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1. Silver Company produces a single product. Last year, the company's variable production costs totaled $7,500 and its fixed manufacturing overhead costs totaled $4,500. The company produced 3,000 units during the year and sold 2,400 units. There were no units in the beginning inventory. Which of the following statements is true? A. Under variable costing, the units in the ending inventory will be costed at $4 each. B. The net operating income under absorption costing for the year will be $900 lower than the net operating income under variable costing. C. The ending inventory under variable costing will be $900 lower than the ending inventory under absorption costing. D. Under absorption costing, the units in ending inventory will be costed at $2.50 each.Answer the following questions using the information below: 2. Lee Company produces a single product. At the end of last year, the company had 30,000 units in its ending inventory. Lee's variable production costs are $10 per unit and its fixed manufacturing overhead costs are $5 per unit every year. The company's net operating income for the year was $12,000 higher under variable costing than under absorption costing. Given these facts, the number of units of product in inventory at the beginning of the year must have been: A. 28,800 units B. 27,600 units C. 32,400 units D. 42,000 units Unit fixed manufacturing overhead = Difference in net income Change in inventory = $12,000 Change in inventory = $5 Change in inventory = 2,400 units Beginning inventory = 2,400 + 30,000 = 32,400 units 3. Ben Company produces a single product. Last year, the company's net operating income under absorption costing was $4,400 lower than under variable costing. The company sold 8,000 units during the year, and its variable costs were $8 per unit, of which $3 was variable selling expense. Fixed manufacturing overhead was $1 per unit in beginning inventory under absorption costing. How many units did the company produce during the year? A. 12,400 units B. 3,600 units C. 7,120 units D. 7,450 units Unit fixed manufacturing overhead = (Difference in income/Change in inventory) = $4,400 Change in inventory = $1 Change in inventory = 4,400 units Units produced during the year = 8,000 units sold - 4,400 units change in inventory = 3,600 units Harris Company produces a single product. Last year, Harris manufactured 17,000 units and sold 13,000 units. Production costs for the year were as follows: Sales were $780,000 for the year, variable selling and administrative expenses were $88,400, and fixed selling and administrative expenses were $170,000. There was no beginning inventory. Assume that direct labor is a variable cost.... View Full Document

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