Question 1

In absorption costing,sales revenue less cost of goods sold is equal to ________.

Accepted Answer

A) contribution margin 
B) operating margin 
C) operating income 
D) gross margin 
A) contribution margin 
B) operating margin 
C) operating income 
D) gross margin D

Question 2

A company can increase the accuracy of its product cost information by converting indirect costs to direct costs.

Accepted Answer

A) True 
 B)False  True

Question 3

The following information was gathered for the Badger Company:   Assume the cost driver for factory overhead costs is direct labor hours.What is the amount of overapplied or underapplied overhead?

Accepted Answer

A) $970 underapplied 
B) $970 overapplied 
C) $1,830 underapplied 
D) $1,830 overapplied 
A) $970 underapplied 
B) $970 overapplied 
C) $1,830 underapplied 
D) $1,830 overapplied D

Question 4

The immediate write-off of overhead variances is used because ________.

Accepted Answer

A) it is simpler 
B) the company has probably sold most of the goods produced during the period so prorating the variance to inventory accounts would not produce materially different results 
C) the extra overhead costs result from inefficiencies in the current period and therefore do not represent assets 
D) all of the above 
A) it is simpler 
B) the company has probably sold most of the goods produced during the period so prorating the variance to inventory accounts would not produce materially different results 
C) the extra overhead costs result from inefficiencies in the current period and therefore do not represent assets 
D) all of the above

Question 5

The variable-costing income statement uses the contribution-approach format.

Accepted Answer

A) True 
 B)False

Question 6

The fixed overhead spending variance is also called the ________ variance.

Accepted Answer

A) production volume 
B) fixed overhead efficiency 
C) fixed overhead flexible budget 
D) fixed overhead usage 
A) production volume 
B) fixed overhead efficiency 
C) fixed overhead flexible budget 
D) fixed overhead usage

Question 7

Rams Company had the following information:   Assume direct labor costs are the cost driver of factory overhead costs.The budgeted factory overhead rate is ________.

Accepted Answer

A) 81 percent of direct labor costs 
B) 90 percent of direct labor costs 
C) 100 percent of direct labor costs 
D) 105 percent of direct labor costs 
A) 81 percent of direct labor costs 
B) 90 percent of direct labor costs 
C) 100 percent of direct labor costs 
D) 105 percent of direct labor costs

Question 8

When the variable costing method is used,fixed factory overhead appears on the income statement as a ________.

Accepted Answer

A) component of cost of goods sold 
B) component of cost of goods sold and production volume variance 
C) production volume variance 
D) fixed expense 
A) component of cost of goods sold 
B) component of cost of goods sold and production volume variance 
C) production volume variance 
D) fixed expense

Question 9

The most common reason for a variance between actual overhead costs and applied overhead costs is the actual level of volume does not equal the level used to calculate the budgeted overhead rate.

Accepted Answer

A) True 
 B)False

Question 10

The production volume variance is calculated by the difference between actual volume and applied volume.

Accepted Answer

A) True 
 B)False

Question 11

Smithison Company gathered the following information for the year ended April 30,2015:
   Required: 
A)Under variable costing,what is the cost of the finished goods inventory on April 30,2015?
B)Under absorption costing,what is the cost of the finished goods inventory on April 30,2015?

Accepted Answer

A) ($155,000 + $99,600 + $70,2

Question 12

When the actual volume is less than the expected volume,the production volume variance is ________.

Accepted Answer

A) favorable 
B) unfavorable 
C) overapplied 
D) overbudgeted 
A) favorable 
B) unfavorable 
C) overapplied 
D) overbudgeted

Question 13

When the actual volume is less than the expected volume,the fixed overhead costs are ________.

Accepted Answer

A) favorable 
B) overapplied 
C) overbudgeted 
D) underapplied 
A) favorable 
B) overapplied 
C) overbudgeted 
D) underapplied

Question 14

The proration method of disposing of an overhead variance prorates the variance among three accounts that include Direct Materials Inventory,Work-in-Process Inventory and Finished Goods Inventory.

Accepted Answer

A) True 
 B)False

Question 15

Variable costing is also called ________.

Accepted Answer

A) full costing 
B) traditional costing 
C) absorption costing 
D) direct costing 
A) full costing 
B) traditional costing 
C) absorption costing 
D) direct costing

Question 16

Kings Company had the following information:   Assume the cost driver for factory overhead costs is direct labor hours and a job uses 2,000 direct labor hours.What amount of factory overhead is applied to the job?

Accepted Answer

A) $7,140 
B) $7,500 
C) $7,600 
D) $8,000 
A) $7,140 
B) $7,500 
C) $7,600 
D) $8,000

Question 17

The production volume variance is a line item on the ________ income statement.

Accepted Answer

A) direct costing 
B) variable costing 
C) absorption costing 
D) absorption costing and variable costing 
A) direct costing 
B) variable costing 
C) absorption costing 
D) absorption costing and variable costing

Question 18

In the immediate write-off of overhead variances,underapplied overhead is regarded as a(n)________.

Accepted Answer

A) addition to the cost of inventory 
B) deduction from the cost of inventory 
C) decrease in cost of goods sold 
D) increase in cost of goods sold 
A) addition to the cost of inventory 
B) deduction from the cost of inventory 
C) decrease in cost of goods sold 
D) increase in cost of goods sold

Question 19

The most widely used approach to disposing of overhead variances is ________.

Accepted Answer

A) to allocate it between finished goods inventory,work-in-process inventory and direct materials inventory 
B) to allocate it between cost of goods sold,finished goods inventory and work-in-process inventory 
C) to allocate it between cost of goods sold,finished goods inventory and direct material inventory 
D) immediate write-off 
A) to allocate it between finished goods inventory,work-in-process inventory and direct materials inventory 
B) to allocate it between cost of goods sold,finished goods inventory and work-in-process inventory 
C) to allocate it between cost of goods sold,finished goods inventory and direct material inventory 
D) immediate write-off

Question 20

The cost driver chosen for applying factory overhead costs should be the cost driver that ________.

Accepted Answer

A) is easiest to understand 
B) incurs the least administrative costs 
C) is easiest to calculate 
D) causes most of the overhead costs 
A) is easiest to understand 
B) incurs the least administrative costs 
C) is easiest to calculate 
D) causes most of the overhead costs

In absorption costing,sales revenue less cost of goods sold is equal to ________.

A company can increase the accuracy of its product cost information by converting indirect costs to direct costs.

The following information was gathered for the Badger Company: Assume the cost driver for factory overhead costs is direct labor hours.What is the amount of overapplied or underapplied overhead?

The immediate write-off of overhead variances is used because ________.

The variable-costing income statement uses the contribution-approach format.

The fixed overhead spending variance is also called the ________ variance.

Rams Company had the following information: Assume direct labor costs are the cost driver of factory overhead costs.The budgeted factory overhead rate is ________.

When the variable costing method is used,fixed factory overhead appears on the income statement as a ________.

The most common reason for a variance between actual overhead costs and applied overhead costs is the actual level of volume does not equal the level used to calculate the budgeted overhead rate.

The production volume variance is calculated by the difference between actual volume and applied volume.

Smithison Company gathered the following information for the year ended April 30,2015: Required: A)Under variable costing,what is the cost of the finished goods inventory on April 30,2015? B)Under absorption costing,what is the cost of the finished goods inventory on April 30,2015?

When the actual volume is less than the expected volume,the production volume variance is ________.

When the actual volume is less than the expected volume,the fixed overhead costs are ________.

The proration method of disposing of an overhead variance prorates the variance among three accounts that include Direct Materials Inventory,Work-in-Process Inventory and Finished Goods Inventory.

Variable costing is also called ________.

Kings Company had the following information: Assume the cost driver for factory overhead costs is direct labor hours and a job uses 2,000 direct labor hours.What amount of factory overhead is applied to the job?

The production volume variance is a line item on the ________ income statement.

In the immediate write-off of overhead variances,underapplied overhead is regarded as a(n)________.

The most widely used approach to disposing of overhead variances is ________.

The cost driver chosen for applying factory overhead costs should be the cost driver that ________.

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 13: Accounting for Overhead Costs

In absorption costing,sales revenue less cost of goods sold is equal to ________.

A company can increase the accuracy of its product cost information by converting indirect costs to direct costs.

The following information was gathered for the Badger Company: Assume the cost driver for factory overhead costs is direct labor hours.What is the amount of overapplied or underapplied overhead?

The immediate write-off of overhead variances is used because ________.

The variable-costing income statement uses the contribution-approach format.

The fixed overhead spending variance is also called the ________ variance.

Rams Company had the following information: Assume direct labor costs are the cost driver of factory overhead costs.The budgeted factory overhead rate is ________.

When the variable costing method is used,fixed factory overhead appears on the income statement as a ________.

The most common reason for a variance between actual overhead costs and applied overhead costs is the actual level of volume does not equal the level used to calculate the budgeted overhead rate.

The production volume variance is calculated by the difference between actual volume and applied volume.

Smithison Company gathered the following information for the year ended April 30,2015: Required: A)Under variable costing,what is the cost of the finished goods inventory on April 30,2015? B)Under absorption costing,what is the cost of the finished goods inventory on April 30,2015?

When the actual volume is less than the expected volume,the production volume variance is ________.

When the actual volume is less than the expected volume,the fixed overhead costs are ________.

The proration method of disposing of an overhead variance prorates the variance among three accounts that include Direct Materials Inventory,Work-in-Process Inventory and Finished Goods Inventory.

Variable costing is also called ________.

Kings Company had the following information: Assume the cost driver for factory overhead costs is direct labor hours and a job uses 2,000 direct labor hours.What amount of factory overhead is applied to the job?

The production volume variance is a line item on the ________ income statement.

In the immediate write-off of overhead variances,underapplied overhead is regarded as a(n)________.

The most widely used approach to disposing of overhead variances is ________.

The cost driver chosen for applying factory overhead costs should be the cost driver that ________.

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters