Question

1. If overhead used was $50,000 and direct materials used was $100,000 and direct labor used was $60,000 then how much was prime cost?

Group of answer choices

$210,000

$160,000

$150,000

$110,000


2. R Company uses a predetermined overhead rate of $12 per direct labor hour to apply overhead. During the year, 30,000 direct labor hours were worked. Actual overhead costs for the year were $320,000. The overhead variance is:

Group of answer choices

$35,560 underapplied

$40,000 underapplied

$36,000 overapplied

$36,000 underapplied

$40,000 overapplied


3. Beginning inventory for J Company was 1,000 units and ending inventory was 6,000 units. The direct labor cost per unit was $40. The direct material cost per unit was $20. The variable overhead cost per unit was $10. The fixed overhead cost per unit was $30. The variable selling and administrative cost per unit was $6. The fixed selling and administrative cost per unit was $14. What is the value of the ending inventory using the absorption costing method?

Group of answer choices

$420,000

$240,000

$380,000

$360,000

$600,000

4.  R Corporation has a $150 per unit sales price for its only product. Variable production costs per unit manufactured are $40. Variable selling and administrative expenses per unit sold are $16. Total fixed production costs are $200,000. Total fixed selling and administrative expenses are $140,000. During the period there were 10,000 units produced and 8,000 units sold. There were no beginning inventories. What is the net income for F Company using the variable costing method?

Group of answer choices

$600,000

$1,200,000

$452,000

$412,000

$480,000

5. Using the high-low method, a company determined that per-unit variable costs were $12 and total fixed costs were $51,000. What total costs would the company forecast assuming it plans to sell 8,000 units next period?

Group of answer choices

$125,000

$147,000

$51,000

$96,000

Answer 1

Answer (1) The Answer is (b) $ 160,000.

Answer (2) The Answer is (e) $ 40,000 Over Applied.

Answer (3) : The Answer is (e) $ 600,000.

Answer (4) : The Answer is (d) $ 412,000.

Answer (5) The Answer is (b) $ 147,000.

Working :

1. Prime Cost = Direct Material + Direct Labor

= $ 100,000 + $ 60,000

= $ 160,000.

2. Under Applied / (Over Applied) OH = Actual OH - Applied OH

= $ 320,000 - (30,000 * $ 12)

= ($ 40,000)

3. Unit Cost per Unit as per Absorption Method = Direct Material + Direct Labor + Variable OH+ Fixed OH

= $ 20 + $ 40 + $ 10 + $ 30

= $ 100

Value of Ending Inventory = 6,000 * $ 100 per Unit = $ 600,000.

4. Income as per Variable Costing :

	Working	Amount
(a) Revenue	8,000 * $ 150	$ 1,200,000
Variable Cost :
Production Cost	8,000 * $ 40	$ 320,000
Selling and Administrative Cost	8,000 * $ 16	$ 128,000
(b) Total Variable Cost		$ 448,000
(c) Contribution (a - b)		$ 752,000
Fixed Cost :
Production Cost		$ 200,000
Selling and Administrative Cost		$ 140,000
(d) Total Fixed Costs		$ 340,000
(e) Net Profit (c - d)		$ 412,000

5. Total Cost = Variable Cost + Fixed Costs

= ($ 8,000 * 12) + $ 51,000

= $ 96,000 + $ 51,000

= $ 147,000.

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