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Exam 2-Spring 2008 Practice problems

Exam 2-Spring 2008 Practice problems - Practice Problems...

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Practice Problems Exam 2-ACCT 202 Spring 2008 Examples of True/False questions. Under absorption costing, a portion of fixed manufacturing overhead costs are released from inventory when production exceeds sales. TRUE OR FALSE If a company uses variable costing, net operating income fluctuates directly with changes in sales volume. TRUE OR FALSE Guerra Electronics manufactures a variety of electronic gadgets for use in the home. An accurate measure of activity to use for allocating the costs of inspecting the finished products at Guerra is direct labor hours. TRUE OR FALSE 1
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Variable Costing Legaz Company, which has only one product, has provided the following data concerning its most recent month of operations. Note that the company's variable costs per unit and total fixed costs have been constant from month to month. Selling price ........................................................... $120 Units in beginning inventory ................................. 100 Units produced ....................................................... 3,900 Units sold ............................................................... 3,600 Units in ending inventory ...................................... 400 Variable costs per unit: Direct materials .................................................. $31 Direct labor ......................................................... $54 Variable manufacturing overhead ...................... $5 Variable selling and administrative .................... $8 Fixed costs: Fixed manufacturing overhead ........................... $54,60 0 Fixed selling and administrative ......................... $21,60 0 The company produces the same number of units every month, although the sales in units vary from month to month a. Compute the unit product cost under absorption costing.
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