21) In absorption costing, all nonmanufacturing costs are subtracted from gross margin. 22) Direct costing is a perfect way to describe the variable-costing inventory method.   23) The distinction between absorption costing and variable costing is most important for which type of industry? A) manufacturing B) marketing C) retail D) service E) educational   24) When all fixed manufacturing costs and variable manufacturing costs are included as inventorial costs, the method being used is A) absorption costing. B) fixed overhead costing. C) manufacturing overhead costing. D) variable costing. E) direct costing.   25) The method of costing that excludes […]

  Use the information below to answer the following question(s).   Beauty Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs.     January February Beginning inventory 0 — Production 2,500 3,000 Sales 2,250 3,025   Other information:     Selling price   $20.00 Standard variable manufacturing cost/unit   $8.00 Standard variable market/admin. cost/unit   $4.00 Standard fixed manufacturing overhead cost/month   $40,000 Standard fixed market/admin. cost/month   $20,000 Budgeted denominator level per month (output units)   4,000   There were no beginning or ending […]

  73) Ewing Company planned to be in operation for three years. During the first year, it had no sales but incurred $120,000 in variable manufacturing expenses and $40,000 in fixed manufacturing expenses. In the next year, it sold half of the finished goods inventory from the previous year for $100,000 but it had no manufacturing costs. In the third year, it sold the remainder of the inventory for $120,000, had no manufacturing expenses and went out of business. Marketing and administrative expenses were fixed and totalled $20,000 each year.   Required: a.Prepare an income statement for each year using […]

  5) An unfavourable variable overhead rate variance can be the result of paying lower prices than budgeted for variable overhead items such as energy.   6) The variable overhead efficiency variance is computed in a different way than the efficiency variance for direct-cost items.   7) The variable overhead flexible-budget variance measures the difference between standard variable overhead costs and flexible-budget variable overhead costs.   8) The variable overhead efficiency variance measures the efficiency with which the cost-allocation base is used.   9) The variable overhead efficiency variance can be interpreted the same way as the efficiency variance for […]

12) Party Animals sells stuffed tigers. Products, Inc., manufactures many different stuffed animals. Party Animals orders 10,400 tigers per year, 200 per week, at $10 per tiger. The manufacturer covers all shipping costs. Party Animals earns 12% on its cash investments. The purchase-order lead time is 3 weeks. Party Animals sells 210 tigers per week. The following data are available (based on management's estimates): Estimated ordering costs per purchase order$10 Estimated insurance, materials handling, breakage, and so on, per year$3 Actual ordering costs per order$15 What is the economic order quantity using the estimated amounts? A) 119 stuffed tigers B) […]