Question 1

Which accounting method is used for external reporting?

Accepted Answer

A) absorption costing 
B) variable costing 
C) transfer price costing 
D) responsibility costing 
A) absorption costing 
B) variable costing 
C) transfer price costing 
D) responsibility costing

Question 2

Raymond Company reported the following units of production and sales for June and July:
Net income under absorption costing for June was $40,000; net income under variable costing for July was $50,000. Fixed manufacturing costs were $600,000 for each month.  
-Refer to the Figure.What was the net income for July using absorption costing?

Accepted Answer

A) $20,000 
B) $40,000 
C) $50,000 
D) $80,000 
A) $20,000 
B) $40,000 
C) $50,000 
D) $80,000

Question 3

What is the general relationship between inventory values calculated using variable costing and inventory values calculated using absorption costing?

Accepted Answer

A) They will be equal. 
B) Inventory values calculated using variable costing will be less. 
C) Inventory values calculated using variable costing will be greater. 
D) Inventory values calculated using variable costing will be twice as much. 
A) They will be equal. 
B) Inventory values calculated using variable costing will be less. 
C) Inventory values calculated using variable costing will be greater. 
D) Inventory values calculated using variable costing will be twice as much.

Question 4

What are the traditional reasons for carrying inventory?

Accepted Answer

1.To balance ordering or setup

Question 5

Stosho Company incurred the following costs in manufacturing desk calculators:
During the period, the company produced and sold 2,000 units.
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 28 \
\text { Indirect materials (variable) } & 8 \
\text { Direct labour } & 16 \
\text { Indirect labour (variable) } & 12 \
\text { Other variable factory overhead } & 20 \
\text { Fixed factory overhead } & 56 \
\text { Variable selling expenses } & 40 \
\text { Fixed selling expenses } & 28
\end{array}$$
-Refer to the Figure.What is the inventory cost per unit using variable costing?

Accepted Answer

A) $42 
B) $52 
C) $62 
D) $84 
A) $42 
B) $52 
C) $62 
D) $84

Question 6

A major advantage to the JIT inventory approach is that it decreases carrying costs.

Accepted Answer

A) True 
 B)False

Question 7

LaTiffa Company orders 250 units at a time and places 15 orders per year.Total ordering cost is $1,100,and total carrying cost is $1,100.Which best describes the economic order quantity?

Accepted Answer

A) The economic order quantity (EOQ) is 250. 
B) The economic order quantity (EOQ) is more than 250. 
C) The economic order quantity (EOQ) is less than 250. 
D) The economic order quantity (EOQ) is 15. 
A) The economic order quantity (EOQ) is 250. 
B) The economic order quantity (EOQ) is more than 250. 
C) The economic order quantity (EOQ) is less than 250. 
D) The economic order quantity (EOQ) is 15.

Question 8

If the number of units produced in a period is smaller than the number of units sold in period,absorption costing income will be higher than variable costing income.

Accepted Answer

A) True 
 B)False

Question 9

On a segmented income statement,fixed costs are broken down into direct fixed costs and overall fixed costs.

Accepted Answer

A) True 
 B)False

Question 10

Match each statement with the correct item below.
-Just-in-time

Accepted Answer

A) The costs of not having a product available when demanded by a customer 
B) The costs of carrying inventory 
C) Approach that maintains goods should be pulled through the system by present demand 
D) The number of units in the order quantity that minimizes the total cost 
E) The costs of placing and receiving an order 
A) The costs of not having a product available when demanded by a customer 
B) The costs of carrying inventory 
C) Approach that maintains goods should be pulled through the system by present demand 
D) The number of units in the order quantity that minimizes the total cost 
E) The costs of placing and receiving an order

Question 11

On which type of income statement does each of the following costs appear?
-Fixed factory overhead for units sold

Accepted Answer

A) Variable costing income statement 
B) Absorption costing income statement 
C) Both types of income statements 
A) Variable costing income statement 
B) Absorption costing income statement 
C) Both types of income statements

Question 12

The costs of NOT having a product available when demanded by a customer are called setup costs.

Accepted Answer

A) True 
 B)False

Question 13

The variable costing income statement for Kilem Company for this year is as follows:
Selected data for this year concerning the operations of the company are as follows:
   Required: Prepare an absorption costing income statement for this year.
 $\begin{array}{lr}\text { Beginning inventory } & -0 \text { - units } \
\text { Units produced } & 8,000 \text { units }\
\text { Manufacturing costs: } & \
\text { Direct labour } & \$ 3.00 \text { per unit } \
\text { Direct materials } & 1.40 \text { per unit } \
\text { Variable overhead } & 1.60 \text { per unit }
\end{array}$

Accepted Answer

The answer of The variable costing income statement for Kilem...

Question 14

Suppose production is less than sales volume.What is the relationship between net income under absorption costing and profits when using variable-costing procedures?

Accepted Answer

A) Net income under absorption costing will be greater than profits when using variable costing. 
B) Net income under absorption costing will be less than profits when using variable costing. 
C) Net income under absorption costing will be equal to profits when using variable costing. 
D) Net income under absorption costing will be randomly different from profits when using variable costing. 
A) Net income under absorption costing will be greater than profits when using variable costing. 
B) Net income under absorption costing will be less than profits when using variable costing. 
C) Net income under absorption costing will be equal to profits when using variable costing. 
D) Net income under absorption costing will be randomly different from profits when using variable costing.

Question 15

On which type of income statement does each of the following costs appear?
-Direct labour for units sold

Accepted Answer

A) Variable costing income statement 
B) Absorption costing income statement 
C) Both types of income statements 
A) Variable costing income statement 
B) Absorption costing income statement 
C) Both types of income statements

Question 16

Lauren Company orders 250 units at a time and places 15 orders per year.Total ordering cost is $1,600,and total carrying cost is $1,250.What is the economic order quantity?

Accepted Answer

A) The economic order quantity (EOQ) is 250. 
B) The economic order quantity (EOQ) is more than 250. 
C) The economic order quantity (EOQ) is less than 250. 
D) The economic order quantity (EOQ) is 15. 
A) The economic order quantity (EOQ) is 250. 
B) The economic order quantity (EOQ) is more than 250. 
C) The economic order quantity (EOQ) is less than 250. 
D) The economic order quantity (EOQ) is 15.

Question 17

On which type of income statement does each of the following costs appear?
-Fixed selling expense

Accepted Answer

A) Variable costing income statement 
B) Absorption costing income statement 
C) Both types of income statements 
A) Variable costing income statement 
B) Absorption costing income statement 
C) Both types of income statements

Question 18

Inventory costs under variable costing include only direct materials,direct labour,and fixed factory overhead.

Accepted Answer

A) True 
 B)False

Question 19

Triple M Company had the following data for the month:
Fixed overhead is $4,000 per month, which is applied to production on the basis of normal activity of 2,000 units. During the month, 2,000 units were produced. Loring started the month with 300 units in beginning inventory, with unit product cost equal to this month's unit product cost. A total of 2,100 units were sold during the month at price of $14 per unit. Selling and administrative expense for the month, all fixed, totalled $3,600.
 $\begin{array}{lr}
\text { Variable costs per unit: } & \
\text { Direct materials } & \$ 4.00 \
\text { Direct labour } & 3.20 \
\text { Variable overhead } & 1.00 \
\text { Variable selling expenses } & 0.40
\end{array}$
-Refer to the Figure.What is the unit product cost under variable costing?

Accepted Answer

A) $7.20 
B) $8.20 
C) $8.60 
D) $10.20 
A) $7.20 
B) $8.20 
C) $8.60 
D) $10.20

Question 20

Which of the following would NOT be considered a segment?

Accepted Answer

A) a division 
B) a product line 
C) a sales territory 
D) a corporation 
A) a division 
B) a product line 
C) a sales territory 
D) a corporation

Which accounting method is used for external reporting?

What is the general relationship between inventory values calculated using variable costing and inventory values calculated using absorption costing?

What are the traditional reasons for carrying inventory?

A major advantage to the JIT inventory approach is that it decreases carrying costs.

LaTiffa Company orders 250 units at a time and places 15 orders per year.Total ordering cost is $1,100,and total carrying cost is $1,100.Which best describes the economic order quantity?

If the number of units produced in a period is smaller than the number of units sold in period,absorption costing income will be higher than variable costing income.

On a segmented income statement,fixed costs are broken down into direct fixed costs and overall fixed costs.

Match each statement with the correct item below. -Just-in-time

On which type of income statement does each of the following costs appear? -Fixed factory overhead for units sold

The costs of NOT having a product available when demanded by a customer are called setup costs.

Suppose production is less than sales volume.What is the relationship between net income under absorption costing and profits when using variable-costing procedures?

On which type of income statement does each of the following costs appear? -Direct labour for units sold

Lauren Company orders 250 units at a time and places 15 orders per year.Total ordering cost is $1,600,and total carrying cost is $1,250.What is the economic order quantity?

On which type of income statement does each of the following costs appear? -Fixed selling expense

Inventory costs under variable costing include only direct materials,direct labour,and fixed factory overhead.

Which of the following would NOT be considered a segment?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 8: Absorption and Variable Costing, and Inventory Management

Which accounting method is used for external reporting?

What is the general relationship between inventory values calculated using variable costing and inventory values calculated using absorption costing?

What are the traditional reasons for carrying inventory?

A major advantage to the JIT inventory approach is that it decreases carrying costs.

LaTiffa Company orders 250 units at a time and places 15 orders per year.Total ordering cost is $1,100,and total carrying cost is $1,100.Which best describes the economic order quantity?

If the number of units produced in a period is smaller than the number of units sold in period,absorption costing income will be higher than variable costing income.

On a segmented income statement,fixed costs are broken down into direct fixed costs and overall fixed costs.

Match each statement with the correct item below. -Just-in-time

On which type of income statement does each of the following costs appear? -Fixed factory overhead for units sold

The costs of NOT having a product available when demanded by a customer are called setup costs.

Suppose production is less than sales volume.What is the relationship between net income under absorption costing and profits when using variable-costing procedures?

On which type of income statement does each of the following costs appear? -Direct labour for units sold

Lauren Company orders 250 units at a time and places 15 orders per year.Total ordering cost is $1,600,and total carrying cost is $1,250.What is the economic order quantity?

On which type of income statement does each of the following costs appear? -Fixed selling expense

Inventory costs under variable costing include only direct materials,direct labour,and fixed factory overhead.

Which of the following would NOT be considered a segment?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters