Question 1

The process of classifying all the costs incurred in the production of a product is referred to as absorption costing.

Accepted Answer

A) True 
 B)False  True

Question 2

When production volume equals sales volume,the amount of fixed overhead expensed is higher using absorption costing than with variable costing.

Accepted Answer

A) True 
 B)False  False

Question 3

Absorption costing is also referred to as full costing.

Accepted Answer

A) True 
 B)False  True

Question 4

Variable costing is also referred to as

Accepted Answer

A) absorption costing. 
B) normal costing. 
C) direct costing. 
D) full costing. 
A) absorption costing. 
B) normal costing. 
C) direct costing. 
D) full costing.

Question 5

Which of the following items is more complicated for a manufacturing company than for a retail operation?

Accepted Answer

A) Accounting for inventory costs 
B) Trying to forecast the effects of financial decisions on the income statement 
C) Both accounting for inventory costs and trying to forecast the effects of financial decisions on the income statement 
D) Neither accounting for inventory costs nor trying to forecast the effects of financial decisions on the income statement is more complicated for a manufacturing company than for a retail operation. 
A) Accounting for inventory costs 
B) Trying to forecast the effects of financial decisions on the income statement 
C) Both accounting for inventory costs and trying to forecast the effects of financial decisions on the income statement 
D) Neither accounting for inventory costs nor trying to forecast the effects of financial decisions on the income statement is more complicated for a manufacturing company than for a retail operation.

Question 6

To make predictions about costs and income,costs must be classified as either

Accepted Answer

A) fixed or variable. 
B) product or administrative. 
C) direct material or conversion. 
D) direct or indirect. 
A) fixed or variable. 
B) product or administrative. 
C) direct material or conversion. 
D) direct or indirect.

Question 7

Absorption costing is also referred to as variable costing.

Accepted Answer

A) True 
 B)False

Question 8

Mixed costs are divided into their direct and indirect components.

Accepted Answer

A) True 
 B)False

Question 9

To make predictions about costs and income,you must first classify costs by their behavior.

Accepted Answer

A) True 
 B)False

Question 10

The difference between absorption and variable costing is the timing difference in the expensing of variable overhead costs.

Accepted Answer

A) True 
 B)False

Question 11

The matching principle states that expenses should be matched with the revenues they generate.

Accepted Answer

A) True 
 B)False

Question 12

Under variable costing,subtract variable costs from sales to arrive at

Accepted Answer

A) gross profit. 
B) gross margin. 
C) contribution margin. 
D) net income. 
A) gross profit. 
B) gross margin. 
C) contribution margin. 
D) net income.

Question 13

The costing method in which only variable product costs are accumulated in inventory is called

Accepted Answer

A) absorption costing. 
B) normal costing. 
C) direct costing. 
D) full costing. 
A) absorption costing. 
B) normal costing. 
C) direct costing. 
D) full costing.

Question 14

You are assigned to a team responsible for reviewing the financial statements with lower-level departmental managers.Some of your team members want to use the absorption costing income statement generally distributed by the accounting department.You believe a variable costing income statement will be more appropriate to use in explaining items to lower-level managers.Your team has requested more information on the variable costing format.
Required:
Write a memo to your team members explaining why you believe the variable costing income statement should be used.

Accepted Answer

To: Team Members Subject: Format for inc

Question 15

The underlying principle that absorption costing satisfies is the

Accepted Answer

A) matching principle. 
B) relevance principle. 
C) historical cost principle. 
D) understandability principle. 
A) matching principle. 
B) relevance principle. 
C) historical cost principle. 
D) understandability principle.

Question 16

When the

Accepted Answer

A) ending inventory on the balance sheet is lower under absorption costing than under variable costing. 
B) ending inventory on the balance sheet is higher under absorption costing than under variable costing. 
C) ending inventory on the balance sheet is the same under absorption costing and variable costing. 
D) cannot be determined with the information given. 
A) ending inventory on the balance sheet is lower under absorption costing than under variable costing. 
B) ending inventory on the balance sheet is higher under absorption costing than under variable costing. 
C) ending inventory on the balance sheet is the same under absorption costing and variable costing. 
D) cannot be determined with the information given.

Question 17

The following table shows Jackson Company's inventory balances,in

Accepted Answer

Year 1 - Variable costing operating inco

Question 18

The only difference between absorption costing and variable costing is the treatment of

Accepted Answer

A) all variable costs. 
B) variable overhead costs. 
C) all fixed costs. 
D) fixed overhead costs. 
A) all variable costs. 
B) variable overhead costs. 
C) all fixed costs. 
D) fixed overhead costs.

Question 19

Fixed manufacturing overhead is treated as a period expense in which of the following costing methods?

Accepted Answer

A) Absorption costing 
B) Normal costing 
C) Full costing 
D) Variable costing 
A) Absorption costing 
B) Normal costing 
C) Full costing 
D) Variable costing

Question 20

Walker Manufacturing began its operations on January 1 of the current year.Walker produced 10,000

Accepted Answer

A) $8,000 
B) $28,000 
C) $30,000 
D) $30,400 
A) $8,000 
B) $28,000 
C) $30,000 
D) $30,400

The process of classifying all the costs incurred in the production of a product is referred to as absorption costing.

When production volume equals sales volume,the amount of fixed overhead expensed is higher using absorption costing than with variable costing.

Absorption costing is also referred to as full costing.

Variable costing is also referred to as

Which of the following items is more complicated for a manufacturing company than for a retail operation?

To make predictions about costs and income,costs must be classified as either

Absorption costing is also referred to as variable costing.

Mixed costs are divided into their direct and indirect components.

To make predictions about costs and income,you must first classify costs by their behavior.

The difference between absorption and variable costing is the timing difference in the expensing of variable overhead costs.

The matching principle states that expenses should be matched with the revenues they generate.

Under variable costing,subtract variable costs from sales to arrive at

The costing method in which only variable product costs are accumulated in inventory is called

The underlying principle that absorption costing satisfies is the

When the

The following table shows Jackson Company's inventory balances,in

The only difference between absorption costing and variable costing is the treatment of

Fixed manufacturing overhead is treated as a period expense in which of the following costing methods?

Walker Manufacturing began its operations on January 1 of the current year.Walker produced 10,000

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity Based Management

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralizing and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

Filters

Exam 15: Topic Focus Variable and Absorption Costing

The process of classifying all the costs incurred in the production of a product is referred to as absorption costing.

When production volume equals sales volume,the amount of fixed overhead expensed is higher using absorption costing than with variable costing.

Absorption costing is also referred to as full costing.

Variable costing is also referred to as

Which of the following items is more complicated for a manufacturing company than for a retail operation?

To make predictions about costs and income,costs must be classified as either

Absorption costing is also referred to as variable costing.

Mixed costs are divided into their direct and indirect components.

To make predictions about costs and income,you must first classify costs by their behavior.

The difference between absorption and variable costing is the timing difference in the expensing of variable overhead costs.

The matching principle states that expenses should be matched with the revenues they generate.

Under variable costing,subtract variable costs from sales to arrive at

The costing method in which only variable product costs are accumulated in inventory is called

The underlying principle that absorption costing satisfies is the

When the

The following table shows Jackson Company's inventory balances,in

The only difference between absorption costing and variable costing is the treatment of

Fixed manufacturing overhead is treated as a period expense in which of the following costing methods?

Walker Manufacturing began its operations on January 1 of the current year.Walker produced 10,000

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity Based Management

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralizing and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

Filters