Garrison 13e Practice Exam – Chapter 7
Print these pages. Answer each of the following questions, explaining your answers or
showing your work, as appropriate, and then compare your solutions to those provided at the
end of the practice exam.
1.
Describe the major advantages of the variable costing method.
2.
Describe the major advantages of the absorption costing method.
3.
Vosges Candy Company produces handmade candies. The candies sell for $12 per box.
During its first year of operations, the company produced 10,000 boxes of candies and sold
9,000 boxes of the candies. The company’s cost information includes the following:
Direct materials
$ 2.00 per unit
Direct labor
$ 3.00 per unit
Variable manufacturing overhead
$ 1.00 pr unit
Variable selling and administrative expenses
$ 3.00 per unit
Fixed manufacturing overhead
$20,000
Fixed selling and administrative expenses
$
5,000
Part (a) Compute the unit product cost under absorption costing.

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Part (b) Compute the unit product cost under variable costing.


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- Spring '11
- Dr.Zachry
- Managerial Accounting, Administrative Expenses, Vosges Candy Company
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