Question 1

All of the following are expensed under variable costing except:

Accepted Answer

A)  variable manufacturing overhead. 
B)  fixed manufacturing overhead. 
C)  variable selling and administrative costs. 
D)  fixed selling and administrative costs. 
E)  variable selling and administrative costs and fixed selling and administrative costs. 
A)  variable manufacturing overhead. 
B)  fixed manufacturing overhead. 
C)  variable selling and administrative costs. 
D)  fixed selling and administrative costs. 
E)  variable selling and administrative costs and fixed selling and administrative costs.

Question 2

Which of the following statements about environmental costs is false?

Accepted Answer

A)  Remediation costs include offsite, but not onsite, remediation costs. 
B)  Abatement costs include costs to reduce or eliminate pollution. 
C)  Monitoring costs include the costs of monitoring the regulatory environment as well as monitoring the production process to determine if pollution is being generated. 
D)  Private environmental costs are those borne by a company or individual. 
E)  Social environmental costs are those borne by the public at large. 
A)  Remediation costs include offsite, but not onsite, remediation costs. 
B)  Abatement costs include costs to reduce or eliminate pollution. 
C)  Monitoring costs include the costs of monitoring the regulatory environment as well as monitoring the production process to determine if pollution is being generated. 
D)  Private environmental costs are those borne by a company or individual. 
E)  Social environmental costs are those borne by the public at large.

Question 3

An analytical method that aims at achieving near-perfect results in a production process is known as the zero-defect perspective.

Accepted Answer

A) True 
 B)False

Question 4

For external-reporting purposes, generally accepted accounting principles require that net income be based on:

Accepted Answer

A)  absorption costing. 
B)  variable costing. 
C)  direct costing. 
D)  semivariable costing. 
E)  activity-based costing. 
A)  absorption costing. 
B)  variable costing. 
C)  direct costing. 
D)  semivariable costing. 
E)  activity-based costing.

Question 5

The underlying difference between absorption costing and variable costing lies in the treatment of:

Accepted Answer

A)  direct labor. 
B)  variable manufacturing overhead. 
C)  fixed manufacturing overhead. 
D)  variable selling and administrative expenses. 
E)  fixed selling and administrative expenses. 
A)  direct labor. 
B)  variable manufacturing overhead. 
C)  fixed manufacturing overhead. 
D)  variable selling and administrative expenses. 
E)  fixed selling and administrative expenses.

Question 6

Which of the following formulas can often reconcile the difference between absorption- and variable-costing income?

Accepted Answer

A)  Change in inventory units * predetermined variable-overhead rate per unit. 
B)  Change in inventory units / predetermined variable-overhead rate per unit. 
C)  Change in inventory units* predetermined fixed-overhead rate per unit. 
D)  Change in inventory units / predetermined fixed-overhead rate per unit. 
E)  (Absorption-costing income - variable-costing income) * fixed-overhead rate per unit. 
A)  Change in inventory units * predetermined variable-overhead rate per unit. 
B)  Change in inventory units / predetermined variable-overhead rate per unit. 
C)  Change in inventory units* predetermined fixed-overhead rate per unit. 
D)  Change in inventory units / predetermined fixed-overhead rate per unit. 
E)  (Absorption-costing income - variable-costing income) * fixed-overhead rate per unit.

Question 7

All of the following costs are inventoried under absorption costing except:

Accepted Answer

A)  direct materials. 
B)  direct labor. 
C)  variable manufacturing overhead. 
D)  fixed manufacturing overhead. 
E)  fixed administrative salaries. 
A)  direct materials. 
B)  direct labor. 
C)  variable manufacturing overhead. 
D)  fixed manufacturing overhead. 
E)  fixed administrative salaries.

Question 8

The optimum level of product quality is where:

Accepted Answer

A)  external failure costs are at a minimum. 
B)  total quality costs are at a minimum. 
C)  prevention costs are at a minimum. 
D)  internal failure costs are at a minimum. 
E)  all of the answers are correct. 
A)  external failure costs are at a minimum. 
B)  total quality costs are at a minimum. 
C)  prevention costs are at a minimum. 
D)  internal failure costs are at a minimum. 
E)  all of the answers are correct.

Question 9

Information taken from Horner Corporation's May accounting records follows.
   
Required: 
A. Assuming the use of variable costing, compute the inventoriable costs for the month.
B. Compute the month's inventoriable costs by using absorption costing.
C. Assume that anticipated and actual production totaled 20,000 units, and that 18,000 units were sold during May. Determine the amount of fixed manufacturing overhead and fixed selling and administrative costs that would be expensed for the month under (1) variable costing and (2) absorption costing.
D. Assume the same data as in requirement "C." Compute the contribution margin that would be reported on a variable-costing income statement.

Accepted Answer

The answer of Information taken from Horner Corporation's May accounting...

Question 10

Craig Company has per-unit fixed and variable manufacturing costs of $40 and $15, respectively. Variable selling and administrative costs are $9 per unit. Consider the two independent cases that follow for the firm.
Case A: Variable-costing income, $110,000; sales, 6,000 units; production, 6,000 units
Case B: Variable-costing income, $178,000; sales, 7,500 units; production, 7,100 units
Required: 
A. From a product-costing perspective, what is the basic difference between absorption costing and variable costing?
 
B. Compute Craig's absorption-costing income in Case
C. Compute Craig's absorption-costing income in Case

Accepted Answer

A. The difference between absorption cos

Question 11

Montana Industries has computed the following unit costs for the year just ended:
 
Which of the following choices correctly depict amounts included in the per-unit cost of inventory under variable costing and absorption costing?

Accepted Answer

A)  Variable, $85; absorption, $105. 
B)  Variable, $85; absorption, $116. 
C)  Variable, $103; absorption, $105. 
D)  Variable, $103; absorption, $116. 
E)  None of the answers is correct. 
A)  Variable, $85; absorption, $105. 
B)  Variable, $85; absorption, $116. 
C)  Variable, $103; absorption, $105. 
D)  Variable, $103; absorption, $116. 
E)  None of the answers is correct.

Question 12

Use the following information to answer the following Questions
Fort Smith Technologies incurred the following costs during the past year when planned production and actual production each totaled 20,000 units:

-If Fort Smith uses absorption costing, the total inventoriable costs for the year would be:

Accepted Answer

A)  $400,000. 
B)  $460,000. 
C)  $560,000. 
D)  $620,000. 
E)  $660,000. 
A)  $400,000. 
B)  $460,000. 
C)  $560,000. 
D)  $620,000. 
E)  $660,000.

Question 13

Chu Enterprise's inventory increased during the year. On the basis of this information, income reported under absorption costing:

Accepted Answer

A)  will be the same as that reported under variable costing. 
B)  will be higher than that reported under variable costing. 
C)  will be lower than that reported under variable costing. 
D)  will differ from that reported under variable costing, the direction of which cannot be determined from the information given. 
E)  will be less than that reported in the previous period. 
A)  will be the same as that reported under variable costing. 
B)  will be higher than that reported under variable costing. 
C)  will be lower than that reported under variable costing. 
D)  will differ from that reported under variable costing, the direction of which cannot be determined from the information given. 
E)  will be less than that reported in the previous period.

Question 14

The difference in income between absorption and variable costing can be explained by the change in finished-goods inventory (in units) multiplied by the standard fixed manufacturing overhead rate.
Required: 
Explain why this calculation accounts for the difference noted.

Accepted Answer

The only difference between the two meth

Question 15

What is the difference between a product's quality of design and its quality of conformance?

Accepted Answer

A product's quality of design is how wel

Question 16

The following data relate to Lebeaux Corporation for the year just ended:

Which of the following statements is correct?

Accepted Answer

A)  Lebeaux's variable-costing income statement would show a gross margin of $270,000. 
B)  Lebeaux's variable costing income statement would show a contribution margin of $330,000. 
C)  Lebeaux's absorption-costing income statement would show a contribution margin of $330,000. 
D)  Lebeaux's absorption costing income statement would show a gross margin of $330,000. 
E)  Lebeaux's absorption-costing income statement would show a gross margin of $145,000. 
A)  Lebeaux's variable-costing income statement would show a gross margin of $270,000. 
B)  Lebeaux's variable costing income statement would show a contribution margin of $330,000. 
C)  Lebeaux's absorption-costing income statement would show a contribution margin of $330,000. 
D)  Lebeaux's absorption costing income statement would show a gross margin of $330,000. 
E)  Lebeaux's absorption-costing income statement would show a gross margin of $145,000.

Question 17

Consider the following statements about absorption costing and variable costing:
I. Variable costing is consistent with contribution reporting and cost-volume-profit analysis.
II. Variable costing must be used for external financial reporting.
III. A number of companies use both absorption costing and variable costing.
Which of the above statements is (are) true?

Accepted Answer

A)  I only. 
B)  II only. 
C)  III only. 
D)  I and II. 
E)  I and III. 
A)  I only. 
B)  II only. 
C)  III only. 
D)  I and II. 
E)  I and III.

Question 18

Fixed manufacturing overhead is not inventoried under absorption costing.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following situations would cause variable-costing income to be higher than absorption-costing income?

Accepted Answer

A)  Units sold equaled 39,000 and units produced equaled 42,000. 
B)  Units sold and units produced were both 42,000. 
C)  Units sold equaled 55,000 and units produced equaled 49,000. 
D)  Sales prices decreased by $7 per unit during the accounting period. 
E)  Selling expenses increased by 10% during the accounting period. 
A)  Units sold equaled 39,000 and units produced equaled 42,000. 
B)  Units sold and units produced were both 42,000. 
C)  Units sold equaled 55,000 and units produced equaled 49,000. 
D)  Sales prices decreased by $7 per unit during the accounting period. 
E)  Selling expenses increased by 10% during the accounting period.

Question 20

All of the following are inventoried under absorption costing except:

Accepted Answer

A)  direct labor. 
B)  raw materials used in production. 
C)  utilities cost consumed in manufacturing. 
D)  sales commissions. 
E)  machine lubricant used in production. 
A)  direct labor. 
B)  raw materials used in production. 
C)  utilities cost consumed in manufacturing. 
D)  sales commissions. 
E)  machine lubricant used in production.

All of the following are expensed under variable costing except:

Which of the following statements about environmental costs is false?

An analytical method that aims at achieving near-perfect results in a production process is known as the zero-defect perspective.

For external-reporting purposes, generally accepted accounting principles require that net income be based on:

The underlying difference between absorption costing and variable costing lies in the treatment of:

Which of the following formulas can often reconcile the difference between absorption- and variable-costing income?

All of the following costs are inventoried under absorption costing except:

The optimum level of product quality is where:

Montana Industries has computed the following unit costs for the year just ended: Which of the following choices correctly depict amounts included in the per-unit cost of inventory under variable costing and absorption costing?

Chu Enterprise's inventory increased during the year. On the basis of this information, income reported under absorption costing:

The difference in income between absorption and variable costing can be explained by the change in finished-goods inventory (in units) multiplied by the standard fixed manufacturing overhead rate. Required: Explain why this calculation accounts for the difference noted.

What is the difference between a product's quality of design and its quality of conformance?

The following data relate to Lebeaux Corporation for the year just ended: Which of the following statements is correct?

Fixed manufacturing overhead is not inventoried under absorption costing.

Which of the following situations would cause variable-costing income to be higher than absorption-costing income?

All of the following are inventoried under absorption costing except:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 8: Variable Costing and the Costs of Quality and Sustainability

All of the following are expensed under variable costing except:

Which of the following statements about environmental costs is false?

An analytical method that aims at achieving near-perfect results in a production process is known as the zero-defect perspective.

For external-reporting purposes, generally accepted accounting principles require that net income be based on:

The underlying difference between absorption costing and variable costing lies in the treatment of:

Which of the following formulas can often reconcile the difference between absorption- and variable-costing income?

All of the following costs are inventoried under absorption costing except:

The optimum level of product quality is where:

Montana Industries has computed the following unit costs for the year just ended: Which of the following choices correctly depict amounts included in the per-unit cost of inventory under variable costing and absorption costing?

Chu Enterprise's inventory increased during the year. On the basis of this information, income reported under absorption costing:

The difference in income between absorption and variable costing can be explained by the change in finished-goods inventory (in units) multiplied by the standard fixed manufacturing overhead rate. Required: Explain why this calculation accounts for the difference noted.

What is the difference between a product's quality of design and its quality of conformance?

The following data relate to Lebeaux Corporation for the year just ended: Which of the following statements is correct?

Fixed manufacturing overhead is not inventoried under absorption costing.

Which of the following situations would cause variable-costing income to be higher than absorption-costing income?

All of the following are inventoried under absorption costing except:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters