21) Barrett Industries began the month of” style=”font-family: ‘Calibri’,sans-serif; mso-fareast-font-family: Calibri; color: black; mso-themecolor: text1;”>with a finished goods inventory of $15 000. The finished goods inventory at the end of June was $10 000 and the cost of goods sold (COGS) during the month was $20 000.Â
The cost of goods manufactured during the month of June was:
| Â | $5 000 |
| Â | $25 000 |
| Â | $20 000 |
| Â | $15 000 |
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22) Classix Products reported $28 000 in net profit for the year using variable costing. The company had no units in beginning inventory, planned and actual production was 30 000 units, and sales were 25 000 units during the year. Variable manufacturing costs were $15 per unit and total budgeted fixed manufacturing overhead was $150 000. There was no underapplied or overapplied overhead reported during the year. Determine the net profit under absorption costing.
24) Callahan Company consists of two divisions, Northern and Southern. During 2008, many of the accounting records were destroyed in a fire. The managing director has asked the accountant for information relating to 2008. The following information is available to the accountant.
| Â | Total (000) | Northern Division (000) | Southern Division (000) | ||
| Revenues | $1 200 | $700 | $500 | ||
| Variable operating expenses | $720 | Â | Â | Â | Â |
| Contribution margin | Â | Â | Â | Â | Â |
| Controllable fixed expenses | $120 | Â | Â | Â | Â |
| Fixed expenses controllable by others | Â | Â | $150 | Â | $80 |
| Business unit margin | Â | Â | Â | Â | $50 |
| Common fixed costs | z | Â | Â | Â | Â |
| Profit before taxes | $85 | Â | Â | Â | Â |
In addition, the contribution margin ratio for both divisions was the same. What were the common fixed costs (z) during 2008?
| Â | $70 000 |
| Â | $130 000 |
| Â | $65 000 |
| Â | $45 000 |
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25) The following information was taken from the business united profit and loss statement of Resell Real Estate Agents for 2008:
| Â | Resell Real Estate | Sydney Division | Tamworth Division | North Coast Division |
| Revenues | $750 000 | $200 000 | $225 000 | $325 000 |
| Variable operating expenses | $410 000 | $110 000 | $120 000 | $180 000 |
| Controllable fixed expenses | $210 000 | $65 000 | $75 000 | $70 000 |
| Fixed expenses controllable by others | $60 000 | $15 000 | $20 000 | $25 000 |
In addition, the company incurred common fixed costs of $18 000. What was the business unit margin of the Tamworth Division during 2008?
| Â | $4 000 |
| Â | $10 000 |
| Â | $(8 000) |
| Â | $30 000 |
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26) Refer to the following data.
| Direct material used | $150 000 |
| Selling costs | $5 000 |
| Indirect labour | $7 000 |
| Administrative costs | $10 000 |
| Depreciation on factory equipment | $70 000 |
| Direct labour | $40 000 |
| Overtime premiums paid | $20 000 |
| Indirect materials | $45 000 |
The period costs are:
| Â | $15 000 |
| Â | $372 000 |
| Â | $20 000 |
| Â | $190 000 |
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27) The Casual Furniture Company manufactures outdoor furniture, and incurred the following costs during the month of January.
| Timber | $25 000 |
| Paint | $5 000 |
| Glue (considered as insignificant amount) | $500 |
| Wages—assembly personnel | $20 000 |
| Wages—factory supervisor | $3 500 |
| Factory cleaner’s wages | $2 000 |
| Sales commissions | $10 000 |
| Administrative staff salaries | $4 000 |
| Depreciation—factory equipment | $3 000 |
| Depreciation—sales office equipment | $1 000 |
| Utilities, insurance—factory | $6 000 |
| Utilities, insurance—sales office | $2 000 |
| Advertising | $8 000 |
| Total costs | $90 000 |
The prime costs are:
| Â | $30 000 |
| Â | $50 000 |
| Â | $65 000 |
| Â | $50 500 |
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28) The Browning Company manufactures a single product; the standard costs per unit being variable manufacturing $8, fixed manufacturing $6. Selling and administrative costs are $2 per unit sold. The selling price is $20 per unit. Actual and budgeted fixed overhead is $900 000 for the year. Information about Browning’s production activity for the year follows:
| Sales | 125 000 units |
| Production | 150 000 units |
| Opening inventory | 5 000 units |
What is the value of closing inventory of finished goods under absorption costing?
| Â | $240 000 |
| Â | $420 000 |
| Â | $120 000 |
| Â | $480 000 |
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29) The Browning Company manufactures a single product; the standard costs per unit being variable manufacturing $8, fixed manufacturing $6. Selling and administrative costs are $2 per unit sold. The selling price is $20 per unit. Actual and budgeted fixed overhead is $900 000 for the year. Information about Browning’s production activity for the year follows:
| Sales | 125 000 units |
| Production | 150 000 units |
| Opening inventory | 5 000 units |
Assuming all information is provided above, the difference in profit between absorption and variable costing would be expected to be:
|  | 30 000 × $8 |
|  | 25 000 × $6 |
|  | 30 000 × $6 |
|  | 25 000 × $8 |
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30) Refer to the following data.
| Direct material used | $150 000 |
| Selling costs | $5 000 |
| Indirect labour | $7 000 |
| Administrative costs | $10 000 |
| Depreciation on factory equipment | $70 000 |
| Direct labour | $40 000 |
| Overtime premiums paid | $20 000 |
| Indirect materials | $45 000 |
The non-manufacturing costs are:
| Â | $15 000 |
| Â | $182 000 |
| Â | $70 000 |
| Â | $372 000 |
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33) Refer to the following data.
| Direct material used | $150 000 |
| Selling costs | $5 000 |
| Indirect labour | $7 000 |
| Administrative costs | $10 000 |
| Depreciation on factory equipment | $70 000 |
| Direct labour | $40 000 |
| Overtime premiums paid | $20 000 |
| Indirect materials | $45 000 |
The conversion costs are:
| Â | $142 000 |
| Â | $190 000 |
| Â | $150 000 |
| Â | $182 000 |
Â
34) Gallison Company’s net profit under absorption costing was $15 000 higher than under variable costing. During the year, the company produced 20 000 units for total variable production costs of $80 000. If fixed manufacturing overhead was $40 000, how many units were sold?
| Â | 12 500 units |
| Â | 20 000 units |
| Â | 10 000 units |
| Â | 7 500 units |
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35) The following information was taken from the business united profit and loss statement of Resell Real Estate Agents for 2008:
| Â | Resell Real Estate | Sydney Division | Tamworth Division | North Coast Division |
| Revenues | $750 000 | $200 000 | $225 000 | $325 000 |
| Variable operating expenses | $410 000 | $110 000 | $120 000 | $180 000 |
| Controllable fixed expenses | $210 000 | $65 000 | $75 000 | $70 000 |
| Fixed expenses controllable by others | $60 000 | $15 000 | $20 000 | $25 000 |
In addition, the company incurred common fixed costs of $18 000. Which amount should be used to evaluate the Sydney Division as an investment of the company?
| Â | $10 000 |
| Â | $25 000 |
| Â | $4 000 |
| Â | $(8 000) |
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36) The Browning Company manufactures a single product; the standard costs per unit being variable manufacturing $8, fixed manufacturing $6. Selling and administrative costs are $2 per unit sold. The selling price is $20 per unit. Actual and budgeted fixed overhead is $900 000 for the year. Information about Browning’s production activity for the year follows:
| Sales | 125 000 units |
| Production | 150 000 units |
| Opening inventory | 5 000 units |
What is the profit under absorption costing?
| Â | $500 000 |
| Â | $350 000 |
| Â | $1 250 000 |
| Â | $750 000 |
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37) The income of a company for a year on a variable costing basis is $85 000 and on an absorption costing basis is $73 000. Fixed costs per unit were the same in both the prior and current year ($1.20 per unit). What was the change in inventory over the year?
| Â | None of the given answers |
| Â | Increase of 12 000 units |
| Â | Increase of 10 000 units |
| Â | Decrease of 10 000 units |
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38) Fairchild Pty Ltd began April with a finished goods inventory of $25 000. The cost of goods manufactured during the month was $40 000 and the cost of goods sold during April was $50 000.Â
The inventory remaining in finished goods at the end of April was:
| Â | $20 000 |
| Â | $15 000 |
| Â | $35 000 |
| Â | $25 000 |
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39) Refer to the following data.
| Direct material used | $150 000 |
| Selling costs | $5 000 |
| Indirect labour | $7 000 |
| Administrative costs | $10 000 |
| Depreciation on factory equipment | $70 000 |
| Direct labour | $40 000 |
| Overtime premiums paid | $20 000 |
| Indirect materials | $45 000 |
The product costs are:
| Â | $190 000 |
| Â | $15 000 |
| Â | $332 000 |
| Â | $182 000 |
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40) Richard’s Division of Richard and Sons has the following data related to a particular period:Â
| Average invested capital | $700 000 |
| Imputed interest rate | 10% |
| Revenues | $1 900 000 |
| Variable costs | $1 150 000 |
| Fixed costs related solely to the division | $673 000 |
Calculate the amount of residual income for the period.
| Â | $70,000 |
| Â | $680,000 |
| Â | $7,000 |
| Â | $77,000 |
