Question 1

Which of the following statements about variable costing is true?

Accepted Answer

A) As manufacturing output increases, the per unit manufacturing cost remains constant. 
B) As manufacturing output increases, the per unit manufacturing cost decreases. 
C) As manufacturing output increases, the per unit manufacturing cost increases. 
D) As manufacturing output increases, the change in the per unit manufacturing cost is negated by the change in the per unit selling cost. 
A) As manufacturing output increases, the per unit manufacturing cost remains constant. 
B) As manufacturing output increases, the per unit manufacturing cost decreases. 
C) As manufacturing output increases, the per unit manufacturing cost increases. 
D) As manufacturing output increases, the change in the per unit manufacturing cost is negated by the change in the per unit selling cost.

Question 2

Use the following information for items 
The Colin Division of Mochrie Company sells its product for $30 per unit.Variable costs per unit are: manufacturing, $12; and selling and administrative, $2.Fixed costs are: $200,000 manufacturing overhead, and $50,000 selling and administrative.There was no beginning inventory.Expected sales for next year are 40,000 units.Ryan Stiles, the manager of the Colin Division, is under pressure to improve the performance of the Division.As he plans for next year, he has to decide whether to produce 40,000 units or 50,000 units.
-What would the net income be under variable costing for each alternative?

Accepted Answer

The answer of Use the following information for items 
The...

Question 3

Use the following information for items 
Obama Company sells its product for $25 per unit.During 2012, it produced 20,000 units and sold 15,000 units (there was no beginning inventory).Costs per unit are: direct materials $5, direct labour $4, and variable overhead $3.Fixed costs are: $300,000 manufacturing overhead, and $50,000 selling and administrative expenses.
-Under absorption costing, what amount of fixed overhead is deferred to a future period?

Accepted Answer

A) $ 70,000. 
B) $ 75,000. 
C) $ 225,000. 
D) $ 300,000. 
A) $ 70,000. 
B) $ 75,000. 
C) $ 225,000. 
D) $ 300,000.

Question 4

Full costing is equivalent to absorption costing.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following terms would be found on an Income Statement using variable costing?

Accepted Answer

A) Contribution margin 
B) Variable manufacturing overhead 
C) Fixed manufacturing overhead not included in cost of goods sold 
D) Gross profit 
A) Contribution margin 
B) Variable manufacturing overhead 
C) Fixed manufacturing overhead not included in cost of goods sold 
D) Gross profit

Question 6

Under absorption costing:

Accepted Answer

A) Only the quantity of products sold determines cost of goods sold. 
B) Only the quantity of products produced determines cost of goods sold. 
C) Both the quantity of products produced and sold determines cost of goods sold. 
D) Neither the quantity of products produced or sold determines cost of goods sold. 
A) Only the quantity of products sold determines cost of goods sold. 
B) Only the quantity of products produced determines cost of goods sold. 
C) Both the quantity of products produced and sold determines cost of goods sold. 
D) Neither the quantity of products produced or sold determines cost of goods sold.

Question 7

If a division manager's compensation is based upon the division's net income, the manager may decide to meet the net income targets by increasing production

Accepted Answer

A) when using variable costing, in order to increase net income. 
B) when using variable costing, in order to decrease net income. 
C) when using absorption costing, in order to increase net income. 
D) when using absorption costing, in order to decrease net income. 
A) when using variable costing, in order to increase net income. 
B) when using variable costing, in order to decrease net income. 
C) when using absorption costing, in order to increase net income. 
D) when using absorption costing, in order to decrease net income.

Question 8

Use the following information for items 
Green Company sells its product for $11,000 per unit.Variable costs per unit are: manufacturing, $6,000; and selling and administrative, $125.Fixed costs are: $30,000 manufacturing overhead, and $40,000 selling and administrative.There was no beginning inventory at 1/1/10.Production was 20 units per year in 2010 - 2012.Sales were 20 units in 2010, 16 units in 2011, and 24 units in 2012.
-Income under variable costing for 2011 is

Accepted Answer

A) $ 8,000. 
B) $14,000. 
C) $16,000. 
D) $22,000. 
A) $ 8,000. 
B) $14,000. 
C) $16,000. 
D) $22,000.

Question 9

Under throughput costing:

Accepted Answer

A) Only direct variable manufacturing costs are inventoriable. 
B) Only direct fixed manufacturing costs are inventoriable. 
C) Only direct material costs are inventoriable. 
D) Only direct labour costs are inventoriable. 
A) Only direct variable manufacturing costs are inventoriable. 
B) Only direct fixed manufacturing costs are inventoriable. 
C) Only direct material costs are inventoriable. 
D) Only direct labour costs are inventoriable.

Question 10

Under absorption costing when production equals sales in a year

Accepted Answer

A) Inventory values and cost of goods sold are higher than under variable costing. 
B) Inventory values and cost of goods sold are lower than under variable costing. 
C) Inventory values and cost of goods sold are the same as under variable costing. 
D) Inventory values are higher and cost of goods sold is lower than under variable costing. 
A) Inventory values and cost of goods sold are higher than under variable costing. 
B) Inventory values and cost of goods sold are lower than under variable costing. 
C) Inventory values and cost of goods sold are the same as under variable costing. 
D) Inventory values are higher and cost of goods sold is lower than under variable costing.

Question 11

Under absorption costing when production exceeds sales in a year:

Accepted Answer

A) Inventory values and cost of goods sold are higher than under variable costing. 
B) Inventory values and cost of goods sold are lower than under variable costing. 
C) Inventory values are lower and cost of goods sold are higher than under variable costing. 
D) Inventory values are higher and cost of goods sold are lower than under variable costing. 
A) Inventory values and cost of goods sold are higher than under variable costing. 
B) Inventory values and cost of goods sold are lower than under variable costing. 
C) Inventory values are lower and cost of goods sold are higher than under variable costing. 
D) Inventory values are higher and cost of goods sold are lower than under variable costing.

Question 12

In full or absorption costing, all manufacturing costs are charged to the product.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not a potential advantage of variable costing relative to absorption costing?

Accepted Answer

A) Net income calculated under variable costing is unaffected by changes in production levels. 
B) It is easier to understand the impact of fixed and variable costs on the computation of net income when variable costing is used. 
C) The use of variable costing is consistent with cost-volume-profit analysis. 
D) Net income calculated under variable costing is not closely tied to changes in sales levels. 
A) Net income calculated under variable costing is unaffected by changes in production levels. 
B) It is easier to understand the impact of fixed and variable costs on the computation of net income when variable costing is used. 
C) The use of variable costing is consistent with cost-volume-profit analysis. 
D) Net income calculated under variable costing is not closely tied to changes in sales levels.

Question 14

Use the following information for items 
Obama Company sells its product for $25 per unit.During 2012, it produced 20,000 units and sold 15,000 units (there was no beginning inventory).Costs per unit are: direct materials $5, direct labour $4, and variable overhead $3.Fixed costs are: $300,000 manufacturing overhead, and $50,000 selling and administrative expenses.
-The per unit manufacturing cost under absorption costing is

Accepted Answer

A) $12. 
B) $27. 
C) $29.50. 
D) $32. 
A) $12. 
B) $27. 
C) $29.50. 
D) $32.

Question 15

When units sold exceed units produced, income under absorption costing is higher than income under variable costing.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following terms would be found on an Income Statement using absorption costing?

Accepted Answer

A) Contribution margin 
B) Variable manufacturing overhead 
C) Fixed manufacturing overhead 
D) Gross profit 
A) Contribution margin 
B) Variable manufacturing overhead 
C) Fixed manufacturing overhead 
D) Gross profit

Question 17

Use the following information for items 
Green Company sells its product for $11,000 per unit.Variable costs per unit are: manufacturing, $6,000; and selling and administrative, $125.Fixed costs are: $30,000 manufacturing overhead, and $40,000 selling and administrative.There was no beginning inventory at 1/1/10.Production was 20 units per year in 2010 - 2012.Sales were 20 units in 2010, 16 units in 2011, and 24 units in 2012.
-Income under absorption costing for 2012 is

Accepted Answer

A) $33,000. 
B) $39,000. 
C) $41,000. 
D) $47,000. 
A) $33,000. 
B) $39,000. 
C) $41,000. 
D) $47,000.

Question 18

Manufacturing cost per unit will be higher under variable costing than under absorption costing.

Accepted Answer

A) True 
 B)False

Question 19

Variable costing is the approach used for external reporting under generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 20

The use of absorption costing facilitates cost-volume-profit analysis.

Accepted Answer

A) True 
 B)False

Which of the following statements about variable costing is true?

Full costing is equivalent to absorption costing.

Which of the following terms would be found on an Income Statement using variable costing?

Under absorption costing:

If a division manager's compensation is based upon the division's net income, the manager may decide to meet the net income targets by increasing production

Under throughput costing:

Under absorption costing when production equals sales in a year

Under absorption costing when production exceeds sales in a year:

In full or absorption costing, all manufacturing costs are charged to the product.

Which of the following is not a potential advantage of variable costing relative to absorption costing?

When units sold exceed units produced, income under absorption costing is higher than income under variable costing.

Which of the following terms would be found on an Income Statement using absorption costing?

Manufacturing cost per unit will be higher under variable costing than under absorption costing.

Variable costing is the approach used for external reporting under generally accepted accounting principles.

The use of absorption costing facilitates cost-volume-profit analysis.

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job Order Costing

Process Costing

Activity-Based-Costing

Cost-Volume-Profit

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

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Exam 8: Variable Costing: a Decision-Making Perspective

Which of the following statements about variable costing is true?

Full costing is equivalent to absorption costing.

Which of the following terms would be found on an Income Statement using variable costing?

Under absorption costing:

If a division manager's compensation is based upon the division's net income, the manager may decide to meet the net income targets by increasing production

Under throughput costing:

Under absorption costing when production equals sales in a year

Under absorption costing when production exceeds sales in a year:

In full or absorption costing, all manufacturing costs are charged to the product.

Which of the following is not a potential advantage of variable costing relative to absorption costing?

When units sold exceed units produced, income under absorption costing is higher than income under variable costing.

Which of the following terms would be found on an Income Statement using absorption costing?

Manufacturing cost per unit will be higher under variable costing than under absorption costing.

Variable costing is the approach used for external reporting under generally accepted accounting principles.

The use of absorption costing facilitates cost-volume-profit analysis.

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job Order Costing

Process Costing

Activity-Based-Costing

Cost-Volume-Profit

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters