A company manufactures 50000 units of a product and sells 40000 units Total

# A company manufactures 50000 units of a product and

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15.A company manufactures 50,000 units of a product and sells 40,000 units. Total manufacturing cost per unit is \$50 (variable manufacturing cost, \$10; fixed manufacturing cost, \$40). Assuming no beginning inventory, the effect on net income if absorption costing is used instead of variable costing is that: A.net income is \$400,000 lowerB.net income is \$400,000 higherC.net income is the sameD.net income is \$200,000 higherE.none of the aboveSUPPORTING CALCULATION:\$40 (50,000 - 40,000) = \$400,000
Direct Costing and Cost-Volume-Profit Analysis 39 B16.A company has the following cost data:Fixed manufacturing costs.......................................................................\$2,000Fixed selling, general, and administrative costs......................................1,000Variable selling costs per unit sold...........................................................1Variable manufacturing costs per unit.....................................................2Beginning inventory......................................................0 unitsProduction......................................................................100 unitsSales..............................................................................90units at \$40 per unitVariable and absorption-cost net incomes are: 17.All of the following statements related to the use of break-even analysis are true except: 18.The costing method that lends itself most readily to the preparation of break-even analysis is: 19.The break-even volume in units is found by dividing fixed expenses by the: A.unit gross profitB.total variable expensesC.unit net profitD.contribution margin ratioE.unit contribution margin
40 Chapter 20 C 20.A major assumption concerning cost and revenue behavior that is important to the development of break-even charts is that: 21.If the fixed cost attendant to a product increases while the variable cost and sales price remain constant, the contribution margin and break-even point will: