Question 1

When units sold exceed units produced,absorption-costing income will be lower than variable-costing income.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following costs would be treated differently under absorption costing and variable costing?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Question 3

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

Question 4

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 5

Income reported under absorption costing and variable costing is:

Accepted Answer

A) always the same. 
B) typically different. 
C) always higher under absorption costing. 
D) always higher under variable costing. 
E) always the same or higher under absorption costing. 
A) always the same. 
B) typically different. 
C) always higher under absorption costing. 
D) always higher under variable costing. 
E) always the same or higher under absorption costing.

Question 6

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 7

Consider the following statements about absorption- and variable-costing income:
I.Yearly income reported under absorption costing will differ from income reported under variable costing if production and sales volumes differ.
II.In the long-run,total income reported under absorption costing will often be close to that reported under variable costing.
III.Differences in income under absorption and variable costing can often be reconciled by multiplying the change in inventory (in units)by the variable manufacturing overhead cost per unit.
Which of the above statements is (are)true?

Accepted Answer

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

Question 8

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 9

Absorption costing is required for tax purposes.

Accepted Answer

A) True 
 B)False

Question 10

Chino began business at the start of the current year.The company planned to produce 25,000 units,and actual production conformed to expectations.Sales totaled 22,000 units at $30 each.Costs incurred were:  
If there were no variances,the company's absorption-costing income would be:

Accepted Answer

A) $190,000. 
B) $202,000. 
C) $208,000. 
D) $220,000. 
E) some other amount. 
A) $190,000. 
B) $202,000. 
C) $208,000. 
D) $220,000. 
E) some other amount.

Question 11

The gross margin that the company would disclose on an absorption-costing income statement is:

Accepted Answer

A) $97,500. 
B) $147,000. 
C) $166,500. 
D) $370,000. 
E) some other amount. 
A) $97,500. 
B) $147,000. 
C) $166,500. 
D) $370,000. 
E) some other amount.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) $9.50. 
B) $25.00. 
C) $28.00. 
D) $33.00. 
E) $40.50. 
A) $9.50. 
B) $25.00. 
C) $28.00. 
D) $33.00. 
E) $40.50.

Question 14

Delaware 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?

Accepted Answer

A) Variable,$85;absorption,$105. 
B) Variable,$85;absorption,$116. 
C) Variable,$103;absorption,$105. 
D) Variable,$103;absorption,$116. 
E) Some other combination of figures not listed abovE. 
A) Variable,$85;absorption,$105. 
B) Variable,$85;absorption,$116. 
C) Variable,$103;absorption,$105. 
D) Variable,$103;absorption,$116. 
E) Some other combination of figures not listed abovE.

Question 15

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 16

The gross margin that the company would disclose on an absorption-costing income statement is:

Accepted Answer

A) $0. 
B) $133,000. 
C) $166,500. 
D) $342,000. 
E) some other amount.
Original answer is wrong ($120,000).Should be $133,000. 
A) $0. 
B) $133,000. 
C) $166,500. 
D) $342,000. 
E) some other amount.
Original answer is wrong ($120,000).Should be $133,000.

Question 17

Springstein began business at the start of the current year.The company planned to produce 40,000 units,and actual production conformed to expectations.Sales totaled 37,000 units at $42 each.Costs incurred were:  
If there were no variances,the company's variable-costing income would be:

Accepted Answer

A) $155,000. 
B) $212,000. 
C) $240,500. 
D) $592,000. 
E) some other amount. 
A) $155,000. 
B) $212,000. 
C) $240,500. 
D) $592,000. 
E) some other amount.

Question 18

Under throughput costing,the cost of a unit typically includes:

Accepted Answer

A) selling costs. 
B) fixed manufacturing overhead. 
C) the direct costs incurred whenever a unit is manufactured. 
D) administrative costs. 
E) all of thesE. 
A) selling costs. 
B) fixed manufacturing overhead. 
C) the direct costs incurred whenever a unit is manufactured. 
D) administrative costs. 
E) all of thesE.

Question 19

Springer began business at the start of the current year.The company planned to produce 40,000 units,and actual production conformed to expectations.Sales totaled 37,000 units at $42 each.Costs incurred were:  
If there were no variances,the company's absorption-costing income would be:

Accepted Answer

A) $155,000. 
B) $230,000. 
C) $240,500. 
D) $592,000. 
E) some other amount. 
A) $155,000. 
B) $230,000. 
C) $240,500. 
D) $592,000. 
E) some other amount.

Question 20

Garcia'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.

When units sold exceed units produced,absorption-costing income will be lower than variable-costing income.

Which of the following costs would be treated differently under absorption costing and variable costing?

All of the following are expensed under variable costing except:

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

Income reported under absorption costing and variable costing is:

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

Absorption costing is required for tax purposes.

Chino began business at the start of the current year.The company planned to produce 25,000 units,and actual production conformed to expectations.Sales totaled 22,000 units at $30 each.Costs incurred were: If there were no variances,the company's absorption-costing income would be:

The gross margin that the company would disclose on an absorption-costing income statement is:

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

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

Delaware 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?

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

The gross margin that the company would disclose on an absorption-costing income statement is:

Springstein began business at the start of the current year.The company planned to produce 40,000 units,and actual production conformed to expectations.Sales totaled 37,000 units at $42 each.Costs incurred were: If there were no variances,the company's variable-costing income would be:

Under throughput costing,the cost of a unit typically includes:

Springer began business at the start of the current year.The company planned to produce 40,000 units,and actual production conformed to expectations.Sales totaled 37,000 units at $42 each.Costs incurred were: If there were no variances,the company's absorption-costing income would be:

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

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts and Accounting for Mass Customization Operations

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

Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Cost-Volume-Profit Analysis

Profit Planning and Activity-Based Budgeting

Standard Costing,Operational Performance Measures,and the Balanced Scorecard

Flexible Budgeting and the Management of Overhead and Support Activity Costs

Responsibility Accounting, Quality Control, and Environmental Cost Management

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

compound Interest and the Concept of Present Value

Inventory Management

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Exam 8: Absorption and Variable Costing

When units sold exceed units produced,absorption-costing income will be lower than variable-costing income.

Which of the following costs would be treated differently under absorption costing and variable costing?

All of the following are expensed under variable costing except:

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

Income reported under absorption costing and variable costing is:

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

Absorption costing is required for tax purposes.

Chino began business at the start of the current year.The company planned to produce 25,000 units,and actual production conformed to expectations.Sales totaled 22,000 units at $30 each.Costs incurred were: If there were no variances,the company's absorption-costing income would be:

The gross margin that the company would disclose on an absorption-costing income statement is:

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

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

Delaware 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?

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

The gross margin that the company would disclose on an absorption-costing income statement is:

Springstein began business at the start of the current year.The company planned to produce 40,000 units,and actual production conformed to expectations.Sales totaled 37,000 units at $42 each.Costs incurred were: If there were no variances,the company's variable-costing income would be:

Under throughput costing,the cost of a unit typically includes:

Springer began business at the start of the current year.The company planned to produce 40,000 units,and actual production conformed to expectations.Sales totaled 37,000 units at $42 each.Costs incurred were: If there were no variances,the company's absorption-costing income would be:

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

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts and Accounting for Mass Customization Operations

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

Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Cost-Volume-Profit Analysis

Profit Planning and Activity-Based Budgeting

Standard Costing,Operational Performance Measures,and the Balanced Scorecard

Flexible Budgeting and the Management of Overhead and Support Activity Costs

Responsibility Accounting, Quality Control, and Environmental Cost Management

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

compound Interest and the Concept of Present Value

Inventory Management

Filters