Chamiching Makes Hacksaw Blades In the First Year, Variable Costs Accounted for Half of First

question 10

Multiple Choice

Chamiching makes hacksaw blades. Inventory values are determined using the first in, first out (FIFO) method. Production and sales data for the first three years appear below. $$\begin{array} { | c | c | c | } \hline \text { Hacksaw blades } & \text { Sold } & \text { Produced } \\\hline Y r 1 & 18,000 & 22,000 \\\hline Y r 2~ & 25,000 & 23,000 \\\hline Y r ~ 3 & 37,000 & 35,000 \\\hline\end{array}$$ $$\begin{array} { | c | c | c | } \hline & \text { Sales price } & \text { Full cost } \\\hline \operatorname { Yr } 1 & \$ 10.00 & \$ 6.00 \\\hline \operatorname { Yr } 2 & \$ 11.00 & \$ 6.60 \\\hline \operatorname { Yr } 3 & \$ 12.00 & \$ 7.60 \\\hline\end{array}$$ In the first year, variable costs accounted for half of the full costs. Total fixed production costs increased each subsequent year by 20%, as a result of step-fixed costs and a general inflationary price increase. For Chamiching, which of the following is true?

• A)The company should always choose absorption costing as it shows increasing profits every year
• B)The company should always choose absorption costing because it facilitates income smoothing
• C)Over the three years, Chamiching accumulates the same total income regardless of the choice of inventory costing method
• D)b) and c) only
• E)a, b and c

Calculate budget variances and interpret their significance.

Apportion costs based on activity bases.

Determine divisional income from operations.

Calculate and analyze transfer prices between divisions.

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Definitions:

Structuralism/poststructuralism

Intellectual movements in philosophy and sociology focusing on human culture and psyche; structuralism emphasizes the overarching structures shaping human experience, while poststructuralism questions these structures’ stability and coherence.

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The process of choosing interventions based on an understanding of the relationships, patterns, and dynamics within an individual's surrounding system.

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