Question

Break Even Corp has the following info:

	2016	2017	2018	2019
Beginning Inventory (in units)	20	30	10	140
Actual Sales (in units)	400	410	390	350
Budgeted production (in units)	500	400	424	484
Budgeted fixed manufacturing costs (in $)	8,000	8,000	8,190	8,470
Operating Income using Variable Costing (in $)	$   0	$ 0	$ 0	$ 0

In 2015, budgeted manufacturing costs were $50 per unit ($18 variable and $32 fixed costs).

In all years, budgeted fixed manufacturing costs = actual fixed manufacturing costs

1. What is net income (loss) using absorption costing for 2016?

1. $(133.33)
2. ($200)
3. Zero
4. $120
5. $(160)

2. What is net income (loss) using absorption costing for 2017?

1. $(280)
2. ($200)
3. zero
4. $200
5. $220

3. What would be in change in net income between variance costing and absorption costing if one less unit was produced in 2019

1. Absorption costing net income would be $19.32 greater than variable costing net income
2. Absorption costing net income would be $19.25 less than variable costing net income
3. Absorption costing net income would be $17.75 greater than variable costing net income
4. Absorption costing net income would be $17.50 less than variable costing net income
5. Absorption costing net income would be $16.00 greater than variable costing net income

4. Sheldon just built a motel at a cost of $1,000,000. He would like to earn a return on investment of 25% per year. The variable operating cost is $8 per room night and fixed costs will total $368,000 per year. He expects 16,000 room nights per year. What price should Sheldon charge for a room-night if he uses full cost plus target return on investment pricing ?

1. $250,000
2. $      8.00
3. $    46.63
4. $    23.00
5. $   38.63

Can Someone please answer with details, thanks!

Answer 1