Question 1

The formula for ordering cost is the

Accepted Answer

A)  number of orders per year *cost of placing an order. 
B)  number of orders per year/cost of placing an order. 
C)  average number of units in inventory * cost of carrying one unit in inventory. 
D)  average number of units in inventory/cost of carrying one unit in inventory. 
E)  ordering cost + carrying cost. 
A)  number of orders per year *cost of placing an order. 
B)  number of orders per year/cost of placing an order. 
C)  average number of units in inventory * cost of carrying one unit in inventory. 
D)  average number of units in inventory/cost of carrying one unit in inventory. 
E)  ordering cost + carrying cost.

Question 2

During the most recent year, Boston Corp. had the following data:
   Required:
A. How many units are in ending inventory?
B. Using absorption costing, calculate the per-unit product cost. What is the value of ending inventory?
C. Using variable costing, calculate the per-unit product cost. What is the value of ending inventory?
D. Prepare an income statement using absorption costing.
E. Prepare an income statement using variable costing.

Accepted Answer

A. Beginning units +

Question 3

What is the difference between absorption-costing income and variable-costing income?

Accepted Answer

The difference between absorption-costin

Question 4

Figure 8-3.
Martin Company uses 625 units of a part each year. The cost of placing one order is $8; the cost of carrying one unit in inventory for a year is $4.
-Refer to Figure 8-3. Martin has decided to begin ordering 40 units at a time. What is the average annual ordering cost of Martin's new policy?

Accepted Answer

A)  $190 
B)  $150 
C)  $125 
D)  $100 
E)  $145 
A)  $190 
B)  $150 
C)  $125 
D)  $100 
E)  $145

Question 5

Figure 8-5.
Sanders Company has the following information for last year:
   There were no beginning inventories.
-Refer to Figure 8-5. What is the income for Sanders using the variable costing method?

Accepted Answer

A)  $420,000 
B)  $480,000 
C)  $520,000 
D)  $500,000 
A)  $420,000 
B)  $480,000 
C)  $520,000 
D)  $500,000

Question 6

List three problems inventory was meant to solve. How does the JIT producer handle these problems?

Accepted Answer

Inventory management was developed to so

Question 7

Figure 8-10.
Nauman Company has the following information pertaining to its two divisions for last year:
   Common expenses are $24,000 for the year.
-Refer to Figure 8-10. What is the segment margin for Division Y?

Accepted Answer

A)  $310,000 
B)  $210,000 
C)  $240,000 
D)  $40,000 
A)  $310,000 
B)  $210,000 
C)  $240,000 
D)  $40,000

Question 8

Which of the following is not a traditional reason for carrying inventory?

Accepted Answer

A)  to satisfy customer demand 
B)  to avoid shutting down manufacturing facilities 
C)  to buffer against unreliable production processes 
D)  to hedge against future price increases 
E)  all of these are traditional reasons for carrying inventory 
A)  to satisfy customer demand 
B)  to avoid shutting down manufacturing facilities 
C)  to buffer against unreliable production processes 
D)  to hedge against future price increases 
E)  all of these are traditional reasons for carrying inventory

Question 9

Carter Company orders 250 units at a time, and places 15 orders per year. Total ordering cost is $1,600 and total carrying cost is $1,250. Which of the following statements is true?

Accepted Answer

A)  The economic order quantity (EOQ) is 250. 
B)  The economic order quantity (EOQ) is more than 250. 
C)  The economic order quantity (EOQ) is less than 250. 
D)  Total inventory-related cost is lower than it would be at the economic order quantity (EOQ). 
E)  None of these. 
A)  The economic order quantity (EOQ) is 250. 
B)  The economic order quantity (EOQ) is more than 250. 
C)  The economic order quantity (EOQ) is less than 250. 
D)  Total inventory-related cost is lower than it would be at the economic order quantity (EOQ). 
E)  None of these.

Question 10

Total inventory-related cost consists of ordering cost and carrying cost.

Accepted Answer

A) True 
 B)False

Question 11

List three problems inventory was meant to solve. How does the JIT producer handle these problems?

Accepted Answer

Problems w

Question 12

For internal reporting ________________ is an important managerial tool because it provides vital cost information for decision making and control.

Accepted Answer

The answer of For internal reporting ________________ is an important...

Question 13

Mario Co. produces three products: LMC, DMC, KPC. For the coming year they expect to produce 160,000 units. Of these, 65,000 will be LMC, 40,000 will be DMC and 55,000 will be KPC. The following information was provided for the coming year:
   Common fixed overhead is $984,000 and fixed selling and administrative expenses for Mario Co. is $881,000 per year.
Required:
A. Calculate the unit variable cost under variable costing.
B. Calculate the unit variable product cost.
C. Prepare a segmented variable-costing income statement for next year.
D. Should Mario Co. keep all product lines?

Accepted Answer

A.
 @#IMG-DLM& B.
 @#IMG-DLM& C.
 @#IMG-DLM& D. The company

Question 14

Match each statement with the correct item below.
a.
the costs of not having a product available when demanded by a customer
b.
the costs of carrying inventory
c.
approach that maintains goods should be pulled through the system by present demand
d.
the number of units in the order quantity that minimizes the total cost
e.
the costs of placing and receiving an order
-Ordering costs

Accepted Answer

The answer of Match each statement with the correct item...

Question 15

You have just become the controller for Artisan Industries. Artisan produces three different products and upon review of their internal reports you notice that they have never prepared a segmented income statement. Explain to the vice president what a segmented income statement consists of and why it can be useful in decision making.

Accepted Answer

In a segmented income statement fixed ex

Question 16

If the number of units produced in a period is smaller than the number of units sold in period, absorption costing income will be higher than variable costing income.

Accepted Answer

A) True 
 B)False

Question 17

Match each statement with the correct item below.
a.
the costs of not having a product available when demanded by a customer
b.
the costs of carrying inventory
c.
approach that maintains goods should be pulled through the system by present demand
d.
the number of units in the order quantity that minimizes the total cost
e.
the costs of placing and receiving an order
-Economic order quantity

Accepted Answer

The answer of Match each statement with the correct item...

Question 18

Variable costing is

Accepted Answer

A)  a good way to value inventories for the balance sheet. 
B)  used for external reporting purposes. 
C)  not useful for companies with multiple segments. 
D)  a useful tool for management decision making. 
E)  can only be used by start-up companies. 
A)  a good way to value inventories for the balance sheet. 
B)  used for external reporting purposes. 
C)  not useful for companies with multiple segments. 
D)  a useful tool for management decision making. 
E)  can only be used by start-up companies.

Question 19

Inventory costs under variable costing include only direct materials, direct labor, and variable factory overhead.

Accepted Answer

A) True 
 B)False

Question 20

MATCHING
Match the type of income statement to the costs it includes.
a.
Variable costing income statement
b.
Absorption costing income statement
c.
Both types of income statements
-Fixed factory overhead for the period

Accepted Answer

The answer of MATCHING
Match the type of income statement to...

The formula for ordering cost is the

What is the difference between absorption-costing income and variable-costing income?

Figure 8-5. Sanders Company has the following information for last year: There were no beginning inventories. -Refer to Figure 8-5. What is the income for Sanders using the variable costing method?

List three problems inventory was meant to solve. How does the JIT producer handle these problems?

Figure 8-10. Nauman Company has the following information pertaining to its two divisions for last year: Common expenses are $24,000 for the year. -Refer to Figure 8-10. What is the segment margin for Division Y?

Which of the following is not a traditional reason for carrying inventory?

Carter Company orders 250 units at a time, and places 15 orders per year. Total ordering cost is $1,600 and total carrying cost is $1,250. Which of the following statements is true?

Total inventory-related cost consists of ordering cost and carrying cost.

List three problems inventory was meant to solve. How does the JIT producer handle these problems?

For internal reporting ________________ is an important managerial tool because it provides vital cost information for decision making and control.

If the number of units produced in a period is smaller than the number of units sold in period, absorption costing income will be higher than variable costing income.

Variable costing is

Inventory costs under variable costing include only direct materials, direct labor, and variable factory overhead.

MATCHING Match the type of income statement to the costs it includes. a. Variable costing income statement b. Absorption costing income statement c. Both types of income statements -Fixed factory overhead for the period

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

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Exam 8: Absorption and Variable Costing, and Inventory Management

The formula for ordering cost is the

What is the difference between absorption-costing income and variable-costing income?

Figure 8-5. Sanders Company has the following information for last year: There were no beginning inventories. -Refer to Figure 8-5. What is the income for Sanders using the variable costing method?

List three problems inventory was meant to solve. How does the JIT producer handle these problems?

Figure 8-10. Nauman Company has the following information pertaining to its two divisions for last year: Common expenses are $24,000 for the year. -Refer to Figure 8-10. What is the segment margin for Division Y?

Which of the following is not a traditional reason for carrying inventory?

Carter Company orders 250 units at a time, and places 15 orders per year. Total ordering cost is $1,600 and total carrying cost is $1,250. Which of the following statements is true?

Total inventory-related cost consists of ordering cost and carrying cost.

List three problems inventory was meant to solve. How does the JIT producer handle these problems?

For internal reporting ________________ is an important managerial tool because it provides vital cost information for decision making and control.

If the number of units produced in a period is smaller than the number of units sold in period, absorption costing income will be higher than variable costing income.

Variable costing is

Inventory costs under variable costing include only direct materials, direct labor, and variable factory overhead.

MATCHING Match the type of income statement to the costs it includes. a. Variable costing income statement b. Absorption costing income statement c. Both types of income statements -Fixed factory overhead for the period

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters