CH7 - Chapter 7 Practice Exam 1 Erie Company manufactures a...

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Unformatted text preview: Chapter 7 Practice Exam 1. Erie Company manufactures a single product. Assume the following data for the year just completed: There were no units in inventory at the beginning of the year. During the year 30,000 units were produced and 25,000 units were sold. Each unit sells for $35. The company's net operating income under variable costing would be: A) $407,500 B) $421,250 C) $431,250 D) $417,500 2. Weber Company computes net operating income under both the absorption costing approach and the variable costing approach. For a given year the absorption costing net operating income was greater than the variable costing net operating income. This fact suggests that: A) variable manufacturing costs were less than fixed manufacturing costs. B) more units were produced during the year than were sold. C) more units were sold during the year than were produced. D) common costs were greater than variable costs for the year. 3. Slovick Inc., which produces a single product, has provided the following data for its most recent month of operations: There were no beginning or ending inventories. The unit product cost under absorption costing was: A) $161 B) $199 C) $262 D) $168 Feedback: Unit fixed manufacturing overhead = $31,000 1,000 = $31 Unit product cost = Direct materials + Direct labor + Variable manufacturing overhead cost + Fixed manufacturing overhead cost = $79 + $82 + $7 + $31 = $199 4. Abdol Company, which has only one product, has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under absorption costing? A) $38 B) $73 C) $44 D) $79 Feedback: Unit fixed manufacturing overhead = $231,000 6,600 = $35 Unit product cost = Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead = $22 + $12 + $4 + $35 = $73 5. Slovick Inc., which produces a single product, has provided the following data for its most recent month of operations: There were no beginning or ending inventories. The unit product cost under variable costing was: A) $168 B) $164 C) $199 D) $171 Feedback: Unit product cost = Direct materials + Direct labor + Variable manufacturing overhead = $79 + $82 + $7 = $168 6. Walsh Company produces a single product. Last year, the company manufactured 25,000 units and sold 22,000 units. Production costs were as follows: Sales totaled $440,000, variable selling and administrative expenses were $110,000, and fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labor is a variable cost. Under variable costing, the total amount of fixed manufacturing cost in the ending inventory would be: A) $0 B) $9,000 C) $14,400 D) $27,000 Feedback: Under variable costing, all fixed manufacturing overhead is expensed in the period in which it is incurred. No fixed manufacturing overhead is added to the cost of inventory. 7....
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This note was uploaded on 07/10/2010 for the course ACCOUNTING 222 taught by Professor Cordes during the Spring '10 term at Johnson County Community College.

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CH7 - Chapter 7 Practice Exam 1 Erie Company manufactures a...

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