Question 1

Which of the following causes he difference between the planned and actual contribution margin?

Accepted Answer

A)  an increase or decrease in the amount of sales 
B)  an increase in the amount of variable costs and expenses 
C)  a decrease in the amount of variable costs and expenses 
D)  all of the above 
A)  an increase or decrease in the amount of sales 
B)  an increase in the amount of variable costs and expenses 
C)  a decrease in the amount of variable costs and expenses 
D)  all of the above D

Question 2

In contribution margin analysis, the increase or decrease in unit sales price or unit cost on the number of units sold is referred to as the:

Accepted Answer

A)  sales factor 
B)  cost of goods sold factor 
C)  quantity factor 
D)  unit price or unit cost factor 
A)  sales factor 
B)  cost of goods sold factor 
C)  quantity factor 
D)  unit price or unit cost factor D

Question 3

In contribution margin analysis, the unit price or unit cost factor is computed as the difference between the actual unit price or unit cost and the planned unit price or unit cost, multiplied by the actual quantity sold.

Accepted Answer

A) True 
 B)False  True

Question 4

For short-run production planning, information in the absorption costing format is more useful to management than is information in the variable costing format.

Accepted Answer

A) True 
 B)False

Question 5

The absorption costing income statement does not distinguish between variable and fixed costs.

Accepted Answer

A) True 
 B)False

Question 6

Management will use both variable and absorption costing in all of the following activities except:

Accepted Answer

A)  controlling costs 
B)  product pricing 
C)  production planning 
D)  controlling inventory levels 
A)  controlling costs 
B)  product pricing 
C)  production planning 
D)  controlling inventory levels

Question 7

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 8

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 9

Another name for variable costing is:

Accepted Answer

A)  indirect costing 
B)  process costing 
C)  direct costing 
D)  differential costing 
A)  indirect costing 
B)  process costing 
C)  direct costing 
D)  differential costing

Question 10

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 11

On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is the:

Accepted Answer

A)  fixed manufacturing costs 
B)  variable cost of goods sold 
C)  fixed selling and administrative expenses 
D)  variable selling and administrative expenses 
A)  fixed manufacturing costs 
B)  variable cost of goods sold 
C)  fixed selling and administrative expenses 
D)  variable selling and administrative expenses

Question 12

The contribution margin ratio is computed as:

Accepted Answer

A)  sales divided by contribution margin 
B)  contribution margin divided by sales 
C)  contribution margin divided by cost of sales 
D)  contribution margin divided by variable cost of sales 
A)  sales divided by contribution margin 
B)  contribution margin divided by sales 
C)  contribution margin divided by cost of sales 
D)  contribution margin divided by variable cost of sales

Question 13

On the variable costing income statement, variable selling and administrative expenses are deducted from manufacturing margin to yield contribution margin.

Accepted Answer

A) True 
 B)False

Question 14

In contribution margin analysis, the quantity factor is computed as:

Accepted Answer

A)  the increase or decrease in the number of units sold multiplied by the planned unit sales price or unit cost 
B)  the increase or decrease in unit sales price or unit cost multiplied by the planned number of units to be sold 
C)  the increase or decrease in the number of units sold multiplied by the actual unit sales price or unit cost 
D)  the increase or decrease in the unit sales price or unit cost multiplied by the actual number of units sold 
A)  the increase or decrease in the number of units sold multiplied by the planned unit sales price or unit cost 
B)  the increase or decrease in unit sales price or unit cost multiplied by the planned number of units to be sold 
C)  the increase or decrease in the number of units sold multiplied by the actual unit sales price or unit cost 
D)  the increase or decrease in the unit sales price or unit cost multiplied by the actual number of units sold

Question 15

The amount of income under absorption costing will be more than 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 16

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 17

Under absorption costing, the cost of finished goods includes direct materials, direct labor, and all factory overhead.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

In the absorption costing income statement, deduction of the cost of goods sold from sales yields net profit.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

(a) $108,000 [4,000 units ´ ($

Exam 20: Variable Costing for Management Analysis

Which of the following causes he difference between the planned and actual contribution margin?

In contribution margin analysis, the increase or decrease in unit sales price or unit cost on the number of units sold is referred to as the:

In contribution margin analysis, the unit price or unit cost factor is computed as the difference between the actual unit price or unit cost and the planned unit price or unit cost, multiplied by the actual quantity sold.

For short-run production planning, information in the absorption costing format is more useful to management than is information in the variable costing format.

The absorption costing income statement does not distinguish between variable and fixed costs.

Management will use both variable and absorption costing in all of the following activities except:

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?

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

Another name for variable costing is:

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?

On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is the:

The contribution margin ratio is computed as:

On the variable costing income statement, variable selling and administrative expenses are deducted from manufacturing margin to yield contribution margin.

In contribution margin analysis, the quantity factor is computed as:

The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured:

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.

Under absorption costing, the cost of finished goods includes direct materials, direct labor, and all factory overhead.

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

In the absorption costing income statement, deduction of the cost of goods sold from sales yields net profit.

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

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

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