Question
In: Accounting
What is variable cost? Identify two variable costs. When units produced exceed units sold for a...
What is variable cost? Identify two variable costs.
When units produced exceed units sold for a reporting period, would income under variable costing be greater than,equal to, or less than income under absorption costing? Explain.
Solutions
Expert Solution
Variable cost:-
a variable cost is a company's expense that wil change in propotion to change in output.it wil increase when production increase and it wil decresae when production decreases.
example for variable cost:-direct material cost,direct labour cost.
When units produced exceed units sold for a reporting period,income under variable costing be less than income under absorption costing.
This difference is because of fixed manufacturing overhead that becomes the part of ending inventory under absorption costing system. The ending inventory absorbs a portion of fixed manufacturing overhead and reduces the burden of the current period. In this way a portion of fixed cost that relates to the current period is transferred to the next period.Under variable costing, the fixed manufacturing overhead cost is not included in the product cost but charged to the income statement of the relevant period in its entirety. Therefore no portion of fixed cost is absorbed by the ending inventory.
ekkarill92 answered 2 years agoRelated Solutions
What is variable cost? Identify two variable costs. When units produced exceed units sold for a...
What is variable cost? Identify two variable costs.
When units produced exceed units sold for a reporting period,
would income under variable costing be greater than,equal to, or
less than income under absorption costing? Explain.
If 12,500 units are produced and sold, what is the variable cost per unit produced and sold?
Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Average Cost Per UnitDirect materials$ 5.60Direct labor$ 3.10Variable manufacturing overhead$ 1.40Fixed manufacturing overhead$ 4.00Fixed selling expense$ 2.60Fixed administrative expense$ 2.20Sales commissions$ 1.20Variable administrative expense$ 0.454. If 12,500 units are produced and sold, what is the variable cost per unit produced and sold? (Round your answer to 2 decimal places.)
1. If 18,000 units are produced and sold, what is the variable cost per unit produced and sold?
Refer to the data given in Exercise 1-7. Answer all questions independently.
Kubin Company's relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows:
Required:
1. If 18,000 units are produced and sold, what is the variable cost per unit produced and sold?
2. If 22,000 units are produced and sold, what is the variable cost per unit produced and sold?
3. If 18,000 units are...
(a) Martin Company incurred the following costs for 70,000 units of produced and sold: Variable costs...
(a)
Martin Company incurred the following costs for 70,000 units of
produced and sold:
Variable costs $420,000
Fixed costs 392,000
Martin has received a special order from a foreign company for
3,000 units. There is sufficient capacity (at the current fixed
costs of $392,000) to fill the order without jeopardizing regular
sales of 70,000 units. Filling the order will require spending an
additional $6,300 for shipping.
If Martin wants to break even on the special order from the
foreign company,...
Q6 A company produced 10,000 units in March 2018 and sold 8,500 of them. The variable...
Q6 A company produced 10,000 units in March 2018 and
sold 8,500 of them. The variable manufacturing costs per unit was
$16 and the fixed cost per unit was $3
Variable selling and administrative expenses were $5 and
the fixed selling and administrative expenses were
$45,000. (5 points each 15 points
total)
Using absorption costing what would be the income from
operations for March?
$_____________________________________________
Using variable costing what would be the income from
operations for March?
$_______________________________________________
C. Explain...
Exercise C Dancing Diva produced 115,000 units this year and sold 110,000 units. The following costs...
Exercise C Dancing Diva produced 115,000 units
this year and sold 110,000 units. The following costs were
incurred:
Direct materials $517,500
Direct labor $1,840,000
Variable overhead $805,000
Fixed overhead $400,000
Sales Commissions $550,000
Fixed Selling Expenses $80,000
Fixed Administrative Expenses $300,000
Each unit sells for $40 each. Calculate the production cost per
unit under the VARIABLE costing method and prepare a Contribution
Margin Income Statement for the year ended December 31.
# of canoes sold and produced 550 750 900 Total Costs variable costs 104,500 142,500 171,000...
# of canoes sold and produced
550
750
900
Total Costs
variable costs
104,500
142,500
171,000
fixed costs
198,000
198,000
198,000
total costs
302,500
340,500
369,000
cost per unit
variable cost per unit
190.00
190.00
190.00
fixed cost per unit
360.00
264.00
220.00
total cost per unit
550.00
454.00
410.00
Sandy Bank, Inc., makes one model of wooden canoe. and, the
information for it follows:
1. Suppose that Sandy Bank raises its selling price to $500 per
canoe. Calculate its...
If a product’s variable cost increases, the number of units needed to be sold to earn...
If a product’s variable cost increases, the number of units
needed to be sold to earn a target profit will:
Increase
Decrease
Not change
Cannot be determined since predicting the effect requires more
information
Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income...
Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing
Cost, Units to Earn Target Income
Werner Company produces and sells disposable foil baking pans to
retailers for $2.50 per pan. The variable cost per pan is as
follows:
Direct materials
$0.30
Direct labor
0.57
Variable factory overhead
0.74
Variable selling expense
0.17
Fixed manufacturing cost totals $136,541 per year.
Administrative cost (all fixed) totals $18,619.
Required:
1. Compute the number of pans that must be sold
for Werner to...
Jasper Enterprises had the following cost and production information for April: Units Produced 20,000 Units Sold...
Jasper Enterprises had the following cost and production
information for April:
Units Produced
20,000
Units Sold
17,000
Unit Sales Price
$200
Manufacturing Cost Per Unit
Direct Material
$50
Direct Labor
$25
Variable Manufacturing Overhead
$10
Fixed Manufacturing Overhead
($400,000/20,000) =
$20
Full Manufacturing Cost Per Unit
$105
Non manufacturing Costs
Variable Selling Expenses
$80,000
Fixed General and Administrative Costs
$75,000
How much greater will Jasper Enterprises' profit be under
absorption costing than under variable costing?
$315,000
$400,000
$60,000
$340,000
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Compare the MOSFET, JFET , and BJT and identify the reasons these devices behave differently. What...
- How would you use SAS Enterprise Miner to create a neural network model of your example?
- Explain the use of neural networking modeling in predictive analytics.
- Current Market Mix of Netflix, as detail as possible, please.
- This is all one question, thank you so much in advance! You must evaluate a proposal...
- X Company is considering the purchase of a new processor that costs $200,000. Shipping and setup...
- There are a large number of tasks involved in information technology and programming, and many of...
ADVERTISEMENT