Question 1

Accountants prefer the variable costing method over absorption costing method for evaluating the performance of a company because

Accepted Answer

A)  by using the absorption costing method,income could appear to be higher by producing more inventory. 
B)  by using the absorption costing method,income could appear to be lower by producing more inventory. 
C)  by using the variable costing method,the cost of goods sold will be higher as more units are manufactured and sales remain the same. 
D)  by using the variable costing method,all fixed and variable costs are included in the unit cost of the product manufactured. 
A)  by using the absorption costing method,income could appear to be higher by producing more inventory. 
B)  by using the absorption costing method,income could appear to be lower by producing more inventory. 
C)  by using the variable costing method,the cost of goods sold will be higher as more units are manufactured and sales remain the same. 
D)  by using the variable costing method,all fixed and variable costs are included in the unit cost of the product manufactured.

Question 2

A business operated at 100% of capacity during its first month and incurred the following costs: ​
  If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month,what would be the amount of income from operations reported on the variable costing income statement?

Accepted Answer

A)  $100,800 
B)  $100,000 
C)  $114,800 
D)  $140,000 
A)  $100,800 
B)  $100,000 
C)  $114,800 
D)  $140,000

Question 3

Under variable costing,which of the following costs would be included in finished goods inventory?

Accepted Answer

A)  neither variable nor fixed factory overhead cost 
B)  both variable and fixed factory overhead cost 
C)  only variable factory overhead cost 
D)  only fixed factory overhead cost 
A)  neither variable nor fixed factory overhead cost 
B)  both variable and fixed factory overhead cost 
C)  only variable factory overhead cost 
D)  only fixed factory overhead cost

Question 4

If variable selling and administrative expenses totaled $120,000 for the year (80,000 units at $1.50 each)and the planned variable selling and administrative expenses totaled $136,500 (78,000 units at $1.75 each),the effect of the unit cost factor on the change in contribution margin is:

Accepted Answer

A)  $19,500 decrease 
B)  $19,500 increase 
C)  $20,000 decrease 
D)  $20,000 increase 
A)  $19,500 decrease 
B)  $19,500 increase 
C)  $20,000 decrease 
D)  $20,000 increase

Question 5

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost,direct labor cost,and all factory overhead cost?

Accepted Answer

A)  Standard costing 
B)  Variable costing 
C)  Absorption costing 
D)  Marginal costing 
A)  Standard costing 
B)  Variable costing 
C)  Absorption costing 
D)  Marginal costing

Question 6

Managers in service firms do not find contribution margin analysis reports useful because their firms do not sell inventory.

Accepted Answer

A) True 
 B)False

Question 7

Ford's Expedition sport utility vehicle is its most profitable model.Therefore,Ford need not promote its Expedition model anymore.

Accepted Answer

A) True 
 B)False

Question 8

A business operated at 100% of capacity during its first month and incurred the following costs: ​
  If 500 units remain unsold at the end of the month,what is the amount of inventory that would be reported on the variable costing balance sheet?

Accepted Answer

A)  $41,500 
B)  $36,000 
C)  $42,800 
D)  $38,500 
A)  $41,500 
B)  $36,000 
C)  $42,800 
D)  $38,500

Question 9

In the short run,the selling price of a product should normally not be less than the variable costs and expenses of making and selling it.

Accepted Answer

A) True 
 B)False

Question 10

Property tax expense is an example of a controllable cost for the supervisor of a manufacturing department.

Accepted Answer

A) True 
 B)False

Question 11

The following data are for Trendy Fashion Apparel:
​
   Determine the contribution margin for (a)Skirts and (b)the South Region.

Accepted Answer

The answer of The following data are for Trendy Fashion...

Question 12

Management should focus its sales and production efforts on the product or products that will provide

Accepted Answer

A)  the highest sales revenue 
B)  the lowest product costs 
C)  the maximum contribution margin 
D)  the lowest direct labor hours 
A)  the highest sales revenue 
B)  the lowest product costs 
C)  the maximum contribution margin 
D)  the lowest direct labor hours

Question 13

For a period during which the quantity of inventory at the end was smaller than that at the beginning,income from operations reported under variable costing will be smaller than income from operations reported under absorption costing.

Accepted Answer

A) True 
 B)False

Question 14

If variable cost of goods sold totaled $80,000 for the year (16,000 units at $5.00 each)and the planned variable cost of goods sold totaled $86,250 (15,000 units at $5.75 each),the effect of the unit cost factor on the change in contribution margin is:

Accepted Answer

A)  $12,000 increase 
B)  $5,750 decrease 
C)  $12,000 decrease 
D)  $5,750 increase 
A)  $12,000 increase 
B)  $5,750 decrease 
C)  $12,000 decrease 
D)  $5,750 increase

Question 15

What is the amount of the contribution margin that would be reported on the variable costing income statement?

Accepted Answer

A)  $34,200 
B)  $20,200 
C)  $29,700 
D)  $26,200 
A)  $34,200 
B)  $20,200 
C)  $29,700 
D)  $26,200

Question 16

Electricity purchased to operate factory machinery would be included as part of the cost of products manufactured under the absorption costing concept.

Accepted Answer

A) True 
 B)False

Question 17

The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured:

Accepted Answer

A)  exceed units sold 
B)  equal units sold 
C)  are less than units sold 
D)  are equal to or greater than units sold 
A)  exceed units sold 
B)  equal units sold 
C)  are less than units sold 
D)  are equal to or greater than units sold

Question 18

On the variable costing income statement,deduction of the variable cost of goods sold from sales yields manufacturing margin.

Accepted Answer

A) True 
 B)False

Question 19

In contribution margin analysis,the effect of a difference in unit sales price or unit cost on the number of units sold is termed the unit price or unit cost factor.

Accepted Answer

A) True 
 B)False

Question 20

A change in the amount of sales can be due to either a change in the units sold or a change in price or both.

Accepted Answer

A) True 
 B)False

Exam 20: Variable Costing for Management Analysis

Accountants prefer the variable costing method over absorption costing method for evaluating the performance of a company because

A business operated at 100% of capacity during its first month and incurred the following costs: ​ If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month,what would be the amount of income from operations reported on the variable costing income statement?

Under variable costing,which of the following costs would be included in finished goods inventory?

If variable selling and administrative expenses totaled $120,000 for the year (80,000 units at $1.50 each)and the planned variable selling and administrative expenses totaled $136,500 (78,000 units at $1.75 each),the effect of the unit cost factor on the change in contribution margin is:

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost,direct labor cost,and all factory overhead cost?

Managers in service firms do not find contribution margin analysis reports useful because their firms do not sell inventory.

Ford's Expedition sport utility vehicle is its most profitable model.Therefore,Ford need not promote its Expedition model anymore.

A business operated at 100% of capacity during its first month and incurred the following costs: ​ If 500 units remain unsold at the end of the month,what is the amount of inventory that would be reported on the variable costing balance sheet?

In the short run,the selling price of a product should normally not be less than the variable costs and expenses of making and selling it.

Property tax expense is an example of a controllable cost for the supervisor of a manufacturing department.

The following data are for Trendy Fashion Apparel: ​ Determine the contribution margin for (a)Skirts and (b)the South Region.

Management should focus its sales and production efforts on the product or products that will provide

For a period during which the quantity of inventory at the end was smaller than that at the beginning,income from operations reported under variable costing will be smaller than income from operations reported under absorption costing.

If variable cost of goods sold totaled $80,000 for the year (16,000 units at $5.00 each)and the planned variable cost of goods sold totaled $86,250 (15,000 units at $5.75 each),the effect of the unit cost factor on the change in contribution margin is:

What is the amount of the contribution margin that would be reported on the variable costing income statement?

Electricity purchased to operate factory machinery would be included as part of the cost of products manufactured under the absorption costing concept.

The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured:

On the variable costing income statement,deduction of the variable cost of goods sold from sales yields manufacturing margin.

In contribution margin analysis,the effect of a difference in unit sales price or unit cost on the number of units sold is termed the unit price or unit cost factor.

A change in the amount of sales can be due to either a change in the units sold or a change in price or both.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current,installment Notes,and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Cost-Volume-Profit Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

Filters

A business operated at 100% of capacity during its first month and incurred the following costs: If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month,what would be the amount of income from operations reported on the variable costing income statement?

A business operated at 100% of capacity during its first month and incurred the following costs: If 500 units remain unsold at the end of the month,what is the amount of inventory that would be reported on the variable costing balance sheet?

The following data are for Trendy Fashion Apparel: Determine the contribution margin for (a)Skirts and (b)the South Region.