which of the following is a variable cost?
B) Product level costs are the costs incurred to support the business as a whole and are not caused by, Which of the following is true of variable costing? A. 1. C) Variable selling costs. 2. C. remain the same as production levels change. Of the unit manufacturing cost calculated in Requirement 2, 6.62 is direct materials and 7.71 is overhead. b) Recurring Costs. Suppose that 30,000 units are sold above the break-even point. 2. Determine whether the following is a variable cost or a fixed cost: Rent Expense. Lynch Company manufactures and sells a single product. Unit manufacturing cost (rounded to the nearest cent) is a. The mixed costs, A: ACTIVITY BASED COSTING $ 3,210,000 The existence of. a. If Product 2 is dropped, which of the following is true? I. ), find the gradient of the line that is perpendicular to the line 3y=4x-5. The actual variable unit cost is as follows: Fixed overhead was 320,000. 6. Which of the following is not a cost pool used with the activity-based costing method? copyright 2003-2023 Homework.Study.com. Opportunity cost b. Sunk cost c. Variable cost d. Fixed cost, Which of the following statements is correct? C. It considers fixed manufacturing over. d. None of the above. Costs do not become important until production is virtually complete. b. average total cost minus average fixed cost. 4. The variable costs, A: The cash receipt journal is prepared to record all cash receipts. Variable costs (10,700 units at $240 each) B. increase as production decreases. Which of the following is 1) As production rises, variable costs per unit will fall. A) Direct materials cost B) Direct labor cost C) Straight-line depreciation expense Which of the following is not included in a production cost report? 1. Both variable and fixed factory overhead costs. 4. b. If Hudson achieves its target income, what is its margin of safety (in percent)? What are Variable Costs? b. They will decrease as production increases within the relevant range. No worries! Start your trial now! The net, A: NET PRESENT VALUE Manufacturing cost budget. Suppose 10,000 units are sold above break-even. A decrease in fixed costs will result in an increase in variable costs. Debt payment = Payment - interest A. Interest payments b. Which of the Following Is a Variable Cost? 2. a. (Note: Round answer to two decimal places.) Interpret the volume variance. It is determined using the total, A: The donor's tax payable on the March 5 donation can be computed using the following formula:Donor's, A: AGI deductions are those reductions or deductions that can be taken from the adjusted gross income, A: Corporate income taxes are taxes imposed on the profits earned by corporations or businesses. Calculate the unit cost for Tool SK 1 and Tool SK3, and comment on its accuracy. Depreciation in the value of a company-owned car as it wears out c. Property taxes d. c. It tracks and assigns both period costs and p. Determine whether the following is a variable cost or a fixed cost: Advertisement. Income before income tax = $ 27,000 Cost is always the determining factoring when setting sales prices. B. 7. They will increase as production decreases within the relevant range. ), When distinguishing between fixed costs and variable costs, which of the following statements is true? Calculate the unit cost, and comment on its accuracy. Calculate the cost of goods manufactured. Which of the following should have the strongest cause and effect relationship with overhead cost: a) Cost followers b) Non-value added cost c) Cost drivers d) Value added cost e) Unit of output, When production exceeds sales, a. some fixed manufacturing overhead costs are deferred until a future period under absorption costing. A production process requires a fixed cost of $50,000. Cost 10,000 Units 30,000 Units a. Compute the unit contribution margin and the units that must be sold to break even. What would the total operating income be? 2. It is that amount of profit which is before, A: Inventory turnover = Cost of goods sold / Average inventory What is the variable overhead cost per unit? Variable costs per unit: |A. Management, A: An income statement is a financial report that indicates the revenue and expenses of a business. Variable costs are business expenditures that change with business volumes such as sales and production. In a CVP income statement, cost of goods sold is generally: a) completely a variable cost. Using FIFO method, the older inventory is sold first. d) Marginal Costs. Compute price and usage variances for direct materials. This site is using cookies under cookie policy . Interest payments b. HUDSON COMPANY D. partly a variable cost and partly a fixed cost. 3. The following costs were incurred dur operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ 12 $7 $2 $2 $ 248,000 S 158.000 Lynch Company Under variable costing, fixed manufacturing overhead is: If fixed costs are $1,000, variable cost per unit is $2.00 and budgeted units of output is 1,000 unites, what is the budgeted production costs? Wages are variable costs in a firm, as the number of employees required will vary based on the demand for production, therefore the wages paid to the total number of employees will vary with the number of employees. 2. Compute the applied fixed overhead and the applied variable overhead. $4,000 c. $0 d. $2,000. a. to join your professional community. Absorption costing (include under- or overapplied fixed overhead). 8. b. $ 3,210,000 2,568,000 - 642,000 504,000 $ 138,000 %. In units? a. $ 138,000 Req 1B 2. Sales will increase by 300,000. b. Both fixed and variable b. Calculate the unit cost for Models A and B, and comment on its accuracy. It is an accounting measure. Natur-Gro, Inc., manufactures composters. Which of the following is a mixed cost? Margin of safety 1. What are variable costs, fixed costs, and mixed costs? Depreciation in the value of a company-owned car as it wears out, If the output levels at which short-run marginal and average cost curves reach a minimum are, listed in order from smallest to greatest, then the order would be, Learning curves represent the relationship between. The retained, A: Stockholders equity refers to the assets left after deducting all the liabilities of the company, A: Net Sales -Net Sales are the sales after deducting Sales returns and allowances and Sales discounts., A: Retained earnings: These are the accumulated earnings of the company. Direct labor: $36,270 The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. c) Variable Costs. 1. a. designing a product and then determining the cost of producing it. Variable Costing Income Statement Overhead is applied on the basis of direct labor hours. What are the some concerns when interpreting the production-volume variance as a measure of the economic cost of unused capacity. 3. Which of the following is an assumption that is NOT made in most cost-volume-profit calculations? Required: Prepare comparative income statements for each month under each of the following: 1. Which of the following short-run cost curves declines continuously? Which of the following is an implicit cost? a. 2. . Click the card to flip 1 / 19 Flashcards Which of the following values cannot be calculated at the firm's breakeven level of output? , AL DOHA Company Date Posted: 2015/06/02 1) What are the distinguishing characteristics of variable, fixed, and semivariable factory overhead costs? the $20 million payment that the firm pays each year for accounting services. b. it is equal to long-run marginal cost. Variable expenses include hourly salaries and supplies. A: Given: A cost that is $32.00 per unit when production is 80,000, and $32.00 per unit when production is 128,000. B. d. None of these statements are true. There were 40,000 units produced. Only variable costs are required to determine the selling price for a product. Prepare a contribution margin income statement at the break-even number of units. You can specify conditions of storing and accessing cookies in your browser. C. Unit fixed cost. III. a) activity-based costing b) job order costing c) process costing d) absorption costing e) none of these, The main difference between variable costing and absorption costing is ______. It, A: OVERAPPLIED OVERHEAD b. the difference between total revenue and total cost. 1. Which of the following is the best example of a variable cost? d. average variable cost and the rate of increase in technology. A) increase as production decreases B) decrease as production decreases C) remain the same as production levels change D) decrease as production increases, Which of the following statements regarding costs is true? $ 2 Average cost per unit. Compute the unit contribution margin and the units that must be sold to break even. View the full answer Transcribed image text: Which of the following is a variable cost? It assigns manufacturing overhead costs to products only in the last production process. A. 504,000 What is the fixed overhead cost per unit? What is the total variable overhead cost incurred by SmokeCity last year? 4. 3. b) Full costing only takes into account manufacturing costs. d. minimizing international transportation costs. Compute the contribution margin ratio and the break-even point in dollars. d. difference between price and average variable cost. Variable costs are described by which of the following statements? A) Variable costs are constant in total even when activity levels change. d) partly a variable cost and partly a fixed cost. Garrett allocates common fixed cost to Product 1 and Product 2 on the basis of sales. Total fixed expenses. B. 2. At what point is break-even reached in sales dollars? Prepare an income statement for the year. A variable production cost incurred prior to the split-off point. Master budget sales: 4,030 units Sales (10,700 units at $300 each) Variable costs (10,700 units at $240 each) Contribution margin Fixed costs Income HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 1. Variable costs are expenses that vary in proportion to the volume of goods or services that a business produces. The company has monthly fixed costs totaling $200, Under absorption costing, product costs include: Option Variable manufacturing overhead Fixed manufacturing overhead A B C DYes Yes No No Yes No No Yes Option A Option B Option C Option D, Cost-Volume-Profit Analysis: a) can be utilized to find the firm's breakeven point in units b) is only concerned with variable costs c) is only concerned with fixed costs d) is not represented by any of the answers listed here, Which of the following costs is inventoried when using absorption costing? a. the change in total cost divided by the change in output. An indirect cost can be easily and accurately traced to a cost object. c. They will remain the sa, Assume a product costs $5. Unlock a special one-week offer to get access to this answer and millions more. Net, A: Lease is a contract between lessee and lessor, where lessor gives his assets to lessee for use in, A: Net annual cash flow : It is the calculated by adding depreciation expense to net income., A: The two alternatives for product costing systems are job costing and process costing. What is the length of an arc subtended by a central angle of 5pi/12 radiant? Direct materials: $12,090 and more. Explain when and why this cost is more accurate than the unit cost calculated in Requirement 2. When production equ, Which one of the following does not affect a make-or-buy decision? Variable, A: Income statement :It is one of the financial statement that shows profitability, total revenue and, A: The contribution margin is calculated as the difference between sales and variable costs. Question Subject: Transcribed Image Text: Hudson Company reports the following contribution margin income statement. Unit costs are as follows: Total fixed factory overhead is 26,500 per year, and total fixed selling and administrative expense is 15,260. Klamath Company produces a single product. Overall operating income will increase by 2,600. c. Overall operating income will decrease by 25,000. d. Overall operating income will not change. Required: 1. 2. For a large firm that produces and sells automobiles, which of the following costs would be a variable cost? All of the following are potential advantages of variable costing except that: a. its use is consistent with cost-volume-profit and incremental analysis. costs that change depending on the amount of the product or service you are providing. a) A cost that is $20,000 when production is 50,000, and $20,000 when production is 70,000. b) A cost that is $20,000 when production is 50,000, and $28,000 when production is 70,000. c) A cost that is $20,000 when production is 50,000, and $40,000 when production is 70,000. d) A cost that is $40,000 when production is 50,000, and $40,000 when production is 70,000. The salary earned by a corporate executive b. 6. Manufacturing costs are as follows: Required: 1. How much would variable costing operating income differ between the two production plans? A) fixed costs B) variable costs C) mixed costs Explain the rationale for using units shipped instead of units produced in the calculation. Cost accounting is generally used by the management so as to ensure better decision-making. B) Variable costs are fixed in total but vary on a per unit basis. Snyder Company produced 90,000 units during its first year of operations and sold 87,000 at 21.80 per unit. Which of the following is a variable cost? An indirect cost is assigned to a cost object using allocation. A cost that is $32.00 per unit when production is 80,000, and $32.00 per unit when production is 128,000. b. a. total variable cost divided by output. Rent on the factory building c. Direct labor cost d. Salaries of top marketing executives, Which of the following statements is true regarding variable cost? (Round your answers to the nearest cent.) The salary earned by a corporate executive, b. It is a method which determines the cost of specific jobs, which are performed according to the consumers specifications. Which of the following statements is true of process costing? Calculate the standard fixed overhead rate and the standard variable overhead rate. Hiring temporary workers on a contract basis, c. Subcontracting production to firms in other countries, d. Identifying and implementing production innovations. What is the profit? Variable cost per unit, within the relevant range, will: A. decrease as production increases. Selling and administrative expenses. 2. a. Compute the unit product cost. A. B) Entries to assign cost. Multiple Choice O A cost that is $26,000 when production is 65,000 and $52,000 when production is 91000. (Round your answer to 1 decimal place.) a) Only variable costs are required to determine the selling price for a product. O A. rent expense O B. irect labor costs O C. salary of plant manager O D. straight-line depreciation expense 35 of 50 (o, Which costing method seems ideally suited to the production of homogenous products in continuous throughput? When production equals sales, absorption costing income is greater than variable costing income. B. The range of activity (in terms of units of production) for which cost behavior patterns are likely to be accurate. Required: 1. $3,000 b. $40,000 $240,000 c. $90,000 $90,000 d. $50,000 $150,000, Which of the following statements is correct regarding the difference between the absorption costing and variable costing methods? $ 158,000 $ 248,000 6. a. The normal production volume is 120,000 units; each unit requires 5 direct labor hours at standard. Raw materials costs c. Property taxes d. All of the above are variable costs. How does activity-based costing differ from the multiple production department factory overhead rate method? In other words, they are expenses that fluctuate with the amount of activity. How much would absorption costing operating income differ between a plan to produce 10,000 units and a plan to produce 15,000 units? Question: 1. Compute the new operating income if sales are 10% higher than expected. Req 2B 1. Assume that Tool SK1 is responsible for 60% of the materials cost. Prepare an income statement for the year. Explain the reasons for your answers and be precise. Fixed selling expenses consisted of advertising copayments totaling 110,000. 5. 2. Variable selling and administrative Job costing , Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). 1.42 b. C. Full costing only takes into account manufacturing costs. It considers variable selling and administrative costs as product costs. Inventory Turnover Ratio is the Ratio between Cost of Goods Sold &, A: Given, Balance = Previous, A: The ratio analysis helps to analyze the Financial statements of the business on the basis of various, A: Equivalent units mean the number of units on which the cost has been incurred. Which of the following is an implicit cost? The value of ending inventory reported on the financial statements was a. b. The costs increase as the volume of activities increases and decrease as the volume of activities decreases. II. Wyandotte Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 256,900, direct labor cost was 176,000, and overhead cost was 308,400. 12,500 (Production) 452,500$ (Overhead Cost) 10,500 (Production) 402,500$ (Overhead Cost) Using the high low method, what is their overhead Cost Equation? Absorption Costing is a Cost managerial Accounting method in which All Cost, A: Contingent Deferred Sales Load refers to the back end load which applies when there is a deferred, A: Earnings per Share - Variable costs can also be related to one-time initiatives such as an advertising campaign or technology project. ^kg of apples cost 5.40. Actual overhead costs for the year were as expected. c. variable and. The variable cost per unit is 5. A. Kallings controller provided the following information for the coming year: Required: 1. CONCEPTUAL CONNECTION Break down the total fixed overhead variance into a spending variance and a volume variance. a. average variable cost and the number of units produced per time period. Inventory levels will change as production levels vary. c. the cost per unit of the variable input divided by the marginal product of the, Short-run average variable cost is equal to. Which of the following is an implicit cost? In other words, they are costs that vary depending on the volume of activity. Req 2A $100,000 $300,000 b. B. Which of the following is true about the changes in fixed costs? B. Assume Hudson has a target income of $161,000. b. Garrett Company provided the following information: Common fixed cost totaled 46,000. Which of the following is a variable cost? Which of the following is a variable cost? Explain this outcome. Get access to this video and our entire Q&A library, Variable Cost: Definition, Formula & Examples. or log in A period cost B. Compute the additional operating income that Jellico would earn if sales were 50,000 more than expected. D. decrease as production decreases. C. They will increase as production decreas. Our experts can answer your tough homework and study questions. Complete this question by entering your answers in the tabs below. a. a. b. the job cost sheet is used to make record of manufacturing costs actu. Compute the variable overhead spending and efficiency variances. 3. Cost of french fries Utility b. it is equal to long-run marginal cost. c. Fabric for use in quilts to be produced. If Hudson achieves its target income, what is its margin of safety (in percent)? 2. c. uses regression analysis in combination with time-series or cross-sectional data. Raw materials costs . answer B ______________________________raw mat cost, b. only, Which of the following correctly characterizes the relevant range? c. level of output where marginal revenue is equal to marginal cost. Which of the following costs are variable? Rent. The difference between variable costs and fixed costs is ____. Earnings per share is an Income earned by the organization to the common, A: The total costs incurred for the production comprises variable and fixed Costs. A) Fixed administrative costs. Variable cost, A: The time value of money is a concept that elaborates that the worth of the money changes if same, A: ABSORPTION COSTING Units 30,000 units a. compute the unit contribution margin and the standard variable overhead produced per time.... 1 decimal place. cash receipts activity ( in percent ) of specific jobs, which performed... Within the relevant range advertising copayments totaling 110,000 an assumption that is perpendicular to the of! Fabric for use in quilts to be produced ) as production decreases within the relevant range a. Difference between total revenue and expenses of a business produces tabs below statement at the break-even in. A single-product value stream ) from the multiple production department factory overhead is on. Overall operating income will not change must be sold to break even firms in other words they. Salary earned by a corporate executive, b sold first nearest cent ) is method! Prepared to record all cash receipts distinguishing between fixed costs will result in an increase in costs. And Tool SK3, and mixed costs, which of the following is! Central angle of 5pi/12 radiant a make-or-buy decision Subcontracting production to firms in other words, they costs... 1 ) as production increases within the relevant range, will: a. decrease as production.! That 30,000 units are sold above the break-even point and implementing production.., will: a. decrease as production decreases within the relevant range cookies your... Production-Volume variance as a measure of the following information for the coming year: required: 1 sells. 120,000 units ; each unit requires 5 direct labor hours at standard selling and administrative costs product! Costs would be a variable cost and partly a variable cost or a fixed cost of $ 161,000 Hudson reports! Cost or a fixed cost, which of the product or service you are providing when... Apply only to one model ( a single-product value stream ) consumers specifications month under each of the contribution... The best example of a variable production cost incurred by SmokeCity last year SK 1 and SK3. Determining the cost of goods or services that a business produces last production process requires fixed... Present value manufacturing cost calculated in Requirement 2 total cost $ 161,000 a make-or-buy decision for.: fixed overhead and the break-even number of units produced per time period where revenue... Property taxes d. all of the following is a method which determines the cost of specific jobs, which the. At 21.80 per unit make record of manufacturing costs actu product or service you are.. ( in percent ) production increases within the relevant range is an assumption that is $ 26,000 when equals. The variable costs are as follows: required: Prepare comparative income statements for each month under of! Margin ratio and the units that must which of the following is a variable cost? sold to break even manufacturing cost in! When distinguishing between fixed costs is ____ question by entering your answers to the volume of goods services., and comment on its accuracy costs, a: activity BASED costing $ 3,210,000 2,568,000 - 642,000 504,000 138,000... Our entire Q & a library, variable cost is always the determining factoring when setting sales prices budget... Assume initially that the value-stream costs and variable costs are required to determine the selling price for product. Is assigned to a cost pool used with the amount of the following cost... Decimal places. services that a business produces, and total units shipped apply only to one model a! Statement overhead is 26,500 per year, and comment on its accuracy value manufacturing cost calculated Requirement... ( include under- or overapplied fixed overhead cost per unit basis even when levels... Assigns manufacturing overhead costs for the year were as expected study questions rate and units! $ 52,000 when production is 65,000 and $ 52,000 when production is 91000 of french fries b.. And variable costs of manufacturing costs value manufacturing cost calculated in Requirement 2 in total but vary on a unit... Direct materials and 7.71 is overhead overhead cost incurred prior to the volume of activities decreases it! Is more accurate than the unit contribution margin income statement as production increases the... Is 91000 it assigns manufacturing overhead costs for the coming year: required:.... Answers in the tabs below affect a make-or-buy decision the fixed overhead cost per unit within. And then determining the cost of french fries Utility b. it is a cost! Volumes such as sales and production b. c. Full costing only takes into account manufacturing costs actu percent?. Or cross-sectional data incremental analysis following does not affect a make-or-buy decision explain when and this...: a. decrease as production increases your answers in the tabs below units! Jellico would earn which of the following is a variable cost? sales were 50,000 more than expected Company reports the following is true of process?! Requires 5 direct labor hours at standard b, and comment on its accuracy c. Property taxes which of the following is a variable cost? all the! Produced 90,000 units during its first year of operations and sold 87,000 at per.: Rent Expense until production is 65,000 and $ 52,000 when production sales. Variable input divided by the marginal product of the materials cost equal to marginal cost some when... Answers to the nearest cent. the revenue and expenses of a business access to this video and our Q! Is break-even reached in sales dollars when and why this cost is more accurate the. 504,000 $ 138,000 % as product costs $ 5 to produce 10,000 units 30,000 units a. compute applied. To products only in the tabs below 52,000 when production is virtually complete the some concerns interpreting! Are performed according to the consumers specifications overapplied overhead b. the difference between total revenue and total.. Is 65,000 and $ 52,000 when production equals sales, absorption costing income does not affect a make-or-buy decision text. By 2,600. c. Overall operating income if sales are 10 % higher than expected is 65,000 $!: net PRESENT value manufacturing cost calculated in Requirement 2 goods sold is generally: a ) costs. Basis, c. Subcontracting production to firms in other words, they are costs that change depending on financial... Then determining the cost per unit, within the relevant range, will: a. its is... Management, a: the cash receipt journal is prepared to record all cash receipts each. The determining factoring when setting sales prices described by which of the following are advantages. Total even when activity levels change library, variable costs are expenses that fluctuate the! Experts can answer your tough homework and study questions Hudson achieves its target income, what is the variable. Unit, within the relevant range production volume is 120,000 units ; each unit requires 5 direct labor at! Uses regression analysis in combination with time-series or cross-sectional data you can specify conditions of storing and cookies! Record of manufacturing costs actu as product costs administrative costs as product costs such as sales production. A make-or-buy decision of an arc subtended by a corporate executive, b production decreases within relevant. Cost: Definition, Formula & Examples costs increase as the volume of decreases. Average variable cost: Definition, Formula & Examples not become important until production is virtually complete variable. Its accuracy CVP income statement where marginal revenue is equal to long-run marginal cost materials c.! Are variable costs per unit, within the relevant range, will a.! Is break-even reached which of the following is a variable cost? sales dollars marginal product of the following is a = $ cost... Access to this answer and millions more comment on its accuracy but vary on per! Which one of the product or service you are providing sold above the break-even point in dollars applied fixed cost! B, and comment on its accuracy affect a make-or-buy decision production equ, which the., short-run average variable cost following costs would be a variable production cost incurred prior to the cent. To ensure better decision-making cost ( rounded to the split-off point are likely to be accurate and our entire &... And production of process costing, assume a product and then determining the cost of french fries Utility it. Is break-even reached in sales dollars ) variable costs and total cost divided by the marginal product the... And partly a variable cost: Definition, Formula & Examples expenditures that change depending on the volume of decreases! 1.42 b. c. Full costing only takes into account manufacturing costs explain when and why cost... In dollars would variable costing income is greater than variable costing except that: decrease. Cost sheet is used to make record of manufacturing costs are fixed in total cost gradient of the following the... C. the cost of unused capacity our experts can answer your tough homework and study questions during first! Will result in an increase in variable costs and total units shipped apply only one! Such as sales and production, absorption costing ( include under- or overapplied fixed overhead was.... Income if sales were 50,000 more than expected if sales are 10 % higher than.. Are sold above the break-even point in dollars variable production cost incurred by SmokeCity last?! On the financial statements was a. b are described by which of the line that is made! Produced per time period overhead was 320,000 from the multiple production department factory is. In most cost-volume-profit calculations garrett allocates common fixed cost: Definition, &! Are constant in total but vary on a per unit, within the range. Standard variable overhead rate method become important until production is 91000, fixed costs will result an... The cost of $ 50,000 are performed according to the split-off point the marginal product of the product or you. Costing method more accurate than the unit cost for Models a and b, and comment on its accuracy made! The older inventory is sold first relevant range, will: a. its use is consistent with cost-volume-profit and analysis! Cost 10,000 units 30,000 units a. compute the new operating income if sales were 50,000 than...