Question 1

Which of the following statements is true for a firm that uses variable costing?

Accepted Answer

A)  The cost of a unit of product changes because of changes in the number of units manufactured. 
B)  Profits fluctuate with sales. 
C)  An idle facility variation is calculated. 
D)  None of the above. 
A)  The cost of a unit of product changes because of changes in the number of units manufactured. 
B)  Profits fluctuate with sales. 
C)  An idle facility variation is calculated. 
D)  None of the above.

Question 2

The following information regarding fixed production costs from a manufacturing firm is available for the current year:   Which of the following statements is not true?

Accepted Answer

A)  The maximum amount of fixed production costs that this firm could deduct using absorption costs in the current year is $116,000. 
B)  The maximum difference between this firm's the current year income based on absorption costing and its income based on variable costing is $16,000. 
C)  Using variable costing, this firm will deduct no more than $16,000 for fixed production costs. 
D)  If this firm produced substantially more units than it sold in the current year, variable costing will probably yield a lower income than absorption costing. 
A)  The maximum amount of fixed production costs that this firm could deduct using absorption costs in the current year is $116,000. 
B)  The maximum difference between this firm's the current year income based on absorption costing and its income based on variable costing is $16,000. 
C)  Using variable costing, this firm will deduct no more than $16,000 for fixed production costs. 
D)  If this firm produced substantially more units than it sold in the current year, variable costing will probably yield a lower income than absorption costing.

Question 3

On December 30, a fire destroyed most of the accounting records of the Alcorn Division, a small one-product manufacturing division that uses standard costs and flexible budgets. All variances are written off as additions to (or deductions from) income; none are pro-rated to inventories. You have the task of reconstructing the records for the year. The general manager informs you that the accountant has been experimenting with both absorption costing and variable costing.
The following information is available for the current year:
   Required:
Compute the following items (ignore income tax effects).

Accepted Answer

The answer of On December 30, a fire destroyed most...

Question 4

The estimated maximum potential activity for a specified time is known as theoretical capacity.

Accepted Answer

A) True 
 B)False

Question 5

If a company used two overhead accounts (actual overhead and applied overhead), the one that would receive the most debits would be

Accepted Answer

A)  actual overhead. 
B)  applied overhead. 
C)  both would receive an equal number of debits. 
D)  impossible to determine without additional information. 
A)  actual overhead. 
B)  applied overhead. 
C)  both would receive an equal number of debits. 
D)  impossible to determine without additional information.

Question 6

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 during the current year Oakwood Corporation manufactured 5,000 units and sold 3,800. There was no beginning or ending work-in-process inventory. How much larger or smaller would Oakwood Corporation's income be if it uses absorption rather than variable costing?

Accepted Answer

A)  The absorption costing income would be $6,000 larger. 
B)  The absorption costing income would be $6,000 smaller. 
C)  The absorption costing income would be $4,800 larger. 
D)  The absorption costing income would be $4,000 smaller. 
A)  The absorption costing income would be $6,000 larger. 
B)  The absorption costing income would be $6,000 smaller. 
C)  The absorption costing income would be $4,800 larger. 
D)  The absorption costing income would be $4,000 smaller.

Question 7

Absorption costing differs from variable costing in all of the following except

Accepted Answer

A)  treatment of fixed manufacturing overhead. 
B)  treatment of variable production costs. 
C)  acceptability for external reporting. 
D)  arrangement of the income statement. 
A)  treatment of fixed manufacturing overhead. 
B)  treatment of variable production costs. 
C)  acceptability for external reporting. 
D)  arrangement of the income statement.

Question 8

Jordan Corporation has developed the following flexible budget formula for monthly overhead:   How much overhead should Jordan expect if the firm plans to produce 200,000 units?

Accepted Answer

A)  $52,600 
B)  $59,000 
C)  $196,600 
D)  $203,000 
A)  $52,600 
B)  $59,000 
C)  $196,600 
D)  $203,000

Question 9

Which of the following costs will vary directly with the level of production?

Accepted Answer

A)  total manufacturing costs 
B)  total period costs 
C)  variable period costs 
D)  variable product costs 
A)  total manufacturing costs 
B)  total period costs 
C)  variable period costs 
D)  variable product costs

Question 10

Direct costing conforms with generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 11

In relationship to changes in activity, fixed overhead changes

Accepted Answer

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

Question 12

Letterman Corporation has the following data for the current year:
   What is the amount of under- or overapplied overhead? Prepare the necessary journal entry to dispose of under- or overapplied overhead.

Accepted Answer

The answer of Letterman Corporation has the following data for...

Question 13

Which of the following must be known about a production process in order to institute a variable costing system?

Accepted Answer

A)  the variable and fixed components of all costs related to production 
B)  the controllable and non-controllable components of all costs related to production 
C)  standard production rates and times for all elements of production 
D)  contribution margin and break-even point for all goods in production 
A)  the variable and fixed components of all costs related to production 
B)  the controllable and non-controllable components of all costs related to production 
C)  standard production rates and times for all elements of production 
D)  contribution margin and break-even point for all goods in production

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The regression equation y = a+ bX assumes that the function is linear in nature.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

An outlier is

Accepted Answer

A)  something that happens outside the organization that does not affect production. 
B)  always used in analyzing a mixed cost. 
C)  something that happens inside the organization that does not affect production. 
D)  typically not used in analyzing a mixed cost. 
A)  something that happens outside the organization that does not affect production. 
B)  always used in analyzing a mixed cost. 
C)  something that happens inside the organization that does not affect production. 
D)  typically not used in analyzing a mixed cost.

Question 18

If actual overhead is less than applied overhead, factory overhead is said to be ____________________.

Accepted Answer

The answer of If actual overhead is less than applied...

Question 19

Wilson Corporation Wilson Corporation has the following data for use of its machinery
  Refer to Wilson Corporation. Using the high-low method, compute the variable cost element.

Accepted Answer

A)  $1.02 
B)  $.98 
C)  $1.31 
D)  $1.19 
A)  $1.02 
B)  $.98 
C)  $1.31 
D)  $1.19

Question 20

In a normal cost system, factory overhead is assigned directly to products and services.

Accepted Answer

A) True 
 B)False

Which of the following statements is true for a firm that uses variable costing?

The following information regarding fixed production costs from a manufacturing firm is available for the current year: Which of the following statements is not true?

The estimated maximum potential activity for a specified time is known as theoretical capacity.

If a company used two overhead accounts (actual overhead and applied overhead), the one that would receive the most debits would be

Absorption costing differs from variable costing in all of the following except

Jordan Corporation has developed the following flexible budget formula for monthly overhead: How much overhead should Jordan expect if the firm plans to produce 200,000 units?

Which of the following costs will vary directly with the level of production?

Direct costing conforms with generally accepted accounting principles.

In relationship to changes in activity, fixed overhead changes

Letterman Corporation has the following data for the current year: What is the amount of under- or overapplied overhead? Prepare the necessary journal entry to dispose of under- or overapplied overhead.

Which of the following must be known about a production process in order to institute a variable costing system?

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

The regression equation y = a+ bX assumes that the function is linear in nature.

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

An outlier is

If actual overhead is less than applied overhead, factory overhead is said to be ____________________.

Wilson Corporation Wilson Corporation has the following data for use of its machinery Refer to Wilson Corporation. Using the high-low method, compute the variable cost element.

In a normal cost system, factory overhead is assigned directly to products and services.

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

Which of the following statements is true for a firm that uses variable costing?

The following information regarding fixed production costs from a manufacturing firm is available for the current year: Which of the following statements is not true?

The estimated maximum potential activity for a specified time is known as theoretical capacity.

If a company used two overhead accounts (actual overhead and applied overhead), the one that would receive the most debits would be

Absorption costing differs from variable costing in all of the following except

Jordan Corporation has developed the following flexible budget formula for monthly overhead: How much overhead should Jordan expect if the firm plans to produce 200,000 units?

Which of the following costs will vary directly with the level of production?

Direct costing conforms with generally accepted accounting principles.

In relationship to changes in activity, fixed overhead changes

Letterman Corporation has the following data for the current year: What is the amount of under- or overapplied overhead? Prepare the necessary journal entry to dispose of under- or overapplied overhead.

Which of the following must be known about a production process in order to institute a variable costing system?

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

The regression equation y = a+ bX assumes that the function is linear in nature.

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

An outlier is

If actual overhead is less than applied overhead, factory overhead is said to be ____________________.

Wilson Corporation Wilson Corporation has the following data for use of its machinery Refer to Wilson Corporation. Using the high-low method, compute the variable cost element.

In a normal cost system, factory overhead is assigned directly to products and services.

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