Question 1

Advantages of throughput costing include all of the following EXCEPT

Accepted Answer

A) throughput costing reduces management's tendency to build inventory levels over which to spread fixed manufacturing costs of production. 
B) throughput costing motivates managers to reduce operating costs such as direct labour and variable overhead, which are treated as period costs rather than product costs. 
C) throughput costing is simpler than normal costing or absorption costing since all manufacturing overhead is expensed as a period cost immediately. 
D) throughput costing motivates managers to reduce operating costs such as direct materials and variable overhead, which are treated as period costs rather than product costs. 
A) throughput costing reduces management's tendency to build inventory levels over which to spread fixed manufacturing costs of production. 
B) throughput costing motivates managers to reduce operating costs such as direct labour and variable overhead, which are treated as period costs rather than product costs. 
C) throughput costing is simpler than normal costing or absorption costing since all manufacturing overhead is expensed as a period cost immediately. 
D) throughput costing motivates managers to reduce operating costs such as direct materials and variable overhead, which are treated as period costs rather than product costs.

Question 2

Choose the answer that is FALSE regarding throughput costing.

Accepted Answer

A) Throughput costing treats all costs as period costs except direct labour. 
B) Throughput costing treats all costs as period costs except direct materials. 
C) Throughput costing is also known as super-variable costing for its close relationship to variable costing. 
D) Assembly line and continuously automated companies are most likely to choose this method of costing than other companies. 
A) Throughput costing treats all costs as period costs except direct labour. 
B) Throughput costing treats all costs as period costs except direct materials. 
C) Throughput costing is also known as super-variable costing for its close relationship to variable costing. 
D) Assembly line and continuously automated companies are most likely to choose this method of costing than other companies.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A customer wants to purchase a large quantity of your product at a price below your normal selling price.Which of the following would be most helpful in assessing the offer?

Accepted Answer

A) cost-volume-profit 
B) either variable or absorption costing 
C) absorption costing 
D) variable costing 
A) cost-volume-profit 
B) either variable or absorption costing 
C) absorption costing 
D) variable costing

Question 5

How are fixed manufacturing costs handled under variable costing?

Accepted Answer

A) They are subtracted from the variable cost of goods sold to determine the ending inventory value that will be recorded on the Balance Sheet. 
B) They are not recorded, which is why variable costing is not used for external reporting. 
C) They are recorded directly on the Balance Sheet. 
D) They are treated as period costs. 
A) They are subtracted from the variable cost of goods sold to determine the ending inventory value that will be recorded on the Balance Sheet. 
B) They are not recorded, which is why variable costing is not used for external reporting. 
C) They are recorded directly on the Balance Sheet. 
D) They are treated as period costs.

Question 6

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 7

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? $\quad $$\quad $$\quad $$\underline{40,000 \text { units }} \quad \underline{50,000 \text { units }}$ 
a) $\quad $$\quad $$\quad $$\quad $$390.00$\quad $$\quad $$\quad $$390.00
b)$\quad $$\quad $$\quad $$\quad $$390.00$\quad $$\quad $$\quad $$430.00
c)$\quad $$\quad $$\quad $$\quad $$390.00$\quad $$\quad $$\quad $$440.00
d)$\quad $$\quad $$\quad $$\quad $$430.00$\quad $$\quad $$\quad $$390.00

Accepted Answer

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

Question 8

When absorption costing is used, management may be tempted to overproduce in a given period in order to increase net income.

Accepted Answer

A) True 
 B)False

Question 9

Under absorption costing

Accepted Answer

A) only direct variable manufacturing costs are inventoriable. 
B) only direct fixed manufacturing costs are inventoriable. 
C) all manufacturing costs are inventoriable. 
D) no manufacturing costs are inventoriable. 
A) only direct variable manufacturing costs are inventoriable. 
B) only direct fixed manufacturing costs are inventoriable. 
C) all manufacturing costs are inventoriable. 
D) no manufacturing costs are inventoriable.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Under variable 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 12

Full costing is equivalent to absorption costing.

Accepted Answer

A) True 
 B)False

Question 13

Net income under variable costing is closely tied to changes in sales levels.

Accepted Answer

A) True 
 B)False

Question 14

When units produced exceeds units sold

Accepted Answer

A) net income under absorption costing is higher than net income under variable costing. 
B) net income under absorption costing is lower than net income under variable costing. 
C) net income under absorption costing equals net income under variable costing. 
D) the relationship between net income under absorption costing and net income under variable costing cannot be predicted. 
A) net income under absorption costing is higher than net income under variable costing. 
B) net income under absorption costing is lower than net income under variable costing. 
C) net income under absorption costing equals net income under variable costing. 
D) the relationship between net income under absorption costing and net income under variable costing cannot be predicted.

Question 15

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 absorption costing for each alternative? $\quad $$\quad $$\quad $$\underline{40,000 \text { units }} \quad \underline{50,000 \text { units }}$ 
a) $\quad $$\quad $$\quad $$\quad $$390.00$\quad $$\quad $$\quad $$390.00
b)$\quad $$\quad $$\quad $$\quad $$390.00$\quad $$\quad $$\quad $$430.00
c)$\quad $$\quad $$\quad $$\quad $$390.00$\quad $$\quad $$\quad $$440.00
d)$\quad $$\quad $$\quad $$\quad $$430.00$\quad $$\quad $$\quad $$390.00

Accepted Answer

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

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

In income statements prepared under absorption costing and variable costing, where would you find the terms contribution margin and gross profit? $\quad $$\quad $$\quad $$\begin{array}{llcc}
 \underline{ \text { Contribution margin }} &\quad\quad\quad\quad\quad\quad\quad\quad  \underline{\text { Gross profit }} \
\end{array}$
a) $\text { In absorption costing income statement } \quad \text { In variable costing income statement }$
b)$\text { In absorption costing income statement } \quad \text { In both income statements }$
c)$\text { In variable costing income statement } \quad\quad \text { In absorption costing income statement }$
d)$\text {In both income statements }\quad\quad\quad\quad\quad \quad \text {In variable costing income statement}$

Accepted Answer

The answer of In income statements prepared under absorption costing...

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Net income under variable costing is unaffected by changes in production levels.

Accepted Answer

A) True 
 B)False

Question 20

When production is greater than sales

Accepted Answer

A) net income under absorption costing will be greater than or less than net income under variable costing depending on the selling and administration costs. 
B) net income under absorption costing will be equal to net income under variable costing. 
C) net income under absorption costing will be less than net income under variable costing. 
D) net income under absorption costing will be greater than net income under variable costing. 
A) net income under absorption costing will be greater than or less than net income under variable costing depending on the selling and administration costs. 
B) net income under absorption costing will be equal to net income under variable costing. 
C) net income under absorption costing will be less than net income under variable costing. 
D) net income under absorption costing will be greater than net income under variable costing.

Advantages of throughput costing include all of the following EXCEPT

Choose the answer that is FALSE regarding throughput costing.

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

A customer wants to purchase a large quantity of your product at a price below your normal selling price.Which of the following would be most helpful in assessing the offer?

How are fixed manufacturing costs handled under variable costing?

Under absorption costing, what amount of fixed overhead is deferred to a future period?

When absorption costing is used, management may be tempted to overproduce in a given period in order to increase net income.

Under absorption costing

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

Under variable costing

Full costing is equivalent to absorption costing.

Net income under variable costing is closely tied to changes in sales levels.

When units produced exceeds units sold

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.

Net income under variable costing is unaffected by changes in production levels.

When production is greater than sales

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job-Order Cost Accounting

Process Cost Accounting

Activity-Based Costing

Decision-Making: Costvolumeprofit

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: Alternative Inventory Costing Methods: a Decision-Making Perspective

Advantages of throughput costing include all of the following EXCEPT

Choose the answer that is FALSE regarding throughput costing.

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

A customer wants to purchase a large quantity of your product at a price below your normal selling price.Which of the following would be most helpful in assessing the offer?

How are fixed manufacturing costs handled under variable costing?

Under absorption costing, what amount of fixed overhead is deferred to a future period?

When absorption costing is used, management may be tempted to overproduce in a given period in order to increase net income.

Under absorption costing

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

Under variable costing

Full costing is equivalent to absorption costing.

Net income under variable costing is closely tied to changes in sales levels.

When units produced exceeds units sold

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.

Net income under variable costing is unaffected by changes in production levels.

When production is greater than sales

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job-Order Cost Accounting

Process Cost Accounting

Activity-Based Costing

Decision-Making: Costvolumeprofit

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters