Question 1

If a firm uses variable costing, fixed manufacturing overhead will be included

Accepted Answer

A)  only on the balance sheet. 
B)  only on the income statement. 
C)  on both the balance sheet and income statement. 
D)  on neither the balance sheet nor income statement. 
A)  only on the balance sheet. 
B)  only on the income statement. 
C)  on both the balance sheet and income statement. 
D)  on neither the balance sheet nor income statement.

Question 2

Allen Corporation uses a predetermined overhead application rate of $.30 per direct labor hour. During the year it incurred $345,000 dollars of actual overhead, but it planned to incur $360,000 of overhead. The company applied $363,000 of overhead during the year. How many direct labor hours did the company plan to incur?

Accepted Answer

A)  1,150,000 
B)  1,190,000 
C)  1,200,000 
D)  1,210,000 
A)  1,150,000 
B)  1,190,000 
C)  1,200,000 
D)  1,210,000

Question 3

An item or event that has a cause-effect relationship with the incurrence of a variable cost is called a

Accepted Answer

A)  mixed cost. 
B)  predictor. 
C)  direct cost. 
D)  cost driver. 
A)  mixed cost. 
B)  predictor. 
C)  direct cost. 
D)  cost driver.

Question 4

The difference between the reported income under absorption and variable costing is attributable to the difference in the

Accepted Answer

A)  income statement formats. 
B)  treatment of fixed manufacturing overhead. 
C)  treatment of variable manufacturing overhead. 
D)  treatment of variable selling, general, and administrative expenses. 
A)  income statement formats. 
B)  treatment of fixed manufacturing overhead. 
C)  treatment of variable manufacturing overhead. 
D)  treatment of variable selling, general, and administrative expenses.

Question 5

If underapplied or overapplied factory overhead is material, it is prorated among ________________________________________, ________________________________________, and ___________________________________.

Accepted Answer

Work in Process Inve

Question 6

Alpha, Beta, and Gamma Companies Three new companies (Alpha, Beta, and Gamma) began operations on January 1 of the current year. Consider the following operating costs that were incurred by these companies during the complete calendar year:
  Refer to Alpha, Beta, and Gamma Companies. Based on sales of 7,000 units, which company will report the greater income before income taxes if variable costing is used?

Accepted Answer

A)  Alpha Company 
B)  Beta Company 
C)  Gamma Company 
D)  All of the companies will report the same income. 
A)  Alpha Company 
B)  Beta Company 
C)  Gamma Company 
D)  All of the companies will report the same income.

Question 7

If actual overhead exceeds applied overhead, factory overhead is said to be underapplied.

Accepted Answer

A) True 
 B)False

Question 8

A performance measure that encompasses a firm's long-run average activity is referred to as ____________________ capacity.

Accepted Answer

The answer of A performance measure that encompasses a firm's...

Question 9

What costs are treated as product costs under variable (direct) costing?

Accepted Answer

A)  only direct costs 
B)  only variable production costs 
C)  all variable costs 
D)  all variable and fixed manufacturing costs 
A)  only direct costs 
B)  only variable production costs 
C)  all variable costs 
D)  all variable and fixed manufacturing costs

Question 10

If a firm uses absorption costing, fixed manufacturing overhead will be included

Accepted Answer

A)  only on the balance sheet. 
B)  only on the income statement. 
C)  on both the balance sheet and income statement. 
D)  on neither the balance sheet nor income statement. 
A)  only on the balance sheet. 
B)  only on the income statement. 
C)  on both the balance sheet and income statement. 
D)  on neither the balance sheet nor income statement.

Question 11

Denver Corporation The records of Denver Corporation revealed the following data for the current year.
  Refer to Denver Corporation. Assume that Denver has underapplied overhead of $10,000 and that this amount is immaterial. What is the balance in Cost of Goods Sold after the underapplied overhead is closed?

Accepted Answer

A)  $133,650 
B)  $123,650 
C)  $143,650 
D)  $137,803 
A)  $133,650 
B)  $123,650 
C)  $143,650 
D)  $137,803

Question 12

If production exceeds sales, absorption costing net income exceeds variable costing net income.

Accepted Answer

A) True 
 B)False

Question 13

The costing system that classifies costs by both functional group and behavior is

Accepted Answer

A)  process costing. 
B)  job order costing. 
C)  variable costing. 
D)  absorption costing. 
A)  process costing. 
B)  job order costing. 
C)  variable costing. 
D)  absorption costing.

Question 14

Sales minus cost of goods sold is referred to as variable contribution margin.

Accepted Answer

A) True 
 B)False

Question 15

Under variable costing, which of the following are costs that can be inventoried?

Accepted Answer

A)  variable selling and administrative expense 
B)  variable manufacturing overhead 
C)  fixed manufacturing overhead 
D)  fixed selling and administrative expense 
A)  variable selling and administrative expense 
B)  variable manufacturing overhead 
C)  fixed manufacturing overhead 
D)  fixed selling and administrative expense

Question 16

Kellman Corporation Kellman Corporation produces a single product that sells for $7.00 per unit. Standard capacity is 100,000 units per year; 100,000 units were produced and 80,000 units were sold during the year. Manufacturing costs and selling and administrative expenses are presented below.
There were no variances from the standard variable costs. Any under- or overapplied overhead is written off directly at year-end as an adjustment to cost of goods sold.
  Kellman Corporation had no inventory at the beginning of the year.
Refer to Kellman Corporation. What is the net income under variable costing?

Accepted Answer

A)  $50,000 
B)  $80,000 
C)  $90,000 
D)  $120,000 
A)  $50,000 
B)  $80,000 
C)  $90,000 
D)  $120,000

Question 17

Since overhead costs are indirect costs,

Accepted Answer

A)  they require some process of allocation. 
B)  they can be easily traced to production. 
C)  a predetermined overhead rate is not advantageous. 
D)  they cannot be allocated. 
A)  they require some process of allocation. 
B)  they can be easily traced to production. 
C)  a predetermined overhead rate is not advantageous. 
D)  they cannot be allocated.

Question 18

A short-run measure of activity that represents a firm's anticipated activity level for an upcoming period based upon expected demand is referred to as:

Accepted Answer

A)  theoretical capacity 
B)  practical capacity 
C)  normal capacity 
D)  expected capacity 
A)  theoretical capacity 
B)  practical capacity 
C)  normal capacity 
D)  expected capacity

Question 19

If underapplied factory overhead is immaterial, the account is closed by a debit to Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 20

What are the primary reasons for using a predetermined overhead rate?

Accepted Answer

The answer of What are the primary reasons for using...

If a firm uses variable costing, fixed manufacturing overhead will be included

An item or event that has a cause-effect relationship with the incurrence of a variable cost is called a

The difference between the reported income under absorption and variable costing is attributable to the difference in the

If underapplied or overapplied factory overhead is material, it is prorated among ______, , and _.

If actual overhead exceeds applied overhead, factory overhead is said to be underapplied.

A performance measure that encompasses a firm's long-run average activity is referred to as ____________________ capacity.

What costs are treated as product costs under variable (direct) costing?

If a firm uses absorption costing, fixed manufacturing overhead will be included

If production exceeds sales, absorption costing net income exceeds variable costing net income.

The costing system that classifies costs by both functional group and behavior is

Sales minus cost of goods sold is referred to as variable contribution margin.

Under variable costing, which of the following are costs that can be inventoried?

Since overhead costs are indirect costs,

A short-run measure of activity that represents a firm's anticipated activity level for an upcoming period based upon expected demand is referred to as:

If underapplied factory overhead is immaterial, the account is closed by a debit to Cost of Goods Sold.

What are the primary reasons for using a predetermined overhead rate?

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

If a firm uses variable costing, fixed manufacturing overhead will be included

An item or event that has a cause-effect relationship with the incurrence of a variable cost is called a

The difference between the reported income under absorption and variable costing is attributable to the difference in the

If underapplied or overapplied factory overhead is material, it is prorated among ________________________________________, ________________________________________, and ___________________________________.

If actual overhead exceeds applied overhead, factory overhead is said to be underapplied.

A performance measure that encompasses a firm's long-run average activity is referred to as ____________________ capacity.

What costs are treated as product costs under variable (direct) costing?

If a firm uses absorption costing, fixed manufacturing overhead will be included

If production exceeds sales, absorption costing net income exceeds variable costing net income.

The costing system that classifies costs by both functional group and behavior is

Sales minus cost of goods sold is referred to as variable contribution margin.

Under variable costing, which of the following are costs that can be inventoried?

Since overhead costs are indirect costs,

A short-run measure of activity that represents a firm's anticipated activity level for an upcoming period based upon expected demand is referred to as:

If underapplied factory overhead is immaterial, the account is closed by a debit to Cost of Goods Sold.

What are the primary reasons for using a predetermined overhead rate?

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

If underapplied or overapplied factory overhead is material, it is prorated among ______, , and _.