10014_040510_18 - Short Answer Questions 1 Production = 30,000 units Absorption NOI> Variable NOI Are we selling more than less than or exactly

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Units Year 1 Year 2 Year 3 Year 4 0 1,000 3,000 P 18,000 29,000 30,000 25,000 S 18,000 28,000 28,000 26,000 Inv. 0 1,000 3,000 2,000 1. In which year will production cost of one unit be the highest using absorption costing? Year 1 (Smallest # of units) DM + DL + VOH + FOH / # of units produced 2. In which year will production cost of one unit be the highest using variable costing? All of them DM + DL + VOH / # of units (unit cost stays the same for VC) 3. Absorption costing NOI = Variable NOI? Year 1 (You have no inventory) 4. Highest NOI using Absorption costing? Year 3 Sales and production influence NOI 5. Highest NOI using Variable costing? Only sales influence VC
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Unformatted text preview: Short Answer Questions 1. Production = 30,000 units Absorption NOI > Variable NOI Are we selling more than, less than, or exactly 30,000 units? If absorption > variable, it would have to be selling less than 30,000 units to give us inventory deferring FOH. 2. Using JIT for the last 3 years and this year, is Absorption NOI greater, less than, or pretty close to Variable NOI for this year? They will be pretty close to each other. ( Little inventory) 3. $5,000,000 Sales BEP = $5,000,000 Sales $300,000 loss on I/S Is inventory going up, down, or staying the same? Down...
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This note was uploaded on 08/25/2010 for the course ACCT 208 taught by Professor Kingery during the Spring '08 term at University of Delaware.

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