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Chapter 21: Q-21-10RQ (page 1167)
In the long run, all costs are controllable. Is this statement true? Why or why not?
Answer
True, all costs are controllable in the long run.
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Question: Computing absorption costing operating income
Refer to the information for Concord, Inc.
Requirements
Use the following information for Exercises E21-14 and E21-15.
Concord, Inc. has collected the following data for November (there are no beginning inventories):
Units produced and sold 500 units Sales price $ 450 per unit Direct materials 64 per unit Direct labor 68 per unit Variable manufacturing overhead 26 per unit Fixed manufacturing overhead 7,500 per month Variable selling and administrative costs 15 per unit Fixed selling and administrative costs 4,400 per month
Using absorption and variable costing
Meyer Company reports the following information for March:
Net Sales Revenue $ 45,300
Variable Cost of Goods Sold 12,500
Fixed Cost of Goods Sold 11,800
Variable Selling and Administrative Costs 14,000
Fixed Selling and Administrative Costs 5,400
Requirements:
Classifying costs Classify each cost by placing an X in the appropriate columns. The first cost is completed as an example.
Absorption Costing Variable Costing Product Cost Period Cost Product Cost Period cost
Computing absorption cost per unit and variable cost per unit
Adamson, Inc. has the following cost data for Product X:
Direct materials $ 41 per unit Direct labor 57 per unit Variable manufacturing overhead 7 per unit Fixed manufacturing overhead 20,000 per year
Calculate the unit product cost using absorption costing and variable costing when production is 2,000 units, 2,500 units, and 5,000 units.
When units produced exceed units sold, how does operating income differ between variable costing and absorption costing? Why?
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