Kimmel.SM.cp19.vpdf

# Accounting: Tools for Business Decision Making

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19-1 CHAPTER 19 Variable Costing: A Decision-Making Perspective ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Exercises A Problems B Problems 1. Explain the difference between absorption costing and variable costing. 1, 2, 3, 5 1, 2, 3, 4, 5, 6, 7, 8 1, 2, 3, 4, 5, 6 1A, 2A, 3A 1B, 2B, 3B 2. Discuss the effect that changes in production level and sales level have on net income measured under absorption costing versus variable costing. 4, 6, 7, 8, 9, 10, 13 7, 8 5, 6, 7 1A, 2A, 3A 1B, 2B, 3B 3. Discuss the relative merits of absorption costing versus variable costing for management decision making. 11, 12, 14 2A, 3A 2B, 3B 4. Explain the term sales mix and its effects on break-even sales. 15, 16, 17 9, 10, 11, 12 8, 9, 10, 11, 12 4A 4B 5. Understand how operating leverage affects profitability. 18, 19, 20, 21, 22 13, 14, 15 13, 14, 15 5A 5B

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19-2 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Calculate product cost; prepare income statements under variable costing and absorption costing and reconcile difference. Simple 20–30 2A Prepare income statements under absorption costing and variable costing for a company with beginning inventory, and reconcile differences. Moderate 20–30 3A Prepare absorption and variable costing income statements and reconcile differences between absorption and variable costing income statements when sales level and production level change. Discuss relative usefulness of absorption costing versus variable costing. Moderate 20–30 4A Determine break-even sales under alternative sales strategies and evaluate results. Moderate 20–30 5A Compute degree of operating leverage and evaluate impact of operating leverage on financial results. Moderate 20–30 1B Calculate product cost; prepare income statements under variable costing and absorption costing and reconcile difference. Simple 20–30 2B Prepare income statements under absorption costing and variable costing for a company with beginning inventory, and reconcile differences. Moderate 20–30 3B Prepare absorption and variable costing income statements and reconcile differences between absorption and variable costing income statements when sales level and production level change. Discuss relative usefulness of absorption costing versus variable costing. Moderate 20–30 4B Determine break-even sales under alternative sales strategies and evaluate results. Moderate 20–30 5B Compute degree of operating leverage and evaluate impact of operating leverage on financial results. Moderate 20–30
BLOOM’S TAXONOMY TABLE 19-3 Correlation Chart between Bloom’s Taxonomy, Study Objectives and End-of-Chapter Exercises and Problems Study Objective Knowledge Comprehension Application Analysis Synthesis Evaluation * 1. Explain the difference between absorption costing and variable costing. Q19-1 Q19-2 Q19-3 Q19-5 BE19-1 BE19-2 BE19-3 BE19-4 BE19-5 BE19-6 BE19-7 BE19-8 E19-1 E19-2 E19-3 E19-4 E19-5 E19-6 P19-1A P19-2A P19-3A P19-1B P19-2B P19-3B 2. Discuss the effect that changes in production level and sales level have on net income measured

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Kimmel.SM.cp19.vpdf - CHAPTER 19 Variable Costing A...

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