Question 1

Throughput costing results in a higher amount of manufacturing costs being placed in inventory than either variable or absorption costing.

Accepted Answer

A) True 
 B)False

Question 2

________ method includes fixed manufacturing overhead costs as inventoriable costs.

Accepted Answer

A) Variable costing 
B) Absorption costing 
C) Throughput costing 
D) Activity-based costing 
A) Variable costing 
B) Absorption costing 
C) Throughput costing 
D) Activity-based costing

Question 3

Kennywood Inc. ,a manufacturing firm,is able to produce 1,000 pairs of pants per hour,at maximum efficiency.There are three eight-hour shifts each day.Due to unavoidable operating interruptions,production averages 825 units per hour.The plant actually operates only 27 days per month.Based on the current budget,Kennywood estimates that it will be able to sell only 503,000 units due to the entry of a competitor with aggressive marketing capabilities.But the demand is unlikely to be affected in future and will be around 518,000.Assume the month has 30 days.What is the theoretical capacity for the month?

Accepted Answer

A) 222,750 units 
B) 720,000 units 
C) 534,600 units 
D) 648,000 units 
A) 222,750 units 
B) 720,000 units 
C) 534,600 units 
D) 648,000 units

Question 4

When actual production is below practical capacity,there will be unused-capacity cost only in the manufacturing function while unused capacity is not a factor in nonmanufacturing links of the value chair such as in the marketing function.

Accepted Answer

A) True 
 B)False

Question 5

________ are subtracted from sales to calculate gross margin.

Accepted Answer

A) Variable and fixed manufacturing costs 
B) Fixed administrative costs 
C) Variable administrative costs 
D) Fixed selling costs 
A) Variable and fixed manufacturing costs 
B) Fixed administrative costs 
C) Variable administrative costs 
D) Fixed selling costs

Question 6

Henry Chapman Manufacturing Inc.incurred the following expenses during 2017:
$\begin{array}{ll}
\text { Fixed manufacturing costs } & \$ 100,000 \
\text { Fixed nonmanufacturing costs } & \$ 87,000 \
\text { Unit selling price } & \$ 310 \
\text { Total unit cost } & \$ 100 \
\text { Variable manufacturing cost rate } & \$ 50 \
\text { Units produced } & 1,320 \quad \text { units }
\end{array}$
What will be the breakeven point if variable costing is used? (Round your final answer up to the next whole unit. )

Accepted Answer

A) 891 units 
B) 1,000 units 
C) 720 units 
D) 385 units 
A) 891 units 
B) 1,000 units 
C) 720 units 
D) 385 units

Question 7

Under absorption costing,fixed manufacturing costs ________.

Accepted Answer

A) are period costs 
B) are inventoriable costs 
C) are treated as an expense 
D) are sunk costs 
A) are period costs 
B) are inventoriable costs 
C) are treated as an expense 
D) are sunk costs

Question 8

U.S.tax reporting requires end-of-period reconciliation between actual and applied indirect costs using the adjusted allocation-rate method or the proration method.

Accepted Answer

A) True 
 B)False

Question 9

Freetown Corporation incurred fixed manufacturing costs of $30,000 during 2017.Other information for 2017 includes:
The budgeted denominator level is 2,000 units. 
Units produced total 1,800 units.
Units sold total 1,300 units.
Beginning inventory was zero.
The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
Fixed manufacturing costs included in ending inventory total ________.(Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar. )

Accepted Answer

A) $8,333 
B) $11,538 
C) $7,500 
D) $0 
A) $8,333 
B) $11,538 
C) $7,500 
D) $0

Question 10

The contribution-margin format of the income statement distinguishes manufacturing costs from nonmanufacturing costs.

Accepted Answer

A) True 
 B)False

Question 11

If 800 units are produced and 1,200 units are sold,the costing method which will result in the greatest operating income is ________.

Accepted Answer

A) throughput costing 
B) variable costing 
C) absorption costing 
D) period costing 
A) throughput costing 
B) variable costing 
C) absorption costing 
D) period costing

Question 12

________ 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 13

Freetown Corporation incurred fixed manufacturing costs of $34,000 during 2017.Other information for 2017 includes:
The budgeted denominator level is 2,000 units. 
Units produced total 1,800 units.
Units sold total 1,300 units.
Beginning inventory was zero.
The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
Operating income using absorption costing will be ________ than operating income if using variable costing.(Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar. )

Accepted Answer

A) $11,900 higher 
B) $9,444 lower 
C) $8,500 higher 
D) $22,100 lower 
A) $11,900 higher 
B) $9,444 lower 
C) $8,500 higher 
D) $22,100 lower

Question 14

Which of the following is true of master-budget capacity utilization?

Accepted Answer

A) It hides the amount of unused capacity. 
B) It represents the maximum units of production intended for current capacity. 
C) It provides the best cost estimate for benchmarking purposes. 
D) It is an average that provides no meaningful feedback to a firm's marketing manager for a particular year. 
A) It hides the amount of unused capacity. 
B) It represents the maximum units of production intended for current capacity. 
C) It provides the best cost estimate for benchmarking purposes. 
D) It is an average that provides no meaningful feedback to a firm's marketing manager for a particular year.

Question 15

To achieve consistency in reporting,a company must use the same capacity-level concept for internal reporting and control as it uses for external reporting and tax reporting.

Accepted Answer

A) True 
 B)False

Question 16

Using master-budget capacity to allocate budgeted fixed manufacturing costs can result in a

Accepted Answer

A) stable measure;avoiding the recalculation of unit costs when expected demand levels change 
B) fixed costs spread over available capacity 
C) can result in a downward demand spiral 
D) in fixed overhead costs calculated based on capacity available 
A) stable measure;avoiding the recalculation of unit costs when expected demand levels change 
B) fixed costs spread over available capacity 
C) can result in a downward demand spiral 
D) in fixed overhead costs calculated based on capacity available

Question 17

Which of the following is not one of the reasons why absorption costing might also be used for internal reporting?

Accepted Answer

A) It is more useful for managerial decision making than variable costing 
B) It is cost effective and less confusing for managers to use one common method for both internal and external reporting 
C) It can help prevent managers from making decisions that make their performance look good to the detriment of income reported to shareholders 
D) For long-term decision making both variable and fixed costs must be considered for inventory related decisions 
A) It is more useful for managerial decision making than variable costing 
B) It is cost effective and less confusing for managers to use one common method for both internal and external reporting 
C) It can help prevent managers from making decisions that make their performance look good to the detriment of income reported to shareholders 
D) For long-term decision making both variable and fixed costs must be considered for inventory related decisions

Question 18

For 2017,Rockford,Inc. ,had sales of 150,000 units and production of 200,000 units.Other information for the year included:

Required:
a.Compute the ending finished goods inventory under both absorption and variable costing.
b.Compute the cost of goods sold under both absorption and variable costing.

Accepted Answer

@#IMG-DLM&_TB5540_00_TB5540_00 @#IMG-DLM&_TB5540_0

Question 19

________ is the continuing reduction in the demand for a company's products that occurs when competitor prices are not met.

Accepted Answer

A) Downward demand spiral 
B) Competitor pricing pressure 
C) Continuous step down demand 
D) Super-demand cutback 
A) Downward demand spiral 
B) Competitor pricing pressure 
C) Continuous step down demand 
D) Super-demand cutback

Question 20

Banta Corporation is in the business of selling computers.The following expenses were incurred in March 2017:
$\begin{array}{ll}
\text { Fixed manufacturing costs } & \$ 90,000 \
\text { Fixed nonmanufacturing costs } & \$ 55,000 \
\text { Unit selling price } & \$ 1,500 \
\text { Variable manufacturing cost } & \$ 800 \
\text { Units produced } & 1,600
\end{array}$
What will be the breakeven point if variable costing is used? (Round your final answer up to the next whole unit. )

Accepted Answer

A) 97 units 
B) 208 units 
C) 182 units 
D) 129 units 
A) 97 units 
B) 208 units 
C) 182 units 
D) 129 units

Throughput costing results in a higher amount of manufacturing costs being placed in inventory than either variable or absorption costing.

________ method includes fixed manufacturing overhead costs as inventoriable costs.

When actual production is below practical capacity,there will be unused-capacity cost only in the manufacturing function while unused capacity is not a factor in nonmanufacturing links of the value chair such as in the marketing function.

________ are subtracted from sales to calculate gross margin.

Under absorption costing,fixed manufacturing costs ________.

U.S.tax reporting requires end-of-period reconciliation between actual and applied indirect costs using the adjusted allocation-rate method or the proration method.

The contribution-margin format of the income statement distinguishes manufacturing costs from nonmanufacturing costs.

If 800 units are produced and 1,200 units are sold,the costing method which will result in the greatest operating income is ________.

________ reduces theoretical capacity for unavoidable operating interruptions.

Which of the following is true of master-budget capacity utilization?

To achieve consistency in reporting,a company must use the same capacity-level concept for internal reporting and control as it uses for external reporting and tax reporting.

Using master-budget capacity to allocate budgeted fixed manufacturing costs can result in a

Which of the following is not one of the reasons why absorption costing might also be used for internal reporting?

For 2017,Rockford,Inc. ,had sales of 150,000 units and production of 200,000 units.Other information for the year included: Required: a.Compute the ending finished goods inventory under both absorption and variable costing. b.Compute the cost of goods sold under both absorption and variable costing.

________ is the continuing reduction in the demand for a company's products that occurs when competitor prices are not met.

The Manager and Management Accounting

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

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

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 and Time

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 results in a higher amount of manufacturing costs being placed in inventory than either variable or absorption costing.

________ method includes fixed manufacturing overhead costs as inventoriable costs.

When actual production is below practical capacity,there will be unused-capacity cost only in the manufacturing function while unused capacity is not a factor in nonmanufacturing links of the value chair such as in the marketing function.

________ are subtracted from sales to calculate gross margin.

Under absorption costing,fixed manufacturing costs ________.

U.S.tax reporting requires end-of-period reconciliation between actual and applied indirect costs using the adjusted allocation-rate method or the proration method.

The contribution-margin format of the income statement distinguishes manufacturing costs from nonmanufacturing costs.

If 800 units are produced and 1,200 units are sold,the costing method which will result in the greatest operating income is ________.

________ reduces theoretical capacity for unavoidable operating interruptions.

Which of the following is true of master-budget capacity utilization?

To achieve consistency in reporting,a company must use the same capacity-level concept for internal reporting and control as it uses for external reporting and tax reporting.

Using master-budget capacity to allocate budgeted fixed manufacturing costs can result in a

Which of the following is not one of the reasons why absorption costing might also be used for internal reporting?

________ is the continuing reduction in the demand for a company's products that occurs when competitor prices are not met.

The Manager and Management Accounting

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

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

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 and Time

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