1. Under variable costing, which of the given costs would be comprised in finished goods inventory?
a. Advertising costs
b. Wages of carpenters in a furniture factory
c. Straight-line depreciation on factory equipment
d. Salary of vice-president of finance
2. Level of inventory of a manufactured product has increased by 8,000 units during a period. Following data are also available:
|
|
Variable
|
Fixed
|
|
Unit manufacturing costs of the period
|
$12.00
|
$5.00
|
|
Unit operating expenses of the period
|
4
|
1.5
|
What would be effect on income from operations if absorption costing is used rather than variable costing?
a. $44,000 increase
b. $40,000 decrease
c. $52,000 increase
d. $40,000 increase
3. Production and sales estimates for April are given:
|
Estimated inventory (units), April
|
19,000
|
|
Desired inventory (units), April 30
|
18,000
|
|
Expected sales volume (units):
|
|
|
Area A
|
3,500
|
|
Area B
|
4,750
|
|
Area C
|
4,250
|
|
Unit sales price
|
$20
|
Number of units expected to be manufactured in April is:
a.12,500
b.13,500
c.10,000
d.11,500