Question 1

Under absorption costing, all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs.

Accepted Answer

A) True 
 B)False

Question 2

Answer the following questions using the information below:
Peggy's Pillows produces and sells a decorative pillow for $75.00 per unit. In the first month of operation, 2,000 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:
  
-What is cost of goods sold using variable costing?

Accepted Answer

A) $35,000 
B) $40,000 
C) $47,250 
D) $54,000 
A) $35,000 
B) $40,000 
C) $47,250 
D) $54,000

Question 3

Theoretical capacity is most often used to cost a product.

Accepted Answer

A) True 
 B)False

Question 4

Answer the following questions using the information below:
Peggy's Pillows produces and sells a decorative pillow for $75.00 per unit. In the first month of operation, 2,000 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:
  
-What is operating income using variable costing?

Accepted Answer

A) $52,500 
B) $78,750 
C) $65,750 
D) $47,000 
A) $52,500 
B) $78,750 
C) $65,750 
D) $47,000

Question 5

Answer the following questions using the information below:
Ms. Janice Meyers, the company president, has heard that there are multiple breakeven points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for 2011 is as follows:
  
-What are breakeven sales in units using variable costing?

Accepted Answer

A) 5,625 units 
B) 5,769 units 
C) 11,875 units 
D) 12,180 units 
A) 5,625 units 
B) 5,769 units 
C) 11,875 units 
D) 12,180 units

Question 6

Answer the following questions using the information below:
Ms. Janice Meyers, the company president, has heard that there are multiple breakeven points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for 2011 is as follows:
  
-What are breakeven sales in units using absorption costing if the production units are actually 25,000?

Accepted Answer

A) 5,625 units 
B) 6,667 units 
C) 7,667 units 
D) 7,931 units 
A) 5,625 units 
B) 6,667 units 
C) 7,667 units 
D) 7,931 units

Question 7

When production deviates from the denominator level, a production-volume variance always exists under absorption costing.

Accepted Answer

A) True 
 B)False

Question 8

Under both variable and absorption costing, all variable manufacturing costs are inventoriable costs.

Accepted Answer

A) True 
 B)False

Question 9

For benchmarking purposes it is best to use master-budget capacity because all competitors use about the same about of capacity for production.

Accepted Answer

A) True 
 B)False

Question 10

Answer the following questions using the information below:
Kory's Auto produces and sells an auto part for $60.00 per unit. In 2011, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes:
  
-What is the inventoriable cost per unit using variable costing?

Accepted Answer

A) $28.50 
B) $30.00 
C) $36.00 
D) $43.50 
A) $28.50 
B) $30.00 
C) $36.00 
D) $43.50

Question 11

It is most difficult to estimate ________ because of the need to predict demand for the next few years.

Accepted Answer

A) practical capacity 
B) theoretical capacity 
C) master-budget capacity utilization 
D) normal capacity utilization 
A) practical capacity 
B) theoretical capacity 
C) master-budget capacity utilization 
D) normal capacity utilization

Question 12

Answer the following questions using the information below:
Kory's Auto produces and sells an auto part for $60.00 per unit. In 2011, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes:
  
-What is the inventoriable cost per unit using absorption costing?

Accepted Answer

A) $30.00 
B) $36.00 
C) $37.50 
D) $43.50 
A) $30.00 
B) $36.00 
C) $37.50 
D) $43.50

Question 13

The higher the denominator level, the:

Accepted Answer

A) higher the budgeted fixed manufacturing cost rate 
B) lower the amount of fixed manufacturing costs allocated to each unit produced 
C) higher the favorable production-volume variance 
D) more likely actual output will exceed the denominator level 
A) higher the budgeted fixed manufacturing cost rate 
B) lower the amount of fixed manufacturing costs allocated to each unit produced 
C) higher the favorable production-volume variance 
D) more likely actual output will exceed the denominator level

Question 14

The marketing manager's performance evaluation is most fair when based on a denominator level using:

Accepted Answer

A) practical capacity 
B) theoretical capacity 
C) master-budget capacity utilization 
D) normal capacity utilization 
A) practical capacity 
B) theoretical capacity 
C) master-budget capacity utilization 
D) normal capacity utilization

Question 15

Data from normal costing and standard costing are used in pricing and product-mix decisions.

Accepted Answer

A) True 
 B)False

Question 16

Using practical capacity is best for evaluating the marketing manager's performance for a particular year.

Accepted Answer

A) True 
 B)False

Question 17

Master-budget capacity utilization:

Accepted Answer

A) hides the amount of unused capacity 
B) represents the maximum units of production intended for current capacity 
C) provides the best cost estimate for benchmarking purposes 
D) when used for product costing results in the lowest cost estimate of the four capacity options 
A) hides the amount of unused capacity 
B) represents the maximum units of production intended for current capacity 
C) provides the best cost estimate for benchmarking purposes 
D) when used for product costing results in the lowest cost estimate of the four capacity options

Question 18

Theoretical capacity:

Accepted Answer

A) is unattainable in the real world 
B) represents an ideal goal of capacity usage 
C) is based on engineering studies that provide information about the technical capabilities of machines used in production 
D) All of these answers are correct. 
A) is unattainable in the real world 
B) represents an ideal goal of capacity usage 
C) is based on engineering studies that provide information about the technical capabilities of machines used in production 
D) All of these answers are correct.

Question 19

________ reduces theoretical capacity for unavoidable operating interruptions.

Accepted Answer

A) Practical capacity 
B) Theoretical capacity 
C) Master-budget capacity utilization 
D) Normal capacity utilization 
A) Practical capacity 
B) Theoretical capacity 
C) Master-budget capacity utilization 
D) Normal capacity utilization

Question 20

Practical capacity may:

Accepted Answer

A) increase over time due to improvements in plant layout 
B) decrease over time due to efficiencies offered by new technologies 
C) cannot be altered unless there is a major plant expansion 
D) Both A and B are correct. 
A) increase over time due to improvements in plant layout 
B) decrease over time due to efficiencies offered by new technologies 
C) cannot be altered unless there is a major plant expansion 
D) Both A and B are correct.

Under absorption costing, all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs.

Theoretical capacity is most often used to cost a product.

When production deviates from the denominator level, a production-volume variance always exists under absorption costing.

Under both variable and absorption costing, all variable manufacturing costs are inventoriable costs.

For benchmarking purposes it is best to use master-budget capacity because all competitors use about the same about of capacity for production.

Answer the following questions using the information below: Kory's Auto produces and sells an auto part for $60.00 per unit. In 2011, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes: -What is the inventoriable cost per unit using variable costing?

It is most difficult to estimate ________ because of the need to predict demand for the next few years.

Answer the following questions using the information below: Kory's Auto produces and sells an auto part for $60.00 per unit. In 2011, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes: -What is the inventoriable cost per unit using absorption costing?

The higher the denominator level, the:

The marketing manager's performance evaluation is most fair when based on a denominator level using:

Data from normal costing and standard costing are used in pricing and product-mix decisions.

Using practical capacity is best for evaluating the marketing manager's performance for a particular year.

Master-budget capacity utilization:

Theoretical capacity:

________ reduces theoretical capacity for unavoidable operating interruptions.

Practical capacity may:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 9: Inventory Costing and Capacity Analysis

Under absorption costing, all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs.

Theoretical capacity is most often used to cost a product.

When production deviates from the denominator level, a production-volume variance always exists under absorption costing.

Under both variable and absorption costing, all variable manufacturing costs are inventoriable costs.

For benchmarking purposes it is best to use master-budget capacity because all competitors use about the same about of capacity for production.

Answer the following questions using the information below: Kory's Auto produces and sells an auto part for $60.00 per unit. In 2011, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes: -What is the inventoriable cost per unit using variable costing?

It is most difficult to estimate ________ because of the need to predict demand for the next few years.

Answer the following questions using the information below: Kory's Auto produces and sells an auto part for $60.00 per unit. In 2011, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes: -What is the inventoriable cost per unit using absorption costing?

The higher the denominator level, the:

The marketing manager's performance evaluation is most fair when based on a denominator level using:

Data from normal costing and standard costing are used in pricing and product-mix decisions.

Using practical capacity is best for evaluating the marketing manager's performance for a particular year.

Master-budget capacity utilization:

Theoretical capacity:

________ reduces theoretical capacity for unavoidable operating interruptions.

Practical capacity may:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters