Question 1

Throughput costing is also referred to as super-variable costing.

Accepted Answer

A) True 
 B)False

Question 2

Under absorption costing, managers can increase operating income by producing more inventory at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 3

When large differences exist between practical capacity and master-budget capacity utilization, companies may:

Accepted Answer

A) classify the difference as planned unused capacity 
B) use master-budget capacity utilization for setting selling prices 
C) use practical capacity for meaningful feedback to the marketing manager 
D) All of these answers are correct. 
A) classify the difference as planned unused capacity 
B) use master-budget capacity utilization for setting selling prices 
C) use practical capacity for meaningful feedback to the marketing manager 
D) All of these answers are correct.

Question 4

If the capacity level chosen to calculate the budgeted fixed overhead cost rate is more than the actual production, an unfavorable production-volume variance will result.

Accepted Answer

A) True 
 B)False

Question 5

The breakeven points are the same under both variable costing and absorption costing.

Accepted Answer

A) True 
 B)False

Question 6

Answer the following questions using the information below:
Russert Company produces wood statues. Management has provided the following information:
    
-What is the total throughput contribution?

Accepted Answer

A) $1,000,000 
B) $2,000,000 
C) $450,000 
D) $750,000 
A) $1,000,000 
B) $2,000,000 
C) $450,000 
D) $750,000

Question 7

Estimating capacity costs is unique to manufacturing and it is NOT applicable to nonmanufacturing entities.

Accepted Answer

A) True 
 B)False

Question 8

Differences between absorption costing and variable costing are much smaller when a:

Accepted Answer

A) large part of the manufacturing process is subcontracted out 
B) just-in-time inventory strategy is implemented 
C) significant portion of manufacturing costs are fixed 
D) Both A and B are correct. 
A) large part of the manufacturing process is subcontracted out 
B) just-in-time inventory strategy is implemented 
C) significant portion of manufacturing costs are fixed 
D) Both A and B are correct.

Question 9

Answer the following questions using the information below:
Veach Corporation incurred fixed manufacturing costs of $6,000 during 2011. Other information for 2011 includes:
   The company uses variable costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold.
-The production-volume variance totals:

Accepted Answer

A) $2,000 
B) $1,500 
C) $2,400 
D) 0 
A) $2,000 
B) $1,500 
C) $2,400 
D) 0

Question 10

Fixed manufacturing costs included in cost of goods available for sale + the production-volume variance will always = total fixed manufacturing costs under absorption costing.

Accepted Answer

A) True 
 B)False

Question 11

________ are subtracted from sales to calculate contribution margin.

Accepted Answer

A) Variable manufacturing costs 
B) Variable selling and administrative costs 
C) Fixed manufacturing costs 
D) Both A and B are correct. 
A) Variable manufacturing costs 
B) Variable selling and administrative costs 
C) Fixed manufacturing costs 
D) Both A and B are correct.

Question 12

Managers face uncertainty when estimating:

Accepted Answer

A) demand of the product 
B) the denominator level for practical capacity 
C) total fixed manufacturing costs for the next accounting period 
D) All of these answers are correct. 
A) demand of the product 
B) the denominator level for practical capacity 
C) total fixed manufacturing costs for the next accounting period 
D) All of these answers are correct.

Question 13

In variable costing, all nonmanufacturing costs are subtracted from contribution margin.

Accepted Answer

A) True 
 B)False

Question 14

Answer the following questions using the information below:
Tunney Corporation incurred fixed manufacturing costs of $7,200 during 2011. Other information for 2011 includes:
   The fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold.
-Under absorption costing, fixed manufacturing costs expensed on the income statement (excluding adjustments for variances)total:

Accepted Answer

A) $8,550 
B) $9,000 
C) $7,200 
D) 0 
A) $8,550 
B) $9,000 
C) $7,200 
D) 0

Question 15

Normal capacity utilization:

Accepted Answer

A) represents real capacity available to the company 
B) can result in setting selling prices that are not competitive 
C) when used for product costing results in the lowest cost estimate of the four capacity options 
D) represents the maximum units of production intended for current capacity 
A) represents real capacity available to the company 
B) can result in setting selling prices that are not competitive 
C) when used for product costing results in the lowest cost estimate of the four capacity options 
D) represents the maximum units of production intended for current capacity

Question 16

________ method(s)expense(s)variable marketing costs in the period incurred.

Accepted Answer

A) Variable costing 
B) Absorption costing 
C) Throughput costing 
D) All of these answers are correct. 
A) Variable costing 
B) Absorption costing 
C) Throughput costing 
D) All of these answers are correct.

Question 17

One possible means of determining the difference between operating incomes for absorption costing and variable costing is by:

Accepted Answer

A) subtracting sales of the previous period from sales of this period 
B) subtracting fixed manufacturing overhead in beginning inventory from fixed manufacturing overhead in ending inventory 
C) multiplying the number of units produced by the budgeted fixed manufacturing cost rate 
D) adding fixed manufacturing costs to the production-volume variance 
A) subtracting sales of the previous period from sales of this period 
B) subtracting fixed manufacturing overhead in beginning inventory from fixed manufacturing overhead in ending inventory 
C) multiplying the number of units produced by the budgeted fixed manufacturing cost rate 
D) adding fixed manufacturing costs to the production-volume variance

Question 18

Answer the following questions using the information below:
Barry's Hobbies produces and sells a luxury animal pillow for $80.00 per unit. In the first month of operation, 3,000 units were produced and 2,250 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 when using absorption costing?

Accepted Answer

A) $8,000 
B) $33,000 
C) ($23,500) 
D) $37,500 
A) $8,000 
B) $33,000 
C) ($23,500) 
D) $37,500

Question 19

The contribution-margin format of the income statement:

Accepted Answer

A) is used with absorption costing 
B) highlights the lump sum of fixed manufacturing costs 
C) distinguishes manufacturing costs from nonmanufacturing costs 
D) calculates gross margin 
A) is used with absorption costing 
B) highlights the lump sum of fixed manufacturing costs 
C) distinguishes manufacturing costs from nonmanufacturing costs 
D) calculates gross margin

Question 20

________ method(s)is required for tax reporting purposes.

Accepted Answer

A) Variable costing 
B) Absorption costing 
C) Throughput costing 
D) All of these answers are correct. 
A) Variable costing 
B) Absorption costing 
C) Throughput costing 
D) All of these answers are correct.

Throughput costing is also referred to as super-variable costing.

Under absorption costing, managers can increase operating income by producing more inventory at the end of the accounting period.

When large differences exist between practical capacity and master-budget capacity utilization, companies may:

If the capacity level chosen to calculate the budgeted fixed overhead cost rate is more than the actual production, an unfavorable production-volume variance will result.

The breakeven points are the same under both variable costing and absorption costing.

Answer the following questions using the information below: Russert Company produces wood statues. Management has provided the following information: -What is the total throughput contribution?

Estimating capacity costs is unique to manufacturing and it is NOT applicable to nonmanufacturing entities.

Differences between absorption costing and variable costing are much smaller when a:

Fixed manufacturing costs included in cost of goods available for sale + the production-volume variance will always = total fixed manufacturing costs under absorption costing.

________ are subtracted from sales to calculate contribution margin.

Managers face uncertainty when estimating:

In variable costing, all nonmanufacturing costs are subtracted from contribution margin.

Normal capacity utilization:

________ method(s)expense(s)variable marketing costs in the period incurred.

One possible means of determining the difference between operating incomes for absorption costing and variable costing is by:

The contribution-margin format of the income statement:

________ method(s)is required for tax reporting purposes.

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

Throughput costing is also referred to as super-variable costing.

Under absorption costing, managers can increase operating income by producing more inventory at the end of the accounting period.

When large differences exist between practical capacity and master-budget capacity utilization, companies may:

If the capacity level chosen to calculate the budgeted fixed overhead cost rate is more than the actual production, an unfavorable production-volume variance will result.

The breakeven points are the same under both variable costing and absorption costing.

Answer the following questions using the information below: Russert Company produces wood statues. Management has provided the following information: -What is the total throughput contribution?

Estimating capacity costs is unique to manufacturing and it is NOT applicable to nonmanufacturing entities.

Differences between absorption costing and variable costing are much smaller when a:

Fixed manufacturing costs included in cost of goods available for sale + the production-volume variance will always = total fixed manufacturing costs under absorption costing.

________ are subtracted from sales to calculate contribution margin.

Managers face uncertainty when estimating:

In variable costing, all nonmanufacturing costs are subtracted from contribution margin.

Normal capacity utilization:

________ method(s)expense(s)variable marketing costs in the period incurred.

One possible means of determining the difference between operating incomes for absorption costing and variable costing is by:

The contribution-margin format of the income statement:

________ method(s)is required for tax reporting purposes.

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