Question 1

Given the following data,total product cost per unit under absorption costing is $9.14.

Accepted Answer

A) True 
 B)False

Question 2

Given the Galaxy Inc.data,what is net income using variable costing?

Accepted Answer

A) $16,220,000 
B) $17,400,000 
C) $16,360,000 
D) $11,275,000 
E) $16,800,000 
A) $16,220,000 
B) $17,400,000 
C) $16,360,000 
D) $11,275,000 
E) $16,800,000

Question 3

A company reports the following information regarding its production cost:
   Required: Perform the following independent calculations.
a.Compute total variable overhead cost if the production cost per unit under variable costing is $240.
b.Compute total variable overhead cost if the production cost per unit under absorption costing is $240.

Accepted Answer

a.$31 DL + $27 DM + (VOH/22,000)VOH = $2

Question 4

Given the following data,calculate product cost per unit under absorption costing.

Accepted Answer

A) $8 per unit 
B) $8.50 per unit 
C) $10.25 per unit 
D) $10.75 per unit 
E) $12 per unit 
A) $8 per unit 
B) $8.50 per unit 
C) $10.25 per unit 
D) $10.75 per unit 
E) $12 per unit

Question 5

It is not possible to convert reports prepared using variable costing to absorption costing reports.

Accepted Answer

A) True 
 B)False

Question 6

Under variable costing,product costs consist of direct labor,direct materials,and ________.

Accepted Answer

variable m

Question 7

Absorption costing is required under GAAP.

Accepted Answer

A) True 
 B)False

Question 8

The use of absorption costing can result in misleading product cost information.

Accepted Answer

A) True 
 B)False

Question 9

Under an income statement prepared using absorption costing,expenses are grouped according to cost behavior.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is true?

Accepted Answer

A) Under variable costing,direct materials and direct labor are expensed as period expenses. 
B) Under variable costing,fixed manufacturing overhead is expensed as period expenses. 
C) Fixed manufacturing overhead costs are treated the same under both absorption costing and variable costing. 
D) Reported income under absorption costing is not affected by production level changes. 
E) Under absorption costing,fixed manufacturing overhead is expensed as period expenses. 
A) Under variable costing,direct materials and direct labor are expensed as period expenses. 
B) Under variable costing,fixed manufacturing overhead is expensed as period expenses. 
C) Fixed manufacturing overhead costs are treated the same under both absorption costing and variable costing. 
D) Reported income under absorption costing is not affected by production level changes. 
E) Under absorption costing,fixed manufacturing overhead is expensed as period expenses.

Question 11

A company is currently operating at 60% capacity producing 10,000 units.Cost information relating to this current production is shown in the following table:
   The company has been approached by a customer with a request for a special order for 5,000 units.What is the minimum per unit sales price that management would accept for this order if the company wishes to increase current profits?

Accepted Answer

10,000/.6 - 10,000 = 6,666 uni

Question 12

The key difference between variable costing and absorption costing is the treatment of ________ costs.

Accepted Answer

The answer of The key difference between variable costing and...

Question 13

Which of the following statements is true regarding absorption costing?

Accepted Answer

A) It is not the traditional costing approach. 
B) It is not permitted to be used for financial reporting. 
C) It is not permitted to be used for tax reporting. 
D) It assigns all manufacturing costs to products. 
E) It requires only variable costs to be treated as product costs. 
A) It is not the traditional costing approach. 
B) It is not permitted to be used for financial reporting. 
C) It is not permitted to be used for tax reporting. 
D) It assigns all manufacturing costs to products. 
E) It requires only variable costs to be treated as product costs.

Question 14

Under absorption costing,which of the following statements is not true?

Accepted Answer

A) Over production and inventory buildup can occur because of how managers are evaluated and rewarded. 
B) The fixed costs per unit decline as more units are produced. 
C) Variable inventory costs are treated in the same manner as they are under variable costing. 
D) Fixed inventory costs are treated in the same manner as they are under variable costing. 
E) All manufacturing costs are assigned to products. 
A) Over production and inventory buildup can occur because of how managers are evaluated and rewarded. 
B) The fixed costs per unit decline as more units are produced. 
C) Variable inventory costs are treated in the same manner as they are under variable costing. 
D) Fixed inventory costs are treated in the same manner as they are under variable costing. 
E) All manufacturing costs are assigned to products.

Question 15

Evaluating and rewarding managers based on absorption costing income can lead to overproduction.

Accepted Answer

A) True 
 B)False

Question 16

What is the formula to compute manufacturing margin?

Accepted Answer

Manufacturing margin

Question 17

Countdown Inc.sold 17,000 units of its product at a price of $81 per unit.Total variable cost per unit is $72.09,consisting of $69.05 in variable production cost and $3.04 in variable selling and administrative cost.Compute the total contribution margin.

Accepted Answer

$81.00 - $

Question 18

When the number of units produced exceeds the number of units sold,absorption costing defers some of the fixed costs incurred.

Accepted Answer

A) True 
 B)False

Question 19

Variable costing is required by Generally Accepted Accounting Principles (GAAP)for financial statement purposes.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following best describes costs assigned to the product under the absorption costing method? 
Direct labor (DL)
Direct materials (DM)
Variable selling and administrative (VSA)
Variable manufacturing overhead (VOH)
Fixed selling and administrative (FSA)
Fixed manufacturing overhead (FOH)

Accepted Answer

A) DL,DM,VSA,and VOH. 
B) DL,DM,and VOH. 
C) DL,DM,VOH,and FOH. 
D) DL and DM. 
E) DL,DM,FSA,and FOH. 
A) DL,DM,VSA,and VOH. 
B) DL,DM,and VOH. 
C) DL,DM,VOH,and FOH. 
D) DL and DM. 
E) DL,DM,FSA,and FOH.

Exam 19: Variable Costing and Analysis

Given the following data,total product cost per unit under absorption costing is $9.14.

Given the Galaxy Inc.data,what is net income using variable costing?

Given the following data,calculate product cost per unit under absorption costing.

It is not possible to convert reports prepared using variable costing to absorption costing reports.

Under variable costing,product costs consist of direct labor,direct materials,and ________.

Absorption costing is required under GAAP.

The use of absorption costing can result in misleading product cost information.

Under an income statement prepared using absorption costing,expenses are grouped according to cost behavior.

Which of the following statements is true?

The key difference between variable costing and absorption costing is the treatment of ________ costs.

Which of the following statements is true regarding absorption costing?

Under absorption costing,which of the following statements is not true?

Evaluating and rewarding managers based on absorption costing income can lead to overproduction.

What is the formula to compute manufacturing margin?

Countdown Inc.sold 17,000 units of its product at a price of $81 per unit.Total variable cost per unit is $72.09,consisting of $69.05 in variable production cost and $3.04 in variable selling and administrative cost.Compute the total contribution margin.

When the number of units produced exceeds the number of units sold,absorption costing defers some of the fixed costs incurred.

Variable costing is required by Generally Accepted Accounting Principles (GAAP)for financial statement purposes.

Which of the following best describes costs assigned to the product under the absorption costing method? Direct labor (DL) Direct materials (DM) Variable selling and administrative (VSA) Variable manufacturing overhead (VOH) Fixed selling and administrative (FSA) Fixed manufacturing overhead (FOH)

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