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

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?

Which of the following statements pertain to variable costing?

On a variable-costing income state ment, fixed overhead is not treated as a period cost.

Fort Smith Technologies incurred the following costs during the past year when planned production and actual production each totaled 20,000 units: Fort Smith's per-unit inventoriable cost under variable costing is:

On a variable-costing income state ment, the cost of goods sold is measured at variable cost, which includes direct material, direct labor, and variable manufacturing overhead.

Which of the following descriptions would not be found on an income statement prepared using absorption costing?

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

Consider the following comments about absorption- and variable-costing income statements: I.A variable-costing income statement discloses a firm's gross margin. II.Cost of goods sold on an absorption-costing income statement includes fixed costs. III.The amount of variable selling and administrative cost is the same on absorption- and variable-costing income statements. Which of the above statements is (are) true?

Cagney Industries has the following cost information for the year just ended: During the year, Cagney produced 6,000 units, out of which 5,400 were sold for $20 each. What is net income under variable costing?

The quality of conformance refers to how well a product is conceived or designed for its intended use.

Fallows Manufacturing produces a single product.During 20X9, the company incurred the following costs: Fallows had no units in beginning inventory.During 20X9, 6,000 units were produced and 5,000 units were sold.Which of the following statements is true when comparing net income using absorption versus variable costing?

Favaz began business at the start of this year and had the following costs: variable manufacturing cost per unit, $9; fixed manufacturing costs, $60,000; variable selling and administrative costs per unit, $2; and fixed selling and administrative costs, $220,000.The company sells its units for $45 each.Additional data follow: There were no variances. The income (loss) under absorption costing is:

Mallory Industries has the following cost information for the year just ended: During the year, Mallory produced 10,000 units, out of which 9,100 were sold for $50 each. What is net income under absorption costing?

Hidden private environmental costs are those that are caused by environmental issues but have not been so identified by the accounting system.

Fixed manufacturing overhead is not inventoried under absorption costing.

Many managers prefer to use absorption-costing data in cost-based pricing decisions.

Romano Corporation has computed the following unit costs for the year just ended: Under variable costing, each unit of the company's inventory would be carried at:

Romano Corporation has computed the following unit costs for the year just ended: Under absorption costing, each unit of the company's inventory would be carried at:

Costs of determining whether defects exist are called:

Which of the following product-costing systems is/are required for tax purposes?