Reference no: EM132552417

Helton Company has the following information for the current year:

Beginning fixed manufacturing overhead in inventory         $95,000

Fixed manufacturing overhead in production                       375,000

Ending fixed manufacturing overhead in inventory                     25,000

Beginning variable manufacturing overhead in inventory             $10,000

Variable manufacturing overhead in production                          50,000

Ending variable manufacturing overhead in inventory                   15,000

Question 1: What is the difference between operating incomes under absorption costing and variable costing?

a. $65,000

b. $50,000

c. $40,000

d. $5,000

e. $70,000

Question 2: Which of the following is an example of a drawback of using absorption costing?

a. It allows management the ability to manipulate operating income via production schedules.

b. An inventoried cost will eventually become part of cost of goods sold.

c. The company's sales level drives the production schedules.

d. A manager may increase maintenance activities above the budgeted level for the current period.

e. Expensing fixed costs as period costs reducing operating income.

Question 3: Zany Brainy projected current year sales of 50,000 units at a unit sale price of $20.00. Actual current year sales were 55,000 units at $22.00 per unit. Variable costs were budgeted at $14.00 per unit and actually totaled $15.00 per unit. Budgeted fixed costs totaled $400,000, while actual fixed costs amounted to $420,000.

What is the Zany Brainy's sales volume variance for total revenue?

a. $110,000 favourable

b. $100,000 unfavourable

c. $110,000 unfavourable

d. $100,000 favourable