approximated budgeted figures, whereas income was substantially
greater than the budgeted amount. There was no beginning or ending
inventories. The most likely explanation of the income increase is that,
compared to budget, actual
40. Which of the following statements is correct regarding the
difference between the absorption costing and variable costing
methods?
41. A manufacturing company prepares income statements using both
absorption and variable costing methods. At the end of a period, actual
sales revenues, total gross profit, and total contribution margin
approximated the budgeted figures, whereas income was substantially
below the budgeted amount. There was no beginning or ending
inventories. The most likely explanation for the income shortfall is
that, compared to budget, actual
42. A single-product company prepares income statements using both
absorption and variable costing methods. Manufacturing overhead
cost applied per unit produced in 2005 was the same as in 2004. The
2005 variable costing statement reported a profit, whereas the 2005
absorption costing statement reported a loss. The difference in
reported income could be explained by the units produced in 2005
being
43. At the end of Killo Co.'s first year of operations, 1,000 units of
inventory remained on hand. Variable and fixed manufacturing costs
per unit were $90 and $20, respectively. If Killo uses absorption
costing rather than direct (variable) costing, the result would be a
higher pretax income of
44. Lynn Manufacturing Co. prepares income statements using both
standard absorption and standard variable costing methods. For 2005,
unit standard costs were unchanged from 2004. In 2005, the only
beginning and ending inventories were finished goods of 5,000 units.