Question
In: Accounting
Assuming the number of units sold and produced are the same, which of the following statements...
Assuming the number of units sold and produced are the same, which of the following statements is true when comparing net income using absorption and direct costing?
|
a. |
Absorption costing will yield a higher net income. |
|
b. |
Direct costing will yield a higher net income. |
|
c. |
Net income will be the same under both methods. |
|
d. |
Direct costing will have higher sales revenue. |
9. Assuming that the number of units produced is greater than the number of units sold, which of the following statements is true when comparing net income using absorption and direct costing?
|
a. |
Absorption costing will yield a higher net income. |
|
b. |
Direct costing will yield a higher net income. |
|
c. |
Net income will be the same under both methods. |
|
d. |
Sales revenue will be less using absorption costing. |
Solutions
Expert Solution
8.Answer: C. Net income will yield a higher net income
Explanation:
- . If the number of units sold and produced are the same then
Net income will be the same under 'Absorption costing' & "Direct Costing'.
- . If the number of units sold and produced are not the same then
Absorption costing will yield a higher net income
- .Sales revenue will be the same in both 'Absorption costing' & "Direct Costing'.
Thus,
Options C. Net income will yield a higher net income is correct since the number of units sold and produced are the same
9.Answer:a.Absorption costing will yield a higher net income
Explanation:
- . If the number of units sold and produced are the same then
Net income will be the same under 'Absorption costing' & "Direct Costing'.
- . If the number of units sold and produced are not the same then
Absorption costing will yield a higher net income
- .Sales revenue will be the same in both 'Absorption costing' & "Direct Costing'.
Thus,
Option a Absorption costing will yield a higher net income. is correct since the number of units produced is greater than the number of units sold.
ekkarill92 answered 2 years agoRelated Solutions
Number of units produced 30, 000 Number of units sold  
Number of units
produced 30,
000
Number of units
sold 28,000
Selling
price $20
Beginning
inventory 0
Fixed selling and administrative
costs $ 20,000
Fixed manufacturing
overhead $
150,000
Direct materials cost per
unit 2
Direct manufacturing
labor 6
Variable manufacturing overhead per unit
4
Variable selling expenses per
unit 2
FMOH per
unit
5
1.Operating Income under Absorption method
is
2.If Sales Revenue $560,000 then Gross Margin under Absorption
method is
3.Cost of Goods Sold and Ending inventory under Absorption
costing method are:
4.What is...
If the number of units produced exceeds the number of units sold, then net operating income...
If the number of units produced exceeds the number of units
sold, then net operating income under absorption costing will:
be equal to the net operating income under variable costing
less total fixed manufacturing costs.
be greater than net operating income under variable
costing.
be equal to the net operating income under variable
costing.
be equal to the net operating income under variable costing
plus total fixed manufacturing costs.
.
A company produces a single product. Last year, fixed
manufacturing...
C. Prepare a budgeted income statement, assuming 600 units to be produced and sold, a per...
C. Prepare a budgeted income statement, assuming 600
units to be produced and sold, a per unit selling price of $85, an
income tax rate of 28% and the following information.
Cost of goods sold of $35 per unit
Labor = $400/month
One part-time employee will be hired to take care of
packaging and shipping. This employee will be paid $10 per hour. He
or she is estimated to work 40 hours total per month.
Advertising fees = $3,000
Bank...
Find the maxium number of units that must be produced and sold in order to yield...
Find the maxium number of units that must be produced and sold
in order to yield the maximum profit. Assume that revenue R(x) and
the cost, C(x) of producing x units are in dollars.
R(x)= 6x, C(x)= 0.01x^2+ 0.3x+7
what is the production level for the maximum profit?
Which of the following is not an example of a cost that varies in total as the number of units produced changes?
Which of the following is not an example of a cost that varies in total as the number of units produced changes? a. wages of assembly worker b. straight-line depreciation on factory equipment c. direct materials cost d. electricity per KWH to operate factory equipment
Assume the following information for a company that produced 10,000 units and sold 8,000 units during...
Assume the following information for a company that produced
10,000 units and sold 8,000 units during its first year of
operations and produced 8,000 units and sold 10,000 units during
its second year of operations:
Per Unit
Per Year
Selling price
$
200
Direct materials
$
82
Direct labor
$
50
Variable manufacturing overhead
$
10
Sales commission
$
8
Fixed manufacturing overhead
$
300,000
Using absorption costing, what is the cost of goods sold for the
second year of...
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.)
You are given the following information: Units in beginning inventory 0 Units produced 40,000 Units sold...
You are given the following
information:
Units in beginning inventory
0
Units produced
40,000
Units sold
37,000
Selling price per unit
$120.00
Variable costs per unit:
Direct materials
$15.00
Direct labor
$30.00
Variable manufacturing
overhead
$5.00
Variable selling and
administrative
$3.00
Fixed expenses per year:
Fixed manufacturing
overhead
$600,000
Fixed selling and
administrative
$800,000
Based on this information, calculate the company's
operating income under both absorption costing and variable costing
approaches. If there is a difference between the two income...
You are given the following information: Units in beginning inventory 0 Units produced 40,000 Units sold...
You are given the following
information:
Units in beginning inventory
0
Units produced
40,000
Units sold
37,000
Selling price per unit
$120.00
Variable costs per unit:
Direct materials
$15.00
Direct labor
$30.00
Variable manufacturing
overhead
$5.00
Variable selling and
administrative
$3.00
Fixed expenses per year:
Fixed manufacturing
overhead
$600,000
Fixed selling and
administrative
$800,000
Based on this information, calculate the company's
operating income under both absorption costing and variable costing
approaches. If there is a difference between the two income...
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...
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