Question 1

Direct labor cost is an example of a controllable cost for the supervisor of a manufacturing department.

Accepted Answer

A) True 
 B)False

Question 2

For a period during which the quantity of product manufactured exceeded the quantity sold, income from operations reported under absorption costing will be larger than income from operations reported under variable costing.

Accepted Answer

A) True 
 B)False

Question 3

A business operated at 100% of capacity during its first month and incurred the following costs:   If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what is the amount of the manufacturing margin that would be reported on the absorption costing income statement?

Accepted Answer

A)  $50,000 
B)  $54,000 
C)  not reported 
D)  $70,000 
A)  $50,000 
B)  $54,000 
C)  not reported 
D)  $70,000

Question 4

For a period during which the quantity of product manufactured was less than the quantity sold, income from operations reported under absorption costing will be larger than income from operations reported under variable costing.

Accepted Answer

A) True 
 B)False

Question 5

The following data are for Trendy Fashion Apparel:   Determine the contribution margin for a) Skirts and b) the South Region.

Accepted Answer

a)$108,000 [4,000 units × $18.

Question 6

Gyro Company manufactures Products T and W and is operating at full capacity. To manufacture Product W requires three times the number of machine hours required for Product T. Market research indicates that 1,000 additional units of Product W could be sold. The contribution margin by unit of product is as follows:   Calculate the increase or decrease in total contribution margin if 1,000 additional units of Product W are produced and sold.

Accepted Answer

​
​
Additional contribution margin from

Question 7

Management may use both absorption and variable costing methods for analyzing a particular product.

Accepted Answer

A) True 
 B)False

Question 8

Property tax expense is an example of a controllable cost for the supervisor of a manufacturing department.

Accepted Answer

A) True 
 B)False

Question 9

The Excelsior Company has three salespersons. Average sales price per unit sold, average variable manufacturing costs per unit, and number of units sold for each salesperson are shown below.
Commissions are earned according to the following schedule:   Prepare a contribution by salesperson report.

Accepted Answer

The answer of The Excelsior Company has three salespersons. Average...

Question 10

A business operated at 100% of capacity during its first month and incurred the following costs:   If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what would be the amount of income from operations reported on the absorption costing income statement?

Accepted Answer

A)  $50,400 
B)  $70,000 
C)  $52,000 
D)  $68,400 
A)  $50,400 
B)  $70,000 
C)  $52,000 
D)  $68,400

Question 11

In variable costing, the cost of products manufactured is composed of only those manufacturing costs that increase or decrease as the volume of production rises or falls.

Accepted Answer

A) True 
 B)False

Question 12

For a period during which the quantity of inventory at the end equals the inventory at the beginning, income from operations reported under variable costing will equal income from operations reported under absorption costing.

Accepted Answer

A) True 
 B)False

Question 13

Under variable costing, which of the following costs would be included in finished goods inventory?

Accepted Answer

A)  salary of salesperson 
B)  salary of vice-president of finance 
C)  wages of carpenters in a furniture factory 
D)  straight-line depreciation on factory equipment 
A)  salary of salesperson 
B)  salary of vice-president of finance 
C)  wages of carpenters in a furniture factory 
D)  straight-line depreciation on factory equipment

Question 14

The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available:   What would be the effect on income from operations if absorption costing is used rather than variable costing?

Accepted Answer

A)  $80,000 decrease 
B)  $80,000 increase 
C)  $104,000 increase 
D)  $104,000 decrease 
A)  $80,000 decrease 
B)  $80,000 increase 
C)  $104,000 increase 
D)  $104,000 decrease

Question 15

Under absorption costing, the cost of finished goods includes direct materials, direct labor, and all factory overhead.

Accepted Answer

A) True 
 B)False

Question 16

At XLT Inc., variable costs are $80 per unit, and fixed costs are $40,000. Sales are estimated to be 4,000 units. a) How much would absorption costing income from operations differ between a plan to produce 8,000 units and a plan to produce 10,000 units? b) How much would variable costing income from operations differ between the two production plans?

Accepted Answer

a)$8,000 greater. 8,000 units

Question 17

Contribution margin reporting and analysis is appropriate only for manufacturing firms, not for service firms.

Accepted Answer

A) True 
 B)False

Question 18

At EOM Inc., the beginning inventory is 20,000 units. All of the units manufactured during the period and 16,000 units of the beginning inventory were sold. The beginning inventory fixed costs are $50 per unit, and variable costs are $300 per unit. Determine a) whether variable costing income from operations is less than or greater than absorption costing income from operations, and b) the difference in variable costing and absorption income from operations.

Accepted Answer

a)Variable costing income from

Question 19

Based upon the following data taken from the records of Bruce Inc., prepare a contribution margin analysis report for the year ended December 31.

Accepted Answer

The answer of Based upon the following data taken from...

Question 20

Costs that can be influenced by management at a specific level of management are called:

Accepted Answer

A)  direct costs. 
B)  variable costs. 
C)  noncontrollable costs. 
D)  controllable costs. 
A)  direct costs. 
B)  variable costs. 
C)  noncontrollable costs. 
D)  controllable costs.

Exam 20: Variable Costing for Management Analysis

Direct labor cost is an example of a controllable cost for the supervisor of a manufacturing department.

For a period during which the quantity of product manufactured exceeded the quantity sold, income from operations reported under absorption costing will be larger than income from operations reported under variable costing.

For a period during which the quantity of product manufactured was less than the quantity sold, income from operations reported under absorption costing will be larger than income from operations reported under variable costing.

The following data are for Trendy Fashion Apparel: Determine the contribution margin for a) Skirts and b) the South Region.

Management may use both absorption and variable costing methods for analyzing a particular product.

Property tax expense is an example of a controllable cost for the supervisor of a manufacturing department.

The Excelsior Company has three salespersons. Average sales price per unit sold, average variable manufacturing costs per unit, and number of units sold for each salesperson are shown below. Commissions are earned according to the following schedule: Prepare a contribution by salesperson report.

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what would be the amount of income from operations reported on the absorption costing income statement?

In variable costing, the cost of products manufactured is composed of only those manufacturing costs that increase or decrease as the volume of production rises or falls.

For a period during which the quantity of inventory at the end equals the inventory at the beginning, income from operations reported under variable costing will equal income from operations reported under absorption costing.

Under variable costing, which of the following costs would be included in finished goods inventory?

The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available: What would be the effect on income from operations if absorption costing is used rather than variable costing?

Under absorption costing, the cost of finished goods includes direct materials, direct labor, and all factory overhead.

Contribution margin reporting and analysis is appropriate only for manufacturing firms, not for service firms.

Based upon the following data taken from the records of Bruce Inc., prepare a contribution margin analysis report for the year ended December 31.

Costs that can be influenced by management at a specific level of management are called:

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

Filters