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2018 10 Beginning Inventory (in units) Actual Sales (in units) Budgeted production (in units) Budgeted fixed manufacturing costs (in $) Operating Income using Variable Costing (in $) 2016 20 400 500 8,000 $ 0 2017 30 410 400 8,000 $0 390 424 8,190 2019 | 140 350 484 8,470 $0 $ 0 In 2015, budgeted manufacturing costs were $50 per unit ($18 variable and $32 fixed costs). In all years, budgeted fixed manufacturing costs = actual fixed manufacturing costs What is net income (loss) using absorption costing for 2016? a. $(133.33) b. ($200) c. Zero d. $120 e. $160 What is net income (loss) using absorption costing for 2017? a. $(280) b. ($200) c. zero d. $200 e. $220 What would be in change in net income between variance costing and absorption costing if one less unit was produced in 2019 a. Absorption costing net income would be $19.32 greater than variable costing net income b. Absorption costing net income would be $19.25 less than variable costing net income c. Absorption costing net income would be $17.75 greater than variable costing net income d. Absorption costing net income would be $17.50 less than variable costing net income e. Absorption costing net income would be $16.00 greater than variable costing net income Sheldon just built a motel at a cost of $1,000,000. He would like to earn a return on investment of 25% per year. The variable operating cost is $8 per room night and fixed costs will total $368,000 per year. He expects 16,000 room nights per year. What price should Sheldon charge for a room-night if he uses full cost plus target return on investment pricing ? a) $250,000 b) $ 8.00 c) $ 46.63 d) $ 23.00 e) $ 38.63 2018 10 Beginning Inventory (in units) Actual Sales (in units) Budgeted production (in units) Budgeted fixed manufacturing costs (in $) Operating Income using Variable Costing (in $) 2016 20 400 500 8,000 $ 0 2017 30 410 400 8,000 $0 390 424 8,190 2019 | 140 350 484 8,470 $0 $ 0 In 2015, budgeted manufacturing costs were $50 per unit ($18 variable and $32 fixed costs). In all years, budgeted fixed manufacturing costs = actual fixed manufacturing costs What is net income (loss) using absorption costing for 2016? a. $(133.33) b. ($200) c. Zero d. $120 e. $160 What is net income (loss) using absorption costing for 2017? a. $(280) b. ($200) c. zero d. $200 e. $220 What would be in change in net income between variance costing and absorption costing if one less unit was produced in 2019 a. Absorption costing net income would be $19.32 greater than variable costing net income b. Absorption costing net income would be $19.25 less than variable costing net income c. Absorption costing net income would be $17.75 greater than variable costing net income d. Absorption costing net income would be $17.50 less than variable costing net income e. Absorption costing net income would be $16.00 greater than variable costing net income Sheldon just built a motel at a cost of $1,000,000. He would like to earn a return on investment of 25% per year. The variable operating cost is $8 per room night and fixed costs will total $368,000 per year. He expects 16,000 room nights per year. What price should Sheldon charge for a room-night if he uses full cost plus target return on investment pricing ? a) $250,000 b) $ 8.00 c) $ 46.63 d) $ 23.00 e) $ 38.63

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