Friday, June 17, 2011

Under variable costing, the fixed manufacturing costs expensed on the income statement (excluding adjustments for variances) total

ACCOUNTING

Multiple Choice

Morse Corporation incurred fixed manufacturing costs of $7,200 during 20x4. Other information for 20x4 includes:

The budgeted denominator level is 800 units.

Units produced total 1,000 units.

Units sold total 950 units.

Beginning inventory was zero.

The fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold.

Under variable costing, the fixed manufacturing costs expensed on the income statement (excluding adjustments for variances) total

a. $8,550.

b. $7,200.

c. $9,000.

d. zero.

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