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WorksheetsManagement Accounting 2 absorption and direct costing
Total questions: 10
Worksheet time: 20mins
What do we try to determine when discussing whether or not we use Absorption Costing or Direct Costing?
we are just trying to make life more difficult
we are interested in the cost price of a finished unit
we are looking at how the production costs are divided over the different types of products
Company bananas has a normal production of 25,000 units. For the coming year it is expected that 22,000 units will be produced. The Total Fixed Costs are €100,000.
Calculate the Production Volume Variance
€ 12,000 negative
€ 12,000 positive
€ 13,636 negative
€ 13,636 positive
Under Absorption Costing the Total Fixed Costs are
A period expense
A product expense
A profit expense
Neither of the answers
Company Top Pups sells its products at a price of € 20. The variable cost per unit are €5. The Total Fixed Costs are €50,000. The normal production is 20,000 units.
Under absorption costing a finished product has the following inventory value:
€ 2.50
€ 7.50
€ 5
€20
Company Botastic sells its products for a price of € 100. It is expected that 60,000 products will be sold. The variable costs per unit are €10 per unit and the Total Fixed Costs are € 75,000. Normal and actual production are 62,500 units.
Calculate the sales volume result
€ 5,328,000
€ 5,700,000
€ 5,937,500
€ 5,550,000
When do we use the production volume variance?
When the actual production is not the same as the normal production
When the quantity sold is not the same as normal production
When the quantity sold is not the same as the actual production
Company Coco sells its products for a price of € 75. It is expected that 10,000 products will be sold. The variable costs per unit are €30 per unit and the Total Fixed Costs are € 40,000. Normal production is 20,000 units and actual production are 25,000 units.
Calculate the profit under direct costing
€ 410,000
€ 440,000
€ 430,000
Company Botastic sells its products for a price of € 100. It is expected that 60,000 products will be sold. The variable costs per unit are €10 per unit and the Total Fixed Costs are € 75,000. Normal and actual production are 62,500 units.
Calculate the profit difference between direct costing and absorption costing
Absorption Costing is higher with € 3,000
Absorption Costing is higher with € 3,125
Absorption Costing is lower with € 3,000
Absorption Costing is lower with € 3,125
Direct costing will have a higher profit than Absorption Costing when:
Sales quantity is higher than Production Quantity
Sales quantity is lower than Production Quantity
Actual Production is higher than Normal Production
Actual Production is lower than Normal Production
how can you calculate the profit difference between absorption costing and direct costing?
inventory change x (sales price - variable cost per unit)
inventory change x (full cost - variable cost per unit)
inventory change x (contribution margin - variable cost per unit)
inventory change x (fixed costs - variable cost per unit)
