Question 1
Under absorption costing, managers can increase operating income by holding less inventories at the end of the period.Question 2
Universal Specialty Group produces a sports theme chair. The following information has been provided by management:| Actual sales | 10,000 units |
| Budgeted production | 12,000 units |
| Selling price | $425 per unit |
| Direct material costs | $90.00 per unit |
| Fixed manufacturing costs | $64.00 per unit |
| Variable manufacturing costs | $50.00 per unit |
| Variable administrative costs | $25.00 per unit |
| a. | What is the cost per statue if absorption costing is used? |
| b. | What is the cost per statue if "super-variable costing" is used? |
Answer 1
falseAnswer 2
| a. | The cost per statue = $90+ $64 + $50 = $204 |
| b. | The cost per statue = Equal to direct material costs of $90.00 |