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Costing Methods and Inventory Analysis

The document contains questions and answers about accounting concepts such as cost of goods sold, work in process inventory, break even point, absorption costing vs variable costing. It also includes a case study about Tin-Carl Peanut Butter company's production and sales data for 2016 including variable and fixed costs. The case asks the learner to calculate the variable cost per unit and ending inventory under variable costing.

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Tin Bernadette Dominico
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60 views2 pages

Costing Methods and Inventory Analysis

The document contains questions and answers about accounting concepts such as cost of goods sold, work in process inventory, break even point, absorption costing vs variable costing. It also includes a case study about Tin-Carl Peanut Butter company's production and sales data for 2016 including variable and fixed costs. The case asks the learner to calculate the variable cost per unit and ending inventory under variable costing.

Uploaded by

Tin Bernadette Dominico
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Question and Answers

1.) Refers to partially completed materials within a production cycle.

a. Cost of Goods Sold


b. Raw Materials Inventory
c. Work in Process Inventory
d. Manufacturing Overhead

Answer: c

2.) is a situation where an organization is neither making money nor losing money, but all the costs have
been covered.

a. Break Even
b. Process Costing
c. Total Quality Management
d. Just in Time Process

Answer: a.

3.) The difference between Absorption Costing and Variable costing is the allocation of what cost?

a. Fixed Overhead
b. Direct Labor Cost
c. Cost of Goods Sold
d. Raw materials inventory

Answer: a.

4.) Which of the following statement is FALSE on ACI (ABSORPTION COSTING INCOME) and VCI
(VARIABLE COSTING INCOME)?

a. When Sales is the same as Production AC and VC income is the same.


b. If Sales is greater than Production: ACI is greater than VCI
c. If Production is greater than SALES: ACI is greater than VCI

Answer: b.
CASE 1:

The production and sales data of Tin-Carl Peanut Butter company for the year 2016 is as follows:

Variable Cost per Unit:

Direct materials: ₱20


Direct labor: ₱10
Variable manufacturing overhead: ₱4
Variable selling and administrative expenses: ₱8

Fixed costs per year:

Fixed manufacturing overhead: ₱180,000


Fixed selling and administrative expenses: ₱600,000

During the year 2016, Tin-Carl Peanut Butter company manufactured 30,000 units out of which 25,000
units were sold. At the end of 2016, the finished goods inventory account showed a balance of₱______

Required:

5.) Compute the Variable Cost Per Unit.

Variable Cost per unit= DL+DM+VMO

Variable Cost per unit:10+20+4= 34

6.) What is the ending inventory under variable costing?

Answer:

Variable Cost per unit x Remaining Units

Ending inventory under variable costing: P34 × 5,000 = P170,000

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