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39. 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 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