Question 1: A company has fixed manufacturing costs of $400,000 and produces 100,000 units and sells 85,000 units. There is no beginning inventory. Which of the following conclusions can be drawn?
A Variable costing income will be $60,000 higher than full costing income.
B Full costing income will be $60,000 higher than variable costing income.
C Variable and full costing income will be the same.
D There is not enough information to draw a conclusion.
Question 2: Data from The William Company for 2008 is as follows:
The company produced 148,000 units during the year and sold 120,000 units. Variable production costs and fixed costs have remained constant all year. Net income for the year was $900,000. What was the company?s contribution margin?
A $2,205,000
B $1,305,000
C $1,003,000
D $1,095,000
Question 3: Last month, PeeWee Company manufactured 20,000 units and sold 18,000 of these units at a price of $8.00 per unit. Manufacturing costs consisted of direct labor, $30,000; direct materials, $32,000; variable manufacturing overhead, $3,600; fixed manufacturing overhead, $21,600. Selling and administrative costs totaled $24,000.
What is PeeWee?s net income using variable costing?
A $48,800
B $32,800
C $41,520
D $39,360
Question 4: The Landes Excavating Company experienced the following costs in 2007:
During the year the company manufactured 100,000 units and sold 80,000 units. If the average selling price per unit was $22.65 what is the company?s contribution margin per unit?
A $16.40
B $15.65
C $18.90
D $13.65
Question 5: Pteri Manufacturing makes a single product - the Pteri. Information for 2005 appears below:
What will the ending inventory value in total be using variable costing?
A $250,000
B $50,000
C $65,000
D $0
Question 6: The Jefferson Supply Company experienced the following costs in 2007:
During the year the company manufactured 92,000 units and sold 85,000 units. If the average selling price per unit was $19.50 what was the company's contribution margin?
A $1,007,250
B $824,500
C $987,250
D $789,500