Question 1

In the formula y = a + bX, a represents

Accepted Answer

A)  mixed cost. 
B)  variable cost. 
C)  total cost. 
D)  fixed cost. 
A)  mixed cost. 
B)  variable cost. 
C)  total cost. 
D)  fixed cost. D

Question 2

A basic concept of variable costing is that period costs should be currently expensed. What is the rationale behind this procedure?

Accepted Answer

A)  Period costs are uncontrollable and should not be charged to a specific product. 
B)  Period costs are generally immaterial in amount and the cost of assigning the amounts to specific products would outweigh the benefits. 
C)  Allocation of period costs is arbitrary at best and could lead to erroneous decision by management. 
D)  Because period costs will occur whether production occurs, it is improper to allocate these costs to production and defer a current cost of doing business. 
A)  Period costs are uncontrollable and should not be charged to a specific product. 
B)  Period costs are generally immaterial in amount and the cost of assigning the amounts to specific products would outweigh the benefits. 
C)  Allocation of period costs is arbitrary at best and could lead to erroneous decision by management. 
D)  Because period costs will occur whether production occurs, it is improper to allocate these costs to production and defer a current cost of doing business. D

Question 3

Consider the regression equation y = a + bX. The portion of the equation that represents the variable rate is __________.

Accepted Answer

B

Question 4

The performance measure that considers routine interruptions is known as ____________________ capacity.

Accepted Answer

The answer of The performance measure that considers routine interruptions...

Question 5

In a(n) ____________________ cost system, factory overhead is assigned directly to products and services.

Accepted Answer

The answer of In a(n) ____________________ cost system, factory overhead...

Question 6

At its present level of operations, a small manufacturing firm has total variable costs equal to 75 percent of sales and total fixed costs equal to 15 percent of sales. Based on variable costing, if sales change by $1.00, income will change by

Accepted Answer

A)  $0.25. 
B)  $0.10. 
C)  $0.75. 
D)  can't be determined from the information given. 
A)  $0.25. 
B)  $0.10. 
C)  $0.75. 
D)  can't be determined from the information given.

Question 7

Weaknesses of the high-low method include all of the following except

Accepted Answer

A)  only two observations are used to develop the cost function. 
B)  the high and low activity levels may not be representative. 
C)  the method does not detect if the cost behavior is nonlinear. 
D)  the mathematical calculations are relatively complex. 
A)  only two observations are used to develop the cost function. 
B)  the high and low activity levels may not be representative. 
C)  the method does not detect if the cost behavior is nonlinear. 
D)  the mathematical calculations are relatively complex.

Question 8

Sales less variable cost of goods sold is referred to as ________________________________________.

Accepted Answer

product co

Question 9

Austin Company The following information is available for Austin Company for its first year of operations:
  Refer to Austin Company. What was the total amount of Selling,General and Administrative expense incurred by Austin Company?

Accepted Answer

A)  $30,000 
B)  $62,500 
C)  $6,000 
D)  can't be determined from the information given 
A)  $30,000 
B)  $62,500 
C)  $6,000 
D)  can't be determined from the information given

Question 10

Austin Company The following information is available for Austin Company for its first year of operations:
  Refer to Austin Company. If Austin Company were using variable costing, what would it show as the value of ending inventory?

Accepted Answer

A)  $120,000 
B)  $64,500 
C)  $27,000 
D)  $24,000 
A)  $120,000 
B)  $64,500 
C)  $27,000 
D)  $24,000

Question 11

If production exceeds sales, absorption costing net income is less than variable costing net income.

Accepted Answer

A) True 
 B)False

Question 12

In the application of "variable costing" as a cost-allocation process in manufacturing,

Accepted Answer

A)  variable direct costs are treated as period costs. 
B)  nonvariable indirect manufacturing costs are treated as product costs. 
C)  variable indirect manufacturing costs are treated as product costs. 
D)  nonvariable direct costs are treated as product costs. 
A)  variable direct costs are treated as period costs. 
B)  nonvariable indirect manufacturing costs are treated as product costs. 
C)  variable indirect manufacturing costs are treated as product costs. 
D)  nonvariable direct costs are treated as product costs.

Question 13

A ______________________________ is a planning document that presents expected variable and fixed overhead costs at different activity levels.

Accepted Answer

The answer of A ______________________________ is a planning document that...

Question 14

If underapplied overhead is considered to beimmaterial, it is closed to which of the following accounts?

Accepted Answer

A)  yes yes yes 
B)  no yes yes 
C)  yes no no 
D)  no no yes 
A)  yes yes yes 
B)  no yes yes 
C)  yes no no 
D)  no no yes

Question 15

How do differences in sales and production level affect net income computed under absorption costing and variable costing?

Accepted Answer

If production equals sales, absorption c

Question 16

Bush Corporation The following information has been extracted from the financial records of Bush Corporation for its first year of operations:
  Refer to Bush Corporation. Based on absorption costing, the Cost of Goods Manufactured for Bush Corporation's first year would be

Accepted Answer

A)  $200,000. 
B)  $270,000. 
C)  $300,000. 
D)  $210,000. 
A)  $200,000. 
B)  $270,000. 
C)  $300,000. 
D)  $210,000.

Question 17

Oakwood Corporation Oakwood Corporation produces a single product. The following cost structure applied to its first year of operations:
  Refer to Oakwood Corporation. Assume for this question only that Oakwood Corporation manufactured and sold 5,000 units in the current year. At this level of activity it had an income of $30,000 using variable costing. What was the sales price per unit?

Accepted Answer

A)  $16.00 
B)  $18.80 
C)  $12.80 
D)  $14.80 
A)  $16.00 
B)  $18.80 
C)  $12.80 
D)  $14.80

Question 18

Sheets Corporation The following information was extracted from the first year absorption-based accounting records of Sheets Corporation
  Refer to Sheets Corporation. Based on variable costing, if Sheets had sold 12,001 units instead of 12,000, its income before income taxes would have been

Accepted Answer

A)  $9.50 higher. 
B)  $11.00 higher. 
C)  $8.50 higher. 
D)  $8.33 higher. 
A)  $9.50 higher. 
B)  $11.00 higher. 
C)  $8.50 higher. 
D)  $8.33 higher.

Question 19

Phantom profits result when absorption costing is used and sales exceed production.

Accepted Answer

A) True 
 B)False

Question 20

Why is variable costing not used extensively in external reporting?

Accepted Answer

Variable costing is not used e

In the formula y = a + bX, a represents

A basic concept of variable costing is that period costs should be currently expensed. What is the rationale behind this procedure?

Consider the regression equation y = a + bX. The portion of the equation that represents the variable rate is __________.

The performance measure that considers routine interruptions is known as ____________________ capacity.

In a(n) ____________________ cost system, factory overhead is assigned directly to products and services.

At its present level of operations, a small manufacturing firm has total variable costs equal to 75 percent of sales and total fixed costs equal to 15 percent of sales. Based on variable costing, if sales change by $1.00, income will change by

Weaknesses of the high-low method include all of the following except

Sales less variable cost of goods sold is referred to as ________________________________________.

Austin Company The following information is available for Austin Company for its first year of operations: Refer to Austin Company. What was the total amount of Selling,General and Administrative expense incurred by Austin Company?

Austin Company The following information is available for Austin Company for its first year of operations: Refer to Austin Company. If Austin Company were using variable costing, what would it show as the value of ending inventory?

If production exceeds sales, absorption costing net income is less than variable costing net income.

In the application of "variable costing" as a cost-allocation process in manufacturing,

A ______________________________ is a planning document that presents expected variable and fixed overhead costs at different activity levels.

If underapplied overhead is considered to beimmaterial, it is closed to which of the following accounts?

How do differences in sales and production level affect net income computed under absorption costing and variable costing?

Bush Corporation The following information has been extracted from the financial records of Bush Corporation for its first year of operations: Refer to Bush Corporation. Based on absorption costing, the Cost of Goods Manufactured for Bush Corporation's first year would be

Sheets Corporation The following information was extracted from the first year absorption-based accounting records of Sheets Corporation Refer to Sheets Corporation. Based on variable costing, if Sheets had sold 12,001 units instead of 12,000, its income before income taxes would have been

Phantom profits result when absorption costing is used and sales exceed production.

Why is variable costing not used extensively in external reporting?

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, Support Department Allocations, and Transfer Pricing

Performance Measurement, Balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

Exam 3: Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

In the formula y = a + bX, a represents

A basic concept of variable costing is that period costs should be currently expensed. What is the rationale behind this procedure?

Consider the regression equation y = a + bX. The portion of the equation that represents the variable rate is __________.

The performance measure that considers routine interruptions is known as ____________________ capacity.

In a(n) ____________________ cost system, factory overhead is assigned directly to products and services.

At its present level of operations, a small manufacturing firm has total variable costs equal to 75 percent of sales and total fixed costs equal to 15 percent of sales. Based on variable costing, if sales change by $1.00, income will change by

Weaknesses of the high-low method include all of the following except

Sales less variable cost of goods sold is referred to as ________________________________________.

Austin Company The following information is available for Austin Company for its first year of operations: Refer to Austin Company. What was the total amount of Selling,General and Administrative expense incurred by Austin Company?

Austin Company The following information is available for Austin Company for its first year of operations: Refer to Austin Company. If Austin Company were using variable costing, what would it show as the value of ending inventory?

If production exceeds sales, absorption costing net income is less than variable costing net income.

In the application of "variable costing" as a cost-allocation process in manufacturing,

A ______________________________ is a planning document that presents expected variable and fixed overhead costs at different activity levels.

If underapplied overhead is considered to beimmaterial, it is closed to which of the following accounts?

How do differences in sales and production level affect net income computed under absorption costing and variable costing?

Bush Corporation The following information has been extracted from the financial records of Bush Corporation for its first year of operations: Refer to Bush Corporation. Based on absorption costing, the Cost of Goods Manufactured for Bush Corporation's first year would be

Sheets Corporation The following information was extracted from the first year absorption-based accounting records of Sheets Corporation Refer to Sheets Corporation. Based on variable costing, if Sheets had sold 12,001 units instead of 12,000, its income before income taxes would have been

Phantom profits result when absorption costing is used and sales exceed production.

Why is variable costing not used extensively in external reporting?

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, Support Department Allocations, and Transfer Pricing

Performance Measurement, Balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters