (@ $37 per unit) Gross margin Selling and administrative expenses* Net operating income $1,197,000 703,000 494,000 303,000 $ 191,000 * $3 per unit variable; $246,000 fixed each year. The company's $37 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($456,000 - 24,000 units) Absorption costing unit product cost 9 8 1 19 $ 37 Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on production equipment and buildings. Production and cost data for the two years are: Units produced Units sold Year 1 24,000 19,000 Year 2 24,000 29,000 Required: 1. Prepare a variable costing contribution format income statement…
The adjustment of overapplied manufacturing overhead cost results in: a. none of the given answers O b. decrease in net operating income. c. decrease in cost of goods sold O d. increase in cost of goods sold
The adjustment of underapplied manufacturing overhead cost results in all the following , EXCEPT a. increase in net operating income . b . increase in cost of goods c. sold decrease in net operating income . d. none of the given answers
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When the number of units sold exceed the number of units produced, income reported under absorption costing will be lower than variable costing. Which of the following gives the best justification of the above statement? a. Income under absorption costing is always more than income reported using variable costing, regardless of the number of units produced. b. The fixed overhead cost deferred in ending inventory is less than the fixed overhead cost recognized from beginning inventory. c. The fixed overhead cost deferred in ending inventory is greater than the fixed overhead cost recognized from beginning inventory. d. Income under absorption costing is always less than income reported using variable costing, regardless of the number of units produced. e. Fixed overhead is treated as a period cost under absorption costing.
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