Question 1

If the number of units produced exceeds the number of units sold, then net operating income under absorption costing will:

Accepted Answer

A) be equal to the net operating income under variable costing. 
B) be greater than net operating income under variable costing. 
C) be equal to the net operating income under variable costing plus total fixed manufacturing costs. 
D) be equal to the net operating income under variable costing less total fixed manufacturing costs. 
A) be equal to the net operating income under variable costing. 
B) be greater than net operating income under variable costing. 
C) be equal to the net operating income under variable costing plus total fixed manufacturing costs. 
D) be equal to the net operating income under variable costing less total fixed manufacturing costs.

Question 2

Under variable costing, all variable costs are treated as product costs.

Accepted Answer

A) True 
 B)False

Question 3

The variable expenses for the South Area for the year were:

Accepted Answer

A) $230,000 
B) $185,000 
C) $162,500 
D) $65,000 
A) $230,000 
B) $185,000 
C) $162,500 
D) $65,000

Question 4

Roberts Company produces a single product. This year, the company's net operating income under absorption costing was $2,000 lower than under variable costing. The company sold 8,000 units during the year, and its variable costs were $8 per unit, of which $2 was variable selling and administrative expense. If production cost was $10 per unit under absorption costing, then how many units did the company produce during the year? (The company produced the same number of units last year.)

Accepted Answer

A) 7,500 units 
B) 7,000 units 
C) 9,000 units 
D) 8,500 units 
A) 7,500 units 
B) 7,000 units 
C) 9,000 units 
D) 8,500 units

Question 5

What was the absorption costing net operating income this year?

Accepted Answer

A) $78,100 
B) $95,100 
C) $65,100 
D) $73,600 
A) $78,100 
B) $95,100 
C) $65,100 
D) $73,600

Question 6

In responsibility accounting, each segment in an organization should be charged with the costs for which it is responsible and over which it has control plus its share of common organizational costs.

Accepted Answer

A) True 
 B)False

Question 7

The value of the company's inventory on August 31 under the absorption costing method is:

Accepted Answer

A) $27,000 
B) $42,000 
C) $36,000 
D) $47,000 
A) $27,000 
B) $42,000 
C) $36,000 
D) $47,000

Question 8

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:   What is the total period cost for the month under variable costing?

Accepted Answer

A) $185,000 
B) $117,600 
C) $273,200 
D) $302,600 
A) $185,000 
B) $117,600 
C) $273,200 
D) $302,600

Question 9

Over an extended period of time in which the final ending inventories are zero, the accumulated net operating income figures reported under absorption costing will be:

Accepted Answer

A) greater than those reported under variable costing. 
B) less than those reported under variable costing. 
C) the same as those reported under variable costing. 
D) higher or lower since no generalization can be made. 
A) greater than those reported under variable costing. 
B) less than those reported under variable costing. 
C) the same as those reported under variable costing. 
D) higher or lower since no generalization can be made.

Question 10

What is the unit product cost for the month under variable costing?

Accepted Answer

A) $99 
B) $81 
C) $106 
D) $88 
A) $99 
B) $81 
C) $106 
D) $88

Question 11

What is the total period cost for the month under the absorption costing approach?

Accepted Answer

A) $104,400 
B) $31,200 
C) $13,000 
D) $135,600 
A) $104,400 
B) $31,200 
C) $13,000 
D) $135,600

Question 12

The carrying value on the balance sheet of the ending finished goods inventory under absorption costing would be:

Accepted Answer

A) $16,000 
B) $10,000 
C) $12,000 
D) $21,000 
A) $16,000 
B) $10,000 
C) $12,000 
D) $21,000

Question 13

The unit product cost under absorption costing is:

Accepted Answer

A) $92 
B) $228 
C) $182 
D) $85 
A) $92 
B) $228 
C) $182 
D) $85

Question 14

The contribution margin ratio for Product C is:

Accepted Answer

A) 75% 
B) 69% 
C) 31% 
D) 25% 
A) 75% 
B) 69% 
C) 31% 
D) 25%

Question 15

What was the absorption costing net operating income last year?

Accepted Answer

A) $86,200 
B) $89,100 
C) $88,800 
D) $91,400 
A) $86,200 
B) $89,100 
C) $88,800 
D) $91,400

Question 16

Roy Corporation produces a single product. During July, Roy produced 10,000 units. Costs incurred during the month were as follows:   Under absorption costing, any unsold units would be carried in the inventory account at a unit product cost of:

Accepted Answer

A) $5.10 
B) $4.40 
C) $3.80 
D) $3.50 
A) $5.10 
B) $4.40 
C) $3.80 
D) $3.50

Question 17

How would Eagle's variable costing net operating income have been affected in its first year if only 9,000 tables were sold instead of 10,000?

Accepted Answer

A) net operating income would have been $37,100 lower 
B) net operating income would have been $45,800 lower 
C) net operating income would have been $56,000 lower 
D) net operating income would have been $62,000 lower 
A) net operating income would have been $37,100 lower 
B) net operating income would have been $45,800 lower 
C) net operating income would have been $56,000 lower 
D) net operating income would have been $62,000 lower

Question 18

The contribution margin tells us what happens to profits as volume changes if a segment's capacity and fixed costs change as well.

Accepted Answer

A) True 
 B)False

Question 19

UHF Antennas, Inc., produces and sells a unique television antenna. The company has just opened a new plant to manufacture the antenna, and the following cost and revenue data have been reported for the first month of the new plant's operation:   Management is anxious to see how profitable the new antenna will be and has asked that an income statement be prepared for the month. Assume that direct labor is a variable cost.
Required:
a. Assuming that the company uses absorption costing, compute the unit product cost and prepare an income statement.
b. Assuming that the company uses variable costing, compute the unit product cost and prepare an income statement.
c. Explain the reason for any difference in the ending inventories under the two costing methods and the impact of this difference on reported net operating income.

Accepted Answer

a. Unit product cost

Question 20

The total contribution margin for the month under the variable costing approach is:

Accepted Answer

A) $192,000 
B) $128,000 
C) $72,800 
D) $140,800 
A) $192,000 
B) $128,000 
C) $72,800 
D) $140,800

If the number of units produced exceeds the number of units sold, then net operating income under absorption costing will:

Under variable costing, all variable costs are treated as product costs.

The variable expenses for the South Area for the year were:

What was the absorption costing net operating income this year?

In responsibility accounting, each segment in an organization should be charged with the costs for which it is responsible and over which it has control plus its share of common organizational costs.

The value of the company's inventory on August 31 under the absorption costing method is:

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the total period cost for the month under variable costing?

Over an extended period of time in which the final ending inventories are zero, the accumulated net operating income figures reported under absorption costing will be:

What is the unit product cost for the month under variable costing?

What is the total period cost for the month under the absorption costing approach?

The carrying value on the balance sheet of the ending finished goods inventory under absorption costing would be:

The unit product cost under absorption costing is:

The contribution margin ratio for Product C is:

What was the absorption costing net operating income last year?

Roy Corporation produces a single product. During July, Roy produced 10,000 units. Costs incurred during the month were as follows: Under absorption costing, any unsold units would be carried in the inventory account at a unit product cost of:

How would Eagle's variable costing net operating income have been affected in its first year if only 9,000 tables were sold instead of 10,000?

The contribution margin tells us what happens to profits as volume changes if a segment's capacity and fixed costs change as well.

The total contribution margin for the month under the variable costing approach is:

Managerial Accounting and Cost Concepts

Cost-Volume-Profit Relationships

Job-Order Costing

Activity-Based-Costing: a Tool to Aid Decision Making

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Capital Budgeting Decisions

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Managerial Accounting and Cost Concepts

Job-Order Costing

Activity-Based-Costing: a Tool to Aid Decision Making

A Capital Budgeting Decisions

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Performance Measurement in Decentralized Organizations

Profitability Analysis

Pricing Products and Services

Filters

Exam 4: Variable Costing and Segment Reporting: Tools for Management

If the number of units produced exceeds the number of units sold, then net operating income under absorption costing will:

Under variable costing, all variable costs are treated as product costs.

The variable expenses for the South Area for the year were:

What was the absorption costing net operating income this year?

In responsibility accounting, each segment in an organization should be charged with the costs for which it is responsible and over which it has control plus its share of common organizational costs.

The value of the company's inventory on August 31 under the absorption costing method is:

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the total period cost for the month under variable costing?

Over an extended period of time in which the final ending inventories are zero, the accumulated net operating income figures reported under absorption costing will be:

What is the unit product cost for the month under variable costing?

What is the total period cost for the month under the absorption costing approach?

The carrying value on the balance sheet of the ending finished goods inventory under absorption costing would be:

The unit product cost under absorption costing is:

The contribution margin ratio for Product C is:

What was the absorption costing net operating income last year?

Roy Corporation produces a single product. During July, Roy produced 10,000 units. Costs incurred during the month were as follows: Under absorption costing, any unsold units would be carried in the inventory account at a unit product cost of:

How would Eagle's variable costing net operating income have been affected in its first year if only 9,000 tables were sold instead of 10,000?

The contribution margin tells us what happens to profits as volume changes if a segment's capacity and fixed costs change as well.

The total contribution margin for the month under the variable costing approach is:

Managerial Accounting and Cost Concepts

Cost-Volume-Profit Relationships

Job-Order Costing

Activity-Based-Costing: a Tool to Aid Decision Making

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Capital Budgeting Decisions

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Managerial Accounting and Cost Concepts

Job-Order Costing

Activity-Based-Costing: a Tool to Aid Decision Making

A Capital Budgeting Decisions

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Performance Measurement in Decentralized Organizations

Profitability Analysis

Pricing Products and Services

Filters