Question 1

Kaycom Inc.reports the following information:   What is the amount of unit product cost that will be considered for external reporting purposes?

Accepted Answer

A) $45 
B) $65 
C) $85 
D) $75 
A) $45 
B) $65 
C) $85 
D) $75

Question 2

Danby Inc.has the following cost data:
   Calculate the unit product cost using absorption costing when production is 200 units,400 units,and 800 units.

Accepted Answer

Absorption Costing for 200 units:
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Question 3

Under absorption costing,operating profit can be ________.

Accepted Answer

A) increased by increasing production without increasing sales 
B) decreased by increasing production without decreasing sales 
C) decreased by increasing the level of ending Finished Goods Inventory 
D) increased by decreasing sales and keeping production equal to sales 
A) increased by increasing production without increasing sales 
B) decreased by increasing production without decreasing sales 
C) decreased by increasing the level of ending Finished Goods Inventory 
D) increased by decreasing sales and keeping production equal to sales

Question 4

When there are no units in the beginning finished goods inventory and the units produced are more than the units sold,the operating income will be higher under variable costing than absorption costing.

Accepted Answer

A) True 
 B)False

Question 5

Groovelex Inc.has collected the following data for the current year:   What is the unit product cost for the current year using absorption costing?

Accepted Answer

A) $70 
B) $65 
C) $80 
D) $55 
A) $70 
B) $65 
C) $80 
D) $55

Question 6

When production is less than sales,the operating income will be lower under absorption costing than variable costing.Assume zero ending inventories.Which of the following gives the correct reason for the above statement?

Accepted Answer

A) all costs incurred have been recorded as expenses 
B) a portion of the fixed manufacturing overhead is still in the ending Finished Goods Inventory account 
C) the units in the beginning finished goods inventory have manufacturing fixed costs assigned to them 
D) fixed manufacturing costs have not been considered while calculating the operating profits 
A) all costs incurred have been recorded as expenses 
B) a portion of the fixed manufacturing overhead is still in the ending Finished Goods Inventory account 
C) the units in the beginning finished goods inventory have manufacturing fixed costs assigned to them 
D) fixed manufacturing costs have not been considered while calculating the operating profits

Question 7

Voltice Services provides event management services.The company has three employees,each assigned to specific customers.The company considers each employee's territory as a business segment.The following data relates to its three segments for the month of June:   The business segments had the following number of customers: Barney,25; Margaret,30; and Owen,35.The total fixed costs for the month amounts to $3,500.What is the operating income of Voltice Services for the month of June?

Accepted Answer

A) $6,900 
B) $6,250 
C) $5,450 
D) $5,950 
A) $6,900 
B) $6,250 
C) $5,450 
D) $5,950

Question 8

Which of the following statements is true of absorption and variable costing systems?

Accepted Answer

A) Both costing methods consider selling and administrative costs to be period costs. 
B) Variable costing considers variable selling and administrative costs to be product costs. 
C) Absorption costing considers fixed manufacturing overhead to be period costs. 
D) Both costing methods consider fixed manufacturing overhead to be product costs. 
A) Both costing methods consider selling and administrative costs to be period costs. 
B) Variable costing considers variable selling and administrative costs to be product costs. 
C) Absorption costing considers fixed manufacturing overhead to be period costs. 
D) Both costing methods consider fixed manufacturing overhead to be product costs.

Question 9

Absorption costing considers fixed selling and administrative costs as product costs.

Accepted Answer

A) True 
 B)False

Question 10

The traditional income statement format calculates operating income as gross profit minus selling and administrative expenses.

Accepted Answer

A) True 
 B)False

Question 11

The ________ method allows managers to manipulate operating profits through production.

Accepted Answer

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

Question 12

Groovelex Inc.has collected the following data for the current year:   The beginning inventory costs $3,750 under absorption costing and $2,500 under variable costing.
What is the operating income using absorption costing?

Accepted Answer

A) $3,950 
B) $2,500 
C) $4,750 
D) $3,750 
A) $3,950 
B) $2,500 
C) $4,750 
D) $3,750

Question 13

Flexlux Inc.reports the following information:   What is the unit product cost using variable costing?

Accepted Answer

A) $50 
B) $55 
C) $45 
D) $65 
A) $50 
B) $55 
C) $45 
D) $65

Question 14

Carbon Inc.reports the following information for April:  
- What is the contribution margin ratio of Beta?

Accepted Answer

A) 20% 
B) 10% 
C) 25% 
D) 15% 
A) 20% 
B) 10% 
C) 25% 
D) 15%

Question 15

Edge Inc.had two products-Le Chaud and Le Frais.Financial data for both the products follow:   It had two sale executives-Jack Lynch and Peter Cho.Each executive sold a total of 1,500 units during the month of March,2015.Jack had a sales mix of 70% Le Chaud and 30% Le Frais.Peter had a sales mix of 60% Le Chaud and 40% Le Frais
-What is the contribution margin ratio for Le Chaud and Le Frais,respectively?

Accepted Answer

A) 17%; 15% 
B) 29%; 20% 
C) 35%; 30% 
D) 21%; 20% 
A) 17%; 15% 
B) 29%; 20% 
C) 35%; 30% 
D) 21%; 20%

Question 16

Medbam Inc.has collected the following data for November (there are no beginning inventories):   What is the operating income using absorption costing?

Accepted Answer

A) $6,000 
B) $3,500 
C) $5,000 
D) $4,500 
A) $6,000 
B) $3,500 
C) $5,000 
D) $4,500

Question 17

Nimtrans Inc.reports the following information for August:   Calculate the gross profit for August using absorption costing?

Accepted Answer

A) $725,000 
B) $650,000 
C) $600,000 
D) $500,000 
A) $725,000 
B) $650,000 
C) $600,000 
D) $500,000

Question 18

Edge Inc.had two products-Le Chaud and Le Frais.Financial data for both the products follow:   It had two sale executives-Jack Lynch and Peter Cho.Each executive sold a total of 1,500 units during the month of March,2015.Jack had a sales mix of 70% Le Chaud and 30% Le Frais.Peter had a sales mix of 60% Le Chaud and 40% Le Frais.
-Based on the above information,calculate Jack's total contribution to company profits?

Accepted Answer

A) $215,750 
B) $285,500 
C) $242,250 
D) $283,200 
A) $215,750 
B) $285,500 
C) $242,250 
D) $283,200

Question 19

The contribution margin format of the income statement categorizes costs by their behavior.

Accepted Answer

A) True 
 B)False

Question 20

In variable costing,all fixed manufacturing costs are expensed in the period incurred.

Accepted Answer

A) True 
 B)False

Exam 21: Variable Costing

Kaycom Inc.reports the following information: What is the amount of unit product cost that will be considered for external reporting purposes?

Danby Inc.has the following cost data: Calculate the unit product cost using absorption costing when production is 200 units,400 units,and 800 units.

Under absorption costing,operating profit can be ________.

When there are no units in the beginning finished goods inventory and the units produced are more than the units sold,the operating income will be higher under variable costing than absorption costing.

Groovelex Inc.has collected the following data for the current year: What is the unit product cost for the current year using absorption costing?

When production is less than sales,the operating income will be lower under absorption costing than variable costing.Assume zero ending inventories.Which of the following gives the correct reason for the above statement?

Which of the following statements is true of absorption and variable costing systems?

Absorption costing considers fixed selling and administrative costs as product costs.

The traditional income statement format calculates operating income as gross profit minus selling and administrative expenses.

The ________ method allows managers to manipulate operating profits through production.

Groovelex Inc.has collected the following data for the current year: The beginning inventory costs $3,750 under absorption costing and $2,500 under variable costing. What is the operating income using absorption costing?

Flexlux Inc.reports the following information: What is the unit product cost using variable costing?

Carbon Inc.reports the following information for April: - What is the contribution margin ratio of Beta?

Medbam Inc.has collected the following data for November (there are no beginning inventories): What is the operating income using absorption costing?

Nimtrans Inc.reports the following information for August: Calculate the gross profit for August using absorption costing?

The contribution margin format of the income statement categorizes costs by their behavior.

In variable costing,all fixed manufacturing costs are expensed in the period incurred.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Investments

Current Liabilities and Payroll

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Accounting Information Systems

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