Question 1

In variable costing, when does fixed manufacturing overhead become an expense?

Accepted Answer

A) Never 
B) In the period when the product is sold 
C) In the period when the expense is incurred 
D) At the time when units are produced 
A) Never 
B) In the period when the product is sold 
C) In the period when the expense is incurred 
D) At the time when units are produced

Question 2

The total amount reported on an income statement for selling and administrative expenseis the same amount regardless if variable of full costing is used..

Accepted Answer

A) True 
 B)False

Question 3

Beiber Boxers contribution income statement utilizing variable costing for 2017 variable costing appears below: $\begin{array}{lll}\text { Sales ( } \$ 12 \text { per unit) }&&\$78,000\
\text { Less variable costs: }\
\text { Cost of goods sold } & \$ 26,000 \
\text { Selling \& administrative } & 9,750 & 35,750\
\text { Contribution margin }&&42,250\\text { Less fixed costs: }\
\text { Manufacturing overhead } & 12,600 \
\text { Selling } \& \text { administrative costs } & 14,950 & 27,550\\text { Net income }&&\$14,700
\end{array}$ The company produced 7,000 units during the year.Variable and fixed production costs have remained constant the entire year.There were no beginning inventories.How much is the dollar value of the ending inventory using full costing?

Accepted Answer

A) $2,000 
B) $2,900 
C) $3,850 
D) None of these answer choices are correct. 
A) $2,000 
B) $2,900 
C) $3,850 
D) None of these answer choices are correct.

Question 4

Leesburg Bags produces backpacks.The costs and prices for the backpacks follow (Assume the same unit costs in all years): $$\begin{array} { l r } 
\text { Selling price } & \$ 23.00 \text { per backpack } \
\text { Variable costs: } & \
\text { Production } & \$ 11.00 \text { per backpack } \
\text { Selling } & \$ 2.00 \text { per backpack } \
\text { Fixed Costs: } & \
\text { Production } & \$ 900,000 \text { per year } \
\text { Selling and administrative } & \$ 540,000 \text { per year }
\end{array}$$ Leesburg Bags produced 250,000 backpacks for the year and sold 200,000.There was no beginning inventory, and costs throughout the year were stable.What would be the difference in income between variable costing income and full costing income if the company had produced 215,000 backpacks instead of 250,000?

Accepted Answer

A) $62,791 
B) $54,000 
C) $46,400 
D) $77,400 
A) $62,791 
B) $54,000 
C) $46,400 
D) $77,400

Question 5

Which of the following is accounted for as a product cost in variable costing?

Accepted Answer

A) Product delivery costs to customers 
B) Variable manufacturing overhead 
C) Fixed manufacturing overhead 
D) Product advertising costs 
A) Product delivery costs to customers 
B) Variable manufacturing overhead 
C) Fixed manufacturing overhead 
D) Product advertising costs

Question 6

Variable costing income is a function of

Accepted Answer

A) only units sold. 
B) only units produced. 
C) both units sold and units produced. 
D) neither units sold nor units produced. 
A) only units sold. 
B) only units produced. 
C) both units sold and units produced. 
D) neither units sold nor units produced.

Question 7

Affinity makes a single product, pool pumps.Information for 2017 appears below (Assume the same unit costs in all years): $$\begin{array} { l r } 
\text { Sales in units } & 5,800 \
\text { Production in units } & 6,200 \
\text { Beginning inventory } & 1,500 \
\text { Variable production cost per unit } & \$ 46.00 \
\text { Variable selling cost per unit } & \$ 6.00 \
\text { Fixed production cost per year } & \$ 31,000 \
\text { Fixed selling and administrative cost per year } & \$ 24,000 \
\text { Selling price per unit } & \$ 75.00
\end{array}$$ How much is net income for the year under variable costing?

Accepted Answer

A) $78,400 
B) $87,600 
C) $80,400 
D) None of these answer choices are correct. 
A) $78,400 
B) $87,600 
C) $80,400 
D) None of these answer choices are correct.

Question 8

If a company's levels of total fixed costs and unit variable costs remain unchanged from one year to the next, under which costing method is it possible for managers to manipulate net income through production?

Accepted Answer

A) Variable costing 
B) Full costing 
C) Both variable and full costing 
D) Neither variable nor full costing 
A) Variable costing 
B) Full costing 
C) Both variable and full costing 
D) Neither variable nor full costing

Question 9

Full costing is

Accepted Answer

A) more useful for decision making than variable costing because it treats all costs of production as an inventory cost. 
B) required for financial reporting under generally accepted accounting principles. 
C) less likely to enable managers to manipulate income by increasing production. 
D) based on cost behavior. 
A) more useful for decision making than variable costing because it treats all costs of production as an inventory cost. 
B) required for financial reporting under generally accepted accounting principles. 
C) less likely to enable managers to manipulate income by increasing production. 
D) based on cost behavior.

Question 10

Which of the following items on a variable costing income statement will change in direct proportion to a change in sales?

Accepted Answer

A) Sales, contribution margin, and net income 
B) Sales, variable costs, and contribution margin 
C) Sales, variable costs, contribution margin, fixed costs, and net income 
D) Sales, variable costs, and fixed costs 
A) Sales, contribution margin, and net income 
B) Sales, variable costs, and contribution margin 
C) Sales, variable costs, contribution margin, fixed costs, and net income 
D) Sales, variable costs, and fixed costs

Question 11

Sol Enterprises' contribution income statement utilizing variable costing appears below: Sol Enterprises
Income Statement
For the Year ended December 31, 2017
$\begin{array}{lr}\text { Sales ( } \$ 12 \text { per unit) }&&\$240,000\
\text { Less variable costs: }\
\text { Cost of goods sold } & \$ 100,000 \
\text { Selling \& administrative costs } & 18,000&118,000\\text { Contribution margin }&&122,000\\text { Less fixed costs: }\\text { Manufacturing overhead } & 60,900 \
\text { Selling \& administrative costs } & 15,000 & 75,900 \\text { Net income }&&\$48,100
\end{array}  $ Sol produced 21,000 units during the year.Variable costs per unit and fixed production costs have remained constant the entire year.There were no beginning inventories.How much is the dollar value of the ending inventory using variable costing?

Accepted Answer

A) $5,000 
B) $7,900 
C) $8,800 
D) $2,900 
A) $5,000 
B) $7,900 
C) $8,800 
D) $2,900

Question 12

The inventoriable cost per unit can be reduced, under variable costing, by decreasing the number of units produced.

Accepted Answer

A) True 
 B)False

Question 13

Acosta Supplies experienced the following costs in 2017: $\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \text { per unit } \
\text { Direct labor } & \$ 4.50 \text { per unit } \
\text { Variable manufacturing overhead } & \$ 2.00 \text { per unit } \
\text { Variable selling } & \$ 1.00 \text { per unit } \
\text { Fixed manufacturing overhead } & \$ 70,000 \
\text { Fixed selling and administrative } & \$ 80,000
\end{array}$ During 2017, the company manufactured 4,000 units and sold 4,200 units.Assume the same unit costs in all years.Beginning inventory consists of 800 units.How much are total variable costs on the company's 2017 contribution margin income statement?

Accepted Answer

A) $37,800 
B) $36,000 
C) $33,600 
D) $32,000 
A) $37,800 
B) $36,000 
C) $33,600 
D) $32,000

Question 14

Which of the following is treated as a product cost in full costing?

Accepted Answer

A) Sales commissions 
B) Product advertising 
C) Depreciation on factory machines 
D) Security at corporate headquarters 
A) Sales commissions 
B) Product advertising 
C) Depreciation on factory machines 
D) Security at corporate headquarters

Question 15

The Crab Shack experienced the following costs in 2017 (Assume the same unit costs in all years): $\begin{array}{lr}\text { Direct materials }&\$ 2.25 \text { per unit }\\text { Direct labor }&\$ 1.50 \text { per unit }\
\text { Manufacturing overhead costs }\
\text { Variable } & \$ 1.10 \text { per unit } \
\text { Fixed } & \$ 60,000\
\text { Selling } \& \text { administrative costs }\
\text { Variable selling } & \$ 0.80 \text { per unit } \
\text { Fixed selling } & \$ 9,000 \
\text { Fixed administrative } & \$ 13,000
\end{array}$ There were 1,800 units in beginning inventory.During the year, the company manufactured 24,000 units and sold 25,000 units.If net income using variable costing was $76,250, how much is net income using full costing?

Accepted Answer

A) $5,880 
B) $79,250 
C) $73,750 
D) $74,350 
A) $5,880 
B) $79,250 
C) $73,750 
D) $74,350

Question 16

Last month, Brand Products manufactured 25,000 calculators and sold 23,000 of these calculators at a price of $10.00 each.Manufacturing costs consisted of direct labor, $30,000; direct materials, $32,000; variable manufacturing overhead, $3,500; fixed manufacturing overhead, $21,500.Selling and administrative costs are all fixed and totaled $24,000.Beginning inventory consists of no units.Brand Products uses full costing.How much will the company's gross margin increase if sales increase 10%?

Accepted Answer

A) Less than 10% 
B) More than 10% 
C) 10% 
D) It depends on other factors not given. 
A) Less than 10% 
B) More than 10% 
C) 10% 
D) It depends on other factors not given.

Question 17

Brislin Gifts makes ceramic mugs and has the following amounts during 2017 (Assume the same unit costs in all years): $\begin{array}{lr}
\text { Selling price } & \$ 9.00 \text { per mug } \
\text { Variable production cost } & \$ 2.50 \text { per mug } \
\text { Variable selling cost } & \$ 1.10 \text { per mug } \
\text { Fixed production cost } & \$ 100,000 \text { per month }\
\text { Fixed selling and administrative cost }& \$ 60,000 \text { per month }\
\end{array}$
$\text { Production and sales in units for the first three months of } 2017 \text { are as follows: }$

$\begin{array}{lll}\text { Year}&\text {  Production}&\text { Sales }\
\text { January } & 50,000 & 44,000 \
\text { February } & 40,000 & 45,000 \
\text { March } & 44,000 & 46,000
\end{array}$ Inventory at January 1, 2017 consisted of 1,000 mugs.How many units will remain in inventory at the end of February?

Accepted Answer

A) 2,000 
B) 0 
C) 7,000 
D) 6,000 
A) 2,000 
B) 0 
C) 7,000 
D) 6,000

Question 18

Aerotrino produces and sells popular t-shirts.Following is information about its t-shirts for 2017: $\begin{array}{lr}
\text { Selling price } & \$ 15.00 \text { per t-shirt } \
\text { Variable costs: } & \
 \text { Production (manufacturing costs) } & \$ 3.00 \text { per t-shirt }\\text { Selling } \& \text { administration } & \$ 1.00 \text { per t-shirt } \
\text { Fixed costs: } & \
\text { Production (manufacturing costs) } & \$ 1,000,000 \text { per year } \
\text { Selling \& administration } & \$ 2,000,000 \text { per vear }
\end{array}$ During 2017, the company produced 400,000 t-shirts and sold 350,000 of them.Assume that there was no beginning inventory.How much is the net income under variable costing?

Accepted Answer

A) $975,000 
B) $1,400,000 
C) $850,000 
D) $2,250,000 
A) $975,000 
B) $1,400,000 
C) $850,000 
D) $2,250,000

Question 19

Leesburg Bags produces backpacks.The costs and prices for the backpacks follow (Assume the same unit costs in all years): $$\begin{array} { l r } 
\text { Selling price } & \$ 23.00 \text { per backpack } \
\text { Variable costs: } & \
\text { Production } & \$ 11.00 \text { per backpack } \
\text { Selling } & \$ 2.00 \text { per backpack } \
\text { Fixed Costs: } & \
\text { Production } & \$ 900,000 \text { per year } \
\text { Selling and administrative } & \$ 540,000 \text { per year }
\end{array}$$ Leesburg Bags produced 250,000 backpacks for the year and sold 200,000.There was no beginning inventory, and costs throughout the year were stable.How much is the cost of ending inventory under variable costing?

Accepted Answer

A) $550,000 
B) $650,000 
C) $730,000 
D) $1,450,000 
A) $550,000 
B) $650,000 
C) $730,000 
D) $1,450,000

Question 20

Diecast Tools' manufacturing costs for 2017 are as follows: $$\begin{array} { l r } 
\text { Direct materials } & \$ 100,000 \
\text { Direct labor } & 120,000 \
\text { Depreciation of factory equipment } & 30,000 \
\text { Production supervisor's salary } & 72,000 \
\text { Other fixed manufacturing overhead } & 50,000
\end{array}$$ What amount should be considered product costs for external reporting purposes?

Accepted Answer

A) $220,000 
B) $293,000 
C) $402,000 
D) $372,000 
A) $220,000 
B) $293,000 
C) $402,000 
D) $372,000

In variable costing, when does fixed manufacturing overhead become an expense?

The total amount reported on an income statement for selling and administrative expenseis the same amount regardless if variable of full costing is used..

Which of the following is accounted for as a product cost in variable costing?

Variable costing income is a function of

If a company's levels of total fixed costs and unit variable costs remain unchanged from one year to the next, under which costing method is it possible for managers to manipulate net income through production?

Full costing is

Which of the following items on a variable costing income statement will change in direct proportion to a change in sales?

The inventoriable cost per unit can be reduced, under variable costing, by decreasing the number of units produced.

Which of the following is treated as a product cost in full costing?

Managerial Accounting in the Information Age

Job-Order Costing for Manufacturing and Service Companies

Process Costing

Cost-Volume-Profit Analysis

Cost Allocation and Activity-Based Costing

The Use of Cost Information in Management Decision Making

Pricing Decisions

Capital Budgeting Decisions

Budgetary Planning and Control

Standard Costs and Variance Analysis

Decentralization and Performance Evaluation

Statement of Cash Flows

Analyzing Financial Statements: a Managerial Perspective

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Exam 5: Variable Costing

In variable costing, when does fixed manufacturing overhead become an expense?

The total amount reported on an income statement for selling and administrative expenseis the same amount regardless if variable of full costing is used..

Which of the following is accounted for as a product cost in variable costing?

Variable costing income is a function of

If a company's levels of total fixed costs and unit variable costs remain unchanged from one year to the next, under which costing method is it possible for managers to manipulate net income through production?

Full costing is

Which of the following items on a variable costing income statement will change in direct proportion to a change in sales?

The inventoriable cost per unit can be reduced, under variable costing, by decreasing the number of units produced.

Which of the following is treated as a product cost in full costing?

Managerial Accounting in the Information Age

Job-Order Costing for Manufacturing and Service Companies

Process Costing

Cost-Volume-Profit Analysis

Cost Allocation and Activity-Based Costing

The Use of Cost Information in Management Decision Making

Pricing Decisions

Capital Budgeting Decisions

Budgetary Planning and Control

Standard Costs and Variance Analysis

Decentralization and Performance Evaluation

Statement of Cash Flows

Analyzing Financial Statements: a Managerial Perspective

Filters