Midterm 2

Question 1

VARIABLE costing manufacturing cost per unit

Answer 1

DM
DL
VMOH
Total manu cost

Question 2

ABSORPTION costing manufacturing cost per unit

Answer 2

DM
DL
FMOH
VMOH
Total manu cost

Question 3

ABSORPTION costing income statement

Answer 3

Company name
Absorption costing income statement
For year ended Dec 31, 2020
Sales
Less: COGS (fixed manu costs per unit x units sold)
Gross profit
Less: VS and AD exp
FS and AD exp
Net income

Question 4

Variable costing income statement

Answer 4

Sales
Less: COGS
Variable Selling and admin exp
Contribution margin
Less: FMOH
FS and AD exp
Net income

Question 5

Reconciling absorption vs. Variable costing incoming numbers

Answer 5

Absorption Net income
Variable Net income
Difference

Question 6

Variance

Answer 6

Beg inv
End inv
Difference
*fixed cost $ per unit
Difference in $

Question 7

Produced < Sold

Answer 7

Variable costing net income is higher

Question 8

Produced > sold

Answer 8

Absorption net income is higher

Question 9

Variable income statement (chapter 6)

Answer 9

Sales
Less: vc
Contribution margin
Less: fc
Income before income tax
Less: income tax
Net income

Question 10

Formula: net income b4 tax

Answer 10

sales - variable cost - fixed cost

Question 11

Formula: contribution margin

Answer 11

Sales - variable costs

Question 12

Formula: Contribution margin per unit

Answer 12

Per unit SP - per unit VC

Question 13

Formula: CM ratio

Answer 13

CM per unit/SP

Question 14

Formula: break even point in $

Answer 14

Fixed cost/contribution margin

Question 15

Formula: break even point in units

Answer 15

Fixed cost/CM per unit

Question 16

Formula: required sales in $ for target operating income

Answer 16

(Fixed cost + target operating income)/CM Ratio

Question 17

Formula: Required sales in unit for target operating income

Answer 17

(Fixed cost + target operating income)/CM per unit

Question 18

Formula: operating income b4 taxes

Answer 18

Operating income after tax/(1-tax rate)

Question 19

Formula: Margin of safety in $

Answer 19

Actual sales - break even sales

Question 20

Formula: Margin of safety ratio

Answer 20

Margin of safety/actual sales

Question 21

Formula: weighted-average contribution margin in units

Answer 21

Unit CM product A * Sales mix % + unit CM product B * sales mix %…

Question 22

Formula: Weighted-average contribution in $

Answer 22

CM ratio product a * sales mix…

Question 23

Chapter 7: incremental analysis (income statement)

Answer 23

Sales. Per unit. Total. $xxxxx
DM
DL
VOH
FOH
Gross profit
L: VS and Ad exp
Net income

Question 24

Special Order questions

Answer 24

1. Do you have capacity?
2. How do you treat fixed costs? (usually don’t include)
3. Are there and special considerations? (Vs and ad expenses)

Question 25

Special order pricing (xxx units) and the profit

Answer 25

Sales ______ DM DL VOH *fixed cost if it says* Total cost per unit Selling price per unit - Cost per unit ___________________________ Incremental profit per unit x # of units produced ____________________________ Total profit

Question 26

Make or buy format

Answer 26

Units| P unit. Make. Buy. Net inc in de DM DL VMOH FMOH Purchase price ____________________ Total cost to produce x units

Question 27

Sell or process further format

Answer 27

Sell. Process furt. Net in dec Sell per unit - ____________________ Variable cost per unit + Fixed cost per unit Total per unit cost ____________________ Net income per unit

Question 28

Retain or replace

Answer 28

Keep equip. Replace. Net inc dec Period of x years ——————————— Variable costs New machines costs