Question 1

Variable costing data can often be used for making non-routine operating decisions.

Accepted Answer

A) True 
 B)False

Question 2

Practical capacity is estimated based on

Accepted Answer

A)  Engineering studies and labor use patterns 
B)  The behavior of fixed costs 
C)  The behavior of variable costs 
D)  Demand patterns 
A)  Engineering studies and labor use patterns 
B)  The behavior of fixed costs 
C)  The behavior of variable costs 
D)  Demand patterns

Question 3

Absorption costing will produce a larger operating profit than variable costing if

Accepted Answer

A)  Fixed production overhead increases 
B)  Fixed production overhead decreases 
C)  Units produced exceed units sold 
D)  Units sold exceed units produced 
A)  Fixed production overhead increases 
B)  Fixed production overhead decreases 
C)  Units produced exceed units sold 
D)  Units sold exceed units produced

Question 4

Total production overhead is treated as a product cost when using

Accepted Answer

A)  Absorption costing 
B)  Throughput costing 
C)  Variable costing 
D)  Throughput costing and absorption costing 
A)  Absorption costing 
B)  Throughput costing 
C)  Variable costing 
D)  Throughput costing and absorption costing

Question 5

Brady Ltd uses a normal absorption costing system in which the overhead rate and variable manufacturing costs have remained unchanged for the last 2 years. During the current year the following activity occurred: The firm had no beginning or ending work in process inventories. However, there were 1,000 units in beginning finished goods.
The sales revenue for the year was

Accepted Answer

A)  $210,000 
B)  $215,040 
C)  $260,000 
D)  $204,960 
A)  $210,000 
B)  $215,040 
C)  $260,000 
D)  $204,960

Question 6

During its first year of operations, Kima Ltd. experienced the following: The cost of goods sold under absorption costing would be

Accepted Answer

A)  $585,000 
B)  $735,000 
C)  $945,000 
D)  $900,000 
A)  $585,000 
B)  $735,000 
C)  $945,000 
D)  $900,000

Question 7

Taylor Ltd just finished its second year of operations. In the first year it produced 1,000 units and sold 400. The second year resulted in the same production level, but sales were 1,200 units. The variable costing income statements for both years are shown below:   The product cost per unit during year 1 using absorption would be

Accepted Answer

A)  $67,000 
B)  $73,000 
C)  $82,000 
D)  $85,000 
A)  $67,000 
B)  $73,000 
C)  $82,000 
D)  $85,000

Question 8

Throughput costing was an outgrowth of the Theory of Constraints.

Accepted Answer

A) True 
 B)False

Question 9

Absorption costing statements conform to generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 10

The volume variance is calculated as

Accepted Answer

A)  Difference between estimated fixed overhead costs and allocated fixed overhead costs 
B)  Sum of estimated fixed overhead costs and allocated fixed overhead costs 
C)  Difference between estimated fixed overhead costs and actual fixed overhead costs 
D)  Difference between actual fixed overhead costs and allocated fixed overhead costs 
A)  Difference between estimated fixed overhead costs and allocated fixed overhead costs 
B)  Sum of estimated fixed overhead costs and allocated fixed overhead costs 
C)  Difference between estimated fixed overhead costs and actual fixed overhead costs 
D)  Difference between actual fixed overhead costs and allocated fixed overhead costs

Question 11

Brady Ltd uses a normal absorption costing system in which the overhead rate and variable manufacturing costs have remained unchanged for the last 2 years. During the current year the following activity occurred: The firm had no beginning or ending work in process inventories. However, there were 1,000 units in beginning finished goods.
If variable costing had been used, the cost of goods sold would be:

Accepted Answer

A)  $133,280 
B)  $93,100 
C)  $98,000 
D)  $111,720 
A)  $133,280 
B)  $93,100 
C)  $98,000 
D)  $111,720

Question 12

Philpott's operating profit using absorption costing is $100. Its inventories using both absorption and variable costing are as follows:   Under variable costing, operating profit would be:

Accepted Answer

A)  $102 
B)  $94 
C)  $100 
D)  $96 
A)  $102 
B)  $94 
C)  $100 
D)  $96

Question 13

Shipp Ltd. budgets the following costs for a normal monthly volume of 500 units selling for $4,000 each.   The product cost per unit using absorption costing is

Accepted Answer

A)  $1,600 
B)  $2,800 
C)  $2,000 
D)  $2,400 
A)  $1,600 
B)  $2,800 
C)  $2,000 
D)  $2,400

Question 14

"Cost" and "expense" are two terms for describing the same concept.

Accepted Answer

A) True 
 B)False

Question 15

PFA Ltd uses a throughput costing system and reported the following information for its first month of operations: Units produced…………………………………..140
Units sold………………………………………..120
Material cost per unit produced……………….$3.50
Conversion cost per unit produced……………$6.50
Fixed period costs per unit produced………….$6.00
Variable period costs per unit produced………$4.00
Selling price per unit…………………………$25.00
PFA's throughput costing operating profit will be

Accepted Answer

A)  $270 
B)  $600 
C)  $400 
D)  None of the above 
A)  $270 
B)  $600 
C)  $400 
D)  None of the above

Question 16

Under which costing method(s) are administrative and selling costs considered period expenses? I Absorption costing
II Throughput costing
III Variable costing

Accepted Answer

A)  I and II only 
B)  II and III only 
C)  I and III only 
D)  I, II, and III 
A)  I and II only 
B)  II and III only 
C)  I and III only 
D)  I, II, and III

Question 17

Practical capacity is always less than theoretical capacity.

Accepted Answer

A) True 
 B)False

Question 18

Improved information technology has increased the availability of variable costing and throughput costing income statements.

Accepted Answer

A) True 
 B)False

Question 19

Supply-based capacity levels include I Normal capacity
II Practical capacity
III Theoretical capacity

Accepted Answer

A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III 
A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III

Question 20

In throughput costing, direct labor and variable overhead are treated as

Accepted Answer

A)  Measures of capacity 
B)  Fixed costs 
C)  Period costs 
D)  Product costs 
A)  Measures of capacity 
B)  Fixed costs 
C)  Period costs 
D)  Product costs

Variable costing data can often be used for making non-routine operating decisions.

Practical capacity is estimated based on

Absorption costing will produce a larger operating profit than variable costing if

Total production overhead is treated as a product cost when using

During its first year of operations, Kima Ltd. experienced the following: The cost of goods sold under absorption costing would be

Throughput costing was an outgrowth of the Theory of Constraints.

Absorption costing statements conform to generally accepted accounting principles.

The volume variance is calculated as

Philpott's operating profit using absorption costing is $100. Its inventories using both absorption and variable costing are as follows: Under variable costing, operating profit would be:

Shipp Ltd. budgets the following costs for a normal monthly volume of 500 units selling for $4,000 each. The product cost per unit using absorption costing is

"Cost" and "expense" are two terms for describing the same concept.

Under which costing method(s) are administrative and selling costs considered period expenses? I Absorption costing II Throughput costing III Variable costing

Practical capacity is always less than theoretical capacity.

Improved information technology has increased the availability of variable costing and throughput costing income statements.

Supply-based capacity levels include I Normal capacity II Practical capacity III Theoretical capacity

In throughput costing, direct labor and variable overhead are treated as

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Cost-Volume-Profit Cvp Analysis

Job Costing Systems

Process Costing Systems

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Standard Costs, Flexible Budgets and Variance Analysis

Operational Budgets

Strategy and Control

Planning and Budgeting for Strategic Success

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

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Exam 7: Absorption, Variable and Throughput Costing

Variable costing data can often be used for making non-routine operating decisions.

Practical capacity is estimated based on

Absorption costing will produce a larger operating profit than variable costing if

Total production overhead is treated as a product cost when using

During its first year of operations, Kima Ltd. experienced the following: The cost of goods sold under absorption costing would be

Throughput costing was an outgrowth of the Theory of Constraints.

Absorption costing statements conform to generally accepted accounting principles.

The volume variance is calculated as

Philpott's operating profit using absorption costing is $100. Its inventories using both absorption and variable costing are as follows: Under variable costing, operating profit would be:

Shipp Ltd. budgets the following costs for a normal monthly volume of 500 units selling for $4,000 each. The product cost per unit using absorption costing is

"Cost" and "expense" are two terms for describing the same concept.

Under which costing method(s) are administrative and selling costs considered period expenses? I Absorption costing II Throughput costing III Variable costing

Practical capacity is always less than theoretical capacity.

Improved information technology has increased the availability of variable costing and throughput costing income statements.

Supply-based capacity levels include I Normal capacity II Practical capacity III Theoretical capacity

In throughput costing, direct labor and variable overhead are treated as

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Cost-Volume-Profit Cvp Analysis

Job Costing Systems

Process Costing Systems

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Standard Costs, Flexible Budgets and Variance Analysis

Operational Budgets

Strategy and Control

Planning and Budgeting for Strategic Success

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters