Analysis competitive advantage

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21) Barrett Industries began the month of June with a finished goods inventory of $15 000. The finished goods inventory at the end of June was $10 000 and the cost of goods sold (COGS) during the month was $20 000.
The cost of goods manufactured during the month of June was:

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	$5 000
	$25 000

	$20 000
	$15 000

22) Classix Products reported $28 000 in net profit for the year using variable costing. The company had no units in beginning inventory, planned and actual production was 30 000 units, and sales were 25 000 units during the year. Variable manufacturing costs were $15 per unit and total budgeted fixed manufacturing overhead was $150 000. There was no underapplied or overapplied overhead reported during the year. Determine the net profit under absorption costing.

	$30 000
	$28 000

	$58 000
	$53 000

24) Callahan Company consists of two divisions, Northern and Southern. During 2008, many of the accounting records were destroyed in a fire. The managing director has asked the accountant for information relating to 2008. The following information is available to the accountant.

	Total (000)	Northern Division (000)		Southern Division (000)
Revenues	$1 200	$700		$500
Variable operating expenses	$720
Contribution margin
Controllable fixed expenses	$120
Fixed expenses controllable by others			$150		$80
Business unit margin					$50
Common fixed costs	z
Profit before taxes	$85

In addition, the contribution margin ratio for both divisions was the same. What were the common fixed costs (z) during 2008?

	$70 000
	$130 000

	$65 000
	$45 000

25) The following information was taken from the business united profit and loss statement of Resell Real Estate Agents for 2008:

	Resell Real Estate	Sydney Division	Tamworth Division	North Coast Division
Revenues	$750 000	$200 000	$225 000	$325 000
Variable operating expenses	$410 000	$110 000	$120 000	$180 000
Controllable fixed expenses	$210 000	$65 000	$75 000	$70 000
Fixed expenses controllable by others	$60 000	$15 000	$20 000	$25 000

In addition, the company incurred common fixed costs of $18 000. What was the business unit margin of the Tamworth Division during 2008?

	$4 000
	$10 000

	$(8 000)
	$30 000

26) Refer to the following data.

Direct material used	$150 000
Selling costs	$5 000
Indirect labour	$7 000
Administrative costs	$10 000
Depreciation on factory equipment	$70 000
Direct labour	$40 000
Overtime premiums paid	$20 000
Indirect materials	$45 000

The period costs are:

	$15 000
	$372 000

	$20 000
	$190 000

27) The Casual Furniture Company manufactures outdoor furniture, and incurred the following costs during the month of January.

Timber	$25 000
Paint	$5 000
Glue (considered as insignificant amount)	$500
Wages—assembly personnel	$20 000
Wages—factory supervisor	$3 500
Factory cleaner’s wages	$2 000
Sales commissions	$10 000
Administrative staff salaries	$4 000
Depreciation—factory equipment	$3 000
Depreciation—sales office equipment	$1 000
Utilities, insurance—factory	$6 000
Utilities, insurance—sales office	$2 000
Advertising	$8 000
Total costs	$90 000

The prime costs are:

	$30 000
	$50 000

	$65 000
	$50 500

28) The Browning Company manufactures a single product; the standard costs per unit being variable manufacturing $8, fixed manufacturing $6. Selling and administrative costs are $2 per unit sold. The selling price is $20 per unit. Actual and budgeted fixed overhead is $900 000 for the year. Information about Browning’s production activity for the year follows:

Sales	125 000 units
Production	150 000 units
Opening inventory	5 000 units

What is the value of closing inventory of finished goods under absorption costing?

	$240 000
	$420 000

	$120 000
	$480 000

29) The Browning Company manufactures a single product; the standard costs per unit being variable manufacturing $8, fixed manufacturing $6. Selling and administrative costs are $2 per unit sold. The selling price is $20 per unit. Actual and budgeted fixed overhead is $900 000 for the year. Information about Browning’s production activity for the year follows:

Sales	125 000 units
Production	150 000 units
Opening inventory	5 000 units

Assuming all information is provided above, the difference in profit between absorption and variable costing would be expected to be:

	30 000 × $8
	25 000 × $6

	30 000 × $6
	25 000 × $8

30) Refer to the following data.

Direct material used	$150 000
Selling costs	$5 000
Indirect labour	$7 000
Administrative costs	$10 000
Depreciation on factory equipment	$70 000
Direct labour	$40 000
Overtime premiums paid	$20 000
Indirect materials	$45 000

The non-manufacturing costs are:

	$15 000
	$182 000

	$70 000
	$372 000

33) Refer to the following data.

Direct material used	$150 000
Selling costs	$5 000
Indirect labour	$7 000
Administrative costs	$10 000
Depreciation on factory equipment	$70 000
Direct labour	$40 000
Overtime premiums paid	$20 000
Indirect materials	$45 000

The conversion costs are:

	$142 000
	$190 000

	$150 000
	$182 000

34) Gallison Company’s net profit under absorption costing was $15 000 higher than under variable costing. During the year, the company produced 20 000 units for total variable production costs of $80 000. If fixed manufacturing overhead was $40 000, how many units were sold?

	12 500 units
	20 000 units

	10 000 units
	7 500 units

35) The following information was taken from the business united profit and loss statement of Resell Real Estate Agents for 2008:

	Resell Real Estate	Sydney Division	Tamworth Division	North Coast Division
Revenues	$750 000	$200 000	$225 000	$325 000
Variable operating expenses	$410 000	$110 000	$120 000	$180 000
Controllable fixed expenses	$210 000	$65 000	$75 000	$70 000
Fixed expenses controllable by others	$60 000	$15 000	$20 000	$25 000

In addition, the company incurred common fixed costs of $18 000. Which amount should be used to evaluate the Sydney Division as an investment of the company?

	$10 000
	$25 000

	$4 000
	$(8 000)

36) The Browning Company manufactures a single product; the standard costs per unit being variable manufacturing $8, fixed manufacturing $6. Selling and administrative costs are $2 per unit sold. The selling price is $20 per unit. Actual and budgeted fixed overhead is $900 000 for the year. Information about Browning’s production activity for the year follows:

Sales	125 000 units
Production	150 000 units
Opening inventory	5 000 units

What is the profit under absorption costing?

	$500 000
	$350 000

	$1 250 000
	$750 000

37) The income of a company for a year on a variable costing basis is $85 000 and on an absorption costing basis is $73 000. Fixed costs per unit were the same in both the prior and current year ($1.20 per unit). What was the change in inventory over the year?

	None of the given answers
	Increase of 12 000 units

	Increase of 10 000 units
	Decrease of 10 000 units

38) Fairchild Pty Ltd began April with a finished goods inventory of $25 000. The cost of goods manufactured during the month was $40 000 and the cost of goods sold during April was $50 000.
The inventory remaining in finished goods at the end of April was:

	$20 000
	$15 000

	$35 000
	$25 000

39) Refer to the following data.

Direct material used	$150 000
Selling costs	$5 000
Indirect labour	$7 000
Administrative costs	$10 000
Depreciation on factory equipment	$70 000
Direct labour	$40 000
Overtime premiums paid	$20 000
Indirect materials	$45 000

The product costs are:

	$190 000
	$15 000

	$332 000
	$182 000

40) Richard’s Division of Richard and Sons has the following data related to a particular period:

Average invested capital	$700 000
Imputed interest rate	10%
Revenues	$1 900 000
Variable costs	$1 150 000
Fixed costs related solely to the division	$673 000

Calculate the amount of residual income for the period.

	$70,000
	$680,000

	$7,000
	$77,000

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