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Exam 17: Super-Variable Costing

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(Appendix 5A)All differences between super-variable costing and absorption costing net operating income are explained by the accounting for direct materials costs.

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Question 2

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(Appendix 5A) Quiller Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 32, 000 units and sold 31, 000 units.The company's only product is sold for $233 per unit. The company is considering using either super-variable costing or a variable costing system that assigns $12 of direct labor cost to each unit that is produced.Which of the following statements is true regarding the net operating income in the first year?

A) Super-variable costing net operating income exceeds variable costing net operating income by $63, 000.
B) Super-variable costing net operating income exceeds variable costing net operating income by $12, 000.
C) Variable costing net operating income exceeds super-variable costing net operating income by $12, 000.
D) Variable costing net operating income exceeds super-variable costing net operating income by $63, 000.

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(Appendix 5A) Prehn Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 36, 000 units and sold 30, 000 units.The company's only product is sold for $251 per unit. Assume that the company uses a variable costing system that assigns $28 of direct labor cost to each unit that is produced.The unit product cost under this costing system is:

(Appendix 5A) Under super-variable costing, which of the following is treated as a period cost?

(Appendix 5A)Ellert Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 52, 000 units and sold 51, 000 units.The company's only product is sold for $251 per unit. Required: a.Assume the company uses super-variable costing.Compute the unit product cost for the year and prepare an income statement for the year. b.Assume that the company uses a variable costing system that assigns $26 of direct labor cost to each unit that is produced.Compute the unit product cost for the year and prepare an income statement for the year.

(Appendix 5A)Rhoda Corporation manufactures and sells one product.In the company's first year of operations, the variable cost consisted solely of direct materials of $87 per unit.The annual fixed costs were $912, 000 of direct labor cost, $2, 128, 000 of fixed manufacturing overhead expense, and $1, 320, 000 of fixed selling and administrative expense.The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 38, 000 units and sold 33, 000 units.The company's only product is sold for $240 per unit. Required: a.Assume the company uses super-variable costing.Compute the unit product cost for the year. b.Assume the company uses super-variable costing.Prepare an income statement for the year.

(Appendix 5A) Wahler Corporation manufactures and sells one product.In the company's first year of operations, the variable cost consisted solely of direct materials of $85 per unit.The annual fixed costs were $640, 000 of direct labor cost, $2, 208, 000 of fixed manufacturing overhead expense, and $1, 140, 000 of fixed selling and administrative expense.The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 32, 000 units and sold 30, 000 units.The company's only product is sold for $249 per unit. The net operating income for the year under super-variable costing is:

(Appendix 5A) Moffa Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 54, 000 units and sold 47, 000 units.The company's only product is sold for $256 per unit. The net operating income for the year under super-variable costing is:

(Appendix 5A) Prehn Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 36, 000 units and sold 30, 000 units.The company's only product is sold for $251 per unit. Assume that the company uses an absorption costing system that assigns $28 of direct labor cost and $70 of fixed manufacturing overhead to each unit that is produced.The unit product cost under this costing system is:

(Appendix 5A) Prehn Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 36, 000 units and sold 30, 000 units.The company's only product is sold for $251 per unit. The unit product cost under super-variable costing is:

(Appendix 5A)Goodwyn Corporation manufactures and sells one product.In the company's first year of operations, the variable cost consisted solely of direct materials of $89 per unit.The annual fixed costs were $1, 269, 000 of direct labor cost, $3, 619, 000 of fixed manufacturing overhead expense, and $1, 260, 000 of fixed selling and administrative expense.The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 47, 000 units and sold 42, 000 units.The company's only product is sold for $259 per unit. Required: a.Assume the company uses super-variable costing.Compute the unit product cost for the year and prepare an income statement for the year. b.Assume that the company uses a variable costing system that assigns $27 of direct labor cost to each unit that is produced.Compute the unit product cost for the year and prepare an income statement for the year.

(Appendix 5A) Wienecke Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 44, 000 units and sold 41, 000 units.The company's only product is sold for $239 per unit. The unit product cost under super-variable costing is:

(Appendix 5A) Schaadt Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 23, 000 units and sold 16, 000 units.The company's only product is sold for $243 per unit. The unit product cost under super-variable costing is:

(Appendix 5A) All differences between super-variable costing and absorption costing are explained by:

(Appendix 5A) Sagon Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 29, 000 units and sold 23, 000 units.The company's only product is sold for $231 per unit. The company is considering using either super-variable costing or an absorption costing system that assigns $25 of direct labor cost and $56 of fixed manufacturing overhead to each unit that is produced.Which of the following statements is true regarding the net operating income in the first year?

(Appendix 5A) Feltner Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 49, 000 units and sold 42, 000 units.The company's only product is sold for $225 per unit. Assume that the company uses an absorption costing system that assigns $19 of direct labor cost and $50 of fixed manufacturing overhead to each unit that is produced.The net operating income under this costing system is:

(Appendix 5A) Nickolls Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 30, 000 units and sold 27, 000 units.The company's only product is sold for $230 per unit. Assume that the company uses a variable costing system that assigns $18 of direct labor cost to each unit that is produced.The net operating income under this costing system is:

(Appendix 5A) Nickolls Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 30, 000 units and sold 27, 000 units.The company's only product is sold for $230 per unit. The net operating income for the year under super-variable costing is:

(Appendix 5A)Grand Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 23, 000 units and sold 21, 000 units.The company's only product is sold for $254 per unit. Required: a.Assume the company uses super-variable costing.Compute the unit product cost for the year and prepare an income statement for the year. b.Assume that the company uses a variable costing system that assigns $20 of direct labor cost to each unit that is produced.Compute the unit product cost for the year and prepare an income statement for the year. c.Assume that the company uses an absorption costing system that assigns $20 of direct labor cost and $71 of fixed manufacturing overhead to each unit that is produced.Compute the unit product cost for the year and prepare an income statement for the year. d.Prepare a reconciliation that explains the difference between the super-variable costing and variable costing net incomes. e.Prepare a reconciliation that explains the difference between the super-variable costing and absorption costing net incomes.

(Appendix 5A)Super-variable costing is a costing method that treats direct labor and manufacturing overhead costs as period costs and includes only direct materials cost in unit product costs.