If inventory levels have declines because of the number of units sold is greater than the...
If inventory levels have declines because of the number of units sold is greater than the units manufactured operating income will be higher under absoprtion costing than it is under variable costing. True or False
Homework Answers
False
The statement is incorrect
If the unit sold are more than units produced than the operating income under absorption costing is lower than it it is under variable costing because of Fixed manufacturing expenses under absorption costing charged on number of units sold under absorption costing whereas in case of variable costing only that much is charged what is incurred during the period
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If inventory levels have declines because of the number of units
sold is greater than the...
ssuming the number of units sold and produced are the same (Sales = Production), which of...
ssuming the number of units sold and produced are the same (Sales = Production), which of the Following statements is TRUE when comparing net income using absorption and variable costing. a. Absorption costing will yield a higher net income. b. Variable costing will yield a higher net income. c. Net income will be the same under both methods. d. Variable costing will have higher sales revenue. Assuming that the number of units produced is greater than the number of units...
In absorption costing, the manufacturing costs expensed are greater than the amount expensed in variable costing...
In absorption costing, the manufacturing costs expensed are greater than the amount expensed in variable costing when units produced are less than sold because the units in beginning inventory under absorption costing were assigned a greater cost in the previous accounting period. O True False
Variable Costing-Sales Exceed Production The beginning inventory is 24,100 units. All of the units that were...
Variable Costing-Sales Exceed Production The beginning inventory is 24,100 units. All of the units that were manufactured during the period and 24,100 units of the beginning inventory were sold. The beginning inventory fixed manufacturing costs are $62 per unit, and variable manufacturing costs are $110 per unit. a. Determine whether variable costing operating income is less than or greater than absorption costing operating income. b. Determine the difference in variable costing and absorption costing operating income.
Krepps Corporation produces a single product. Last year, Krepps manufactured 35,040 units and sold 29,600 units....
Krepps Corporation produces a single product. Last year, Krepps manufactured 35,040 units and sold 29,600 units. Production costs for the year were as follows: Direct materials $ 266,304 Direct labor $ 157,680 Variable manufacturing overhead $ 297,840 Fixed manufacturing overhead $ 385,440 Sales totaled $1,450,400 for the year, variable selling and administrative expenses totaled $156,880, and fixed selling and administrative expenses totaled $255,792. There was no beginning inventory. Assume that direct labor is a variable cost. Under variable costing, the...
Krepps Corporation produces a single product. Last year, Krepps manufactured 30,030 units and sold 24,700 units....
Krepps Corporation produces a single product. Last year, Krepps manufactured 30,030 units and sold 24,700 units. Production costs for the year were as follows: Direct materials $ 243,243 Direct labor $ 126,126 Variable manufacturing overhead $ 237,237 Fixed manufacturing overhead $ 420,420 Sales totaled $1,272,050 for the year, variable selling and administrative expenses totaled $133,380, and fixed selling and administrative expenses totaled $195,195. There was no beginning inventory. Assume that direct labor is a variable cost. Under variable costing, the...
Feldspar, Inc. started the year with 200 units in the Finished Goods Inventory account. It produced...
Feldspar, Inc. started the year with 200 units in the Finished Goods Inventory account. It produced 600 units during the year and sold 800 units. If Feldspar uses variable costing. A) its operating income will be the same as under absorption costing its value of ending Finished Goods Inventory reported in the balance sheet will be B) higher than under absorption costing C) its operating income for the period will be lower than under absorption costing D) its operating income...
The following data pertain to one month's operations of Whitney, Inc.: Units in Beginning Inventory -...
The following data pertain to one month's operations of Whitney, Inc.: Units in Beginning Inventory - 0, Units Produced - 9,000, Units Sold - 8,000. VARIABLE COST PER UNIT: -- Manufacturing - $10, Selling and Administrative - $6. FIXED COSTS IN TOTAL: -- Manufacturing - $18,000, Selling and Administrative - $27,000. For the month noted, what was the relationship between the operating income under variable costing as opposed to under absorption costing? A) Higher than operating income under absorption costing....
3,000 2,500 350 $ Number of units produced Number of units sold Unit sales price Direct...
3,000 2,500 350 $ Number of units produced Number of units sold Unit sales price Direct materials per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit ($225,000 - 3,000 units) Total variable selling expenses ($15 per unit sold) Total fixed general and administrative expenses 80 60 10 75 37,500 65,000 Required: Prepare Crystal Cold's full absorption costing income statement and variable costing income statement for the year. CRYSTAL COLD COOLERS INC. Full Absorption...
1. Use the income statements on the Absorption Statement and Variable Statement to complete the following...
1. Use the income statements on the Absorption Statement and Variable Statement to complete the following table for the original production level. Then prepare similar income statements at a production level 10,000 units higher and add that information to the table. Assume that total fixed costs, unit variable costs, unit sales price, and the sales levels are the same at both production levels. Operating Income Original Production Level-Absorption Original Production Level-Variable Additional 10,000 Units-Absorption Additional 10,000 Units-Variable $310,000 $250,000 $...
Ned's Entrees produces frozen meals, which it sells for $ 10 each. The company uses the...
Ned's Entrees produces frozen meals, which it sells for $ 10 each. The company uses the FIFO inventory costing method, and it computes a new monthly fixed manufacturing overhead rate based on the actual number of meals produced that month. All costs and production levels are exactly as planned. The following data are from the company's first two months in business: LOADING...(Click the icon to view the data.) Requirements 1. Compute the product cost per meal produced under absorption costing...
ssuming the number of units sold and produced are the same (Sales = Production), which of the Following statements is TRUE when comparing net income using absorption and variable costing. a. Absorption costing will yield a higher net income. b. Variable costing will yield a higher net income. c. Net income will be the same under both methods. d. Variable costing will have higher sales revenue. Assuming that the number of units produced is greater than the number of units...
In absorption costing, the manufacturing costs expensed are greater than the amount expensed in variable costing when units produced are less than sold because the units in beginning inventory under absorption costing were assigned a greater cost in the previous accounting period. O True False
Variable Costing-Sales Exceed Production The beginning inventory is 24,100 units. All of the units that were manufactured during the period and 24,100 units of the beginning inventory were sold. The beginning inventory fixed manufacturing costs are $62 per unit, and variable manufacturing costs are $110 per unit. a. Determine whether variable costing operating income is less than or greater than absorption costing operating income. b. Determine the difference in variable costing and absorption costing operating income.
Feldspar, Inc. started the year with 200 units in the Finished Goods Inventory account. It produced 600 units during the year and sold 800 units. If Feldspar uses variable costing. A) its operating income will be the same as under absorption costing its value of ending Finished Goods Inventory reported in the balance sheet will be B) higher than under absorption costing C) its operating income for the period will be lower than under absorption costing D) its operating income...
The following data pertain to one month's operations of Whitney, Inc.: Units in Beginning Inventory - 0, Units Produced - 9,000, Units Sold - 8,000. VARIABLE COST PER UNIT: -- Manufacturing - $10, Selling and Administrative - $6. FIXED COSTS IN TOTAL: -- Manufacturing - $18,000, Selling and Administrative - $27,000. For the month noted, what was the relationship between the operating income under variable costing as opposed to under absorption costing? A) Higher than operating income under absorption costing....
3,000 2,500 350 $ Number of units produced Number of units sold Unit sales price Direct materials per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit ($225,000 - 3,000 units) Total variable selling expenses ($15 per unit sold) Total fixed general and administrative expenses 80 60 10 75 37,500 65,000 Required: Prepare Crystal Cold's full absorption costing income statement and variable costing income statement for the year. CRYSTAL COLD COOLERS INC. Full Absorption...
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