1.The biggest problems with producing too much are lost sales and customer dissatisfaction.

a.True

b.False

2.Given the following data, calculate the total product cost per unit under variable costing.

Direct labor	$3.50 per unit
Direct materials	$1.25 per unit
Overhead
Total variable overhead	$41,400
Total fixed overhead	$150,000
Expected units to be produced	18,000 units

a.$4.75 per unit

b.$7.05 per unit

c.$15.38 per unit

d.$13.08 per unit

e.$16 per unit

3.Gage Company reports the following information for its first year of operations:

Units produced this year	7,000 units
Units sold this year	6,500 units
Direct materials	$22 per unit
Direct labor	$30 per unit
Variable overhead	? in total
Fixed overhead	$56,000 in total

If the company's cost per unit of finished goods using variable costing is $63, what is total variable overhead?

a.$21,000

b.$71,500

c.$77,000

d.$19,500

e.$16,590

4.The traditional income statement format used for financial reporting is called the contribution margin format.

a.True

b.False