Exam 8: Absorption and Variable Costing

Santa Fe Corporation has computed the following unit costs for the year just ended: Which of the following choices correctly depicts the per-unit cost of inventory under variable costing and absorption costing?

Under variable costing,each unit of the company's inventory would be carried at:

Highway Company reported the following costs for the year just ended: If Highway uses throughput costing and had sales revenues for the period of $950,000,which of the following choices correctly depicts the company's cost of goods sold and income? (delete "Net",below;just say "Income.")

Indiana's per-unit inventoriable cost under variable costing is:

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

The income (loss)under variable costing is:

The contribution margin that the company would disclose on a variable-costing income statement is:

Under variable costing,fixed manufacturing overhead is:

If Indiana uses variable costing,the total inventoriable costs for the year would be:

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?

The income (loss)under absorption costing is:

Absorption and variable costing are two different methods of measuring income and costing inventory. Required: A.Product costs are defined as costs associated with the manufacturing process.How does the operational definition of product cost differ between absorption costing and variable costing? A.The sole difference between the two methods is that fixed manufacturing overhead costs are defined as a product cost under absorption costing and as a period cost under variable costing. B.An absorption-costing income statement will report gross profit or gross margin whereas a variable-costing income statement will report contribution margin.What is the difference between these terms? B.Gross profit (gross margin)is the difference between sales and cost of goods solD.Cost of goods sold includes variable and fixed manufacturing costs.Contribution margin,on the other hand,is the difference between sales and variable expenses,namely,variable cost of goods sold and variable operating expenses.Fixed costs are ignored when calculating the contribution margin.

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

The contribution margin that the company would disclose on a variable-costing income statement is:

All of the following are inventoried under absorption costing except:

Variable costing of inventory and absorption costing of inventory is relevant for which of the following types of businesses:

Which of the following statements pertain to both variable costing and absorption costing?

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

Ortego's management recently committed to incurring direct labor and all manufacturing overhead charges regardless of the number of units produced.Under throughput costing,the company's cost of goods sold would include charges for:

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.