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# Variable costing and absorption costing

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Abbey Company, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price \$129

Units in beginning inventory 0
Units produced 6,300
Units sold 6,100
Units in ending inventory 200

Variable costs per unit:
Direct materials \$32
Direct labor \$50

Fixed costs:

1. What is the unit product cost for the month under variable costing?
A) \$87
B) \$101
C) \$112
D) \$98

2. What is the unit product cost for the month under absorption costing?
A) \$101
B) \$98
C) \$87
D) \$112

3. The total gross margin for the month under the absorption costing approach is:
A) \$189,100
B) \$6,100
C) \$170,800
D) \$191,000

4. What is the total period cost for the month under the variable costing approach?
A) \$252,900
B) \$164,700
C) \$88,200
D) \$185,800

5. What is the net operating income for the month under variable costing?
A) \$3,300
B) \$2,800
C) (\$14,100)
D) \$6,100