Question 1

The unit product cost under absorption costing does not include fixed manufacturing overhead cost.

Accepted Answer

A) True 
 B)False

Question 2

Favini Company, which has only one product, has provided the following data concerning its most recent month of operations:  
-What is the unit product cost for the month under absorption costing?

Accepted Answer

A) $91 
B) $125 
C) $118 
D) $98 
A) $91 
B) $125 
C) $118 
D) $98

Question 3

Carr Company produces a single product. During the past year, Carr manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows:
-Under absorption costing,the ending inventory for the year would be valued at:

Accepted Answer

A) $179,500 
B) $213,500 
C) $222,000 
D) $152,000 
A) $179,500 
B) $213,500 
C) $222,000 
D) $152,000

Question 4

Under variable costing,costs that are treated as period costs include:

Accepted Answer

A) only fixed manufacturing costs. 
B) both variable and fixed manufacturing costs. 
C) all fixed costs. 
D) only fixed selling and administrative costs. 
A) only fixed manufacturing costs. 
B) both variable and fixed manufacturing costs. 
C) all fixed costs. 
D) only fixed selling and administrative costs.

Question 5

Vanstee Corporation manufactures a variety of products. Variable costing net operating income last year was $60,000 and this year was $67,000. Last year, $37,000 in fixed manufacturing overhead costs were deferred in inventory under absorption costing. This year, $8,000 in fixed manufacturing overhead costs were released from inventory under absorption costing.
-What was the absorption costing net operating income this year?

Accepted Answer

A) $38,000 
B) $96,000 
C) $75,000 
D) $59,000 
A) $38,000 
B) $96,000 
C) $75,000 
D) $59,000

Question 6

Tsuchiya Corporation manufactures a variety of products.Last year,the company's variable costing net operating income was $57,500.Fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $35,400.What was the absorption costing net operating income last year?

Accepted Answer

A) $22,100 
B) $35,400 
C) $57,500 
D) $92,900 
A) $22,100 
B) $35,400 
C) $57,500 
D) $92,900

Question 7

The following cost formula relates to last year's operations at Lemine Manufacturing Corporation:
Y = $84,000 + $60.00X
In the formula above, 75% of the fixed cost and 90% of the variable cost are manufacturing costs. Y is the total cost and X is the number of units produced and sold. 
-If Lemine produces and sells 7,000 units,what is the unit product cost under each of the following methods?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

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 net operating income for the month under absorption costing?

Accepted Answer

A) $5,300 
B) $3,000 
C) $(12,700) 
D) $8,300 
A) $5,300 
B) $3,000 
C) $(12,700) 
D) $8,300

Question 9

Mennig Corporation produces a single product and has the following cost structure:  
-The unit product cost under variable costing is:

Accepted Answer

A) $182 
B) $92 
C) $87 
D) $94 
A) $182 
B) $92 
C) $87 
D) $94

Question 10

Kilihea Corporation produces a single product. The company's absorption costing income statement for July follows:  The company's variable production costs are $20 per unit and its fixed manufacturing overhead totals $80,000 per month.
-Net operating income under the variable costing method for July would be:

Accepted Answer

A) $53,000 
B) $49,800 
C) $61,000 
D) $57,000 
A) $53,000 
B) $49,800 
C) $61,000 
D) $57,000

Question 11

The salary of the treasurer of a corporation is an example of a common cost which normally cannot be traced to product segments.

Accepted Answer

A) True 
 B)False

Question 12

Deboer Company, which has only one product, has provided the following data concerning its most recent month of operations:    
-What is the total period cost for the month under the absorption costing approach?

Accepted Answer

A) $8,400 
B) $17,600 
C) $26,000 
D) $13,600 
A) $8,400 
B) $17,600 
C) $26,000 
D) $13,600

Question 13

The Rial Company's income statement for June is given below: 
-If sales for Division F increase $40,000 with a $10,000 increase in the Division's traceable fixed costs,the overall company net operating income should:

Accepted Answer

A) increase by $30,000 
B) increase by $6,000 
C) increase by $2,889 
D) decrease by $4,000 
A) increase by $30,000 
B) increase by $6,000 
C) increase by $2,889 
D) decrease by $4,000

Question 14

Condit Corporation manufactures a variety of products. Variable costing net operating income was $75,600 last year and was $80,100 this year. Last year, inventory decreased by 3,400 units. This year, inventory increased by 3,000 units. Fixed manufacturing overhead cost is $5 per unit.
-What was the absorption costing net operating income last year?

Accepted Answer

A) $77,600 
B) $75,600 
C) $92,600 
D) $58,600 
A) $77,600 
B) $75,600 
C) $92,600 
D) $58,600

Question 15

Stryker Corporation has two major business segments-East and West. In April, the East business segment had sales revenues of $500,000, variable expenses of $280,000, and traceable fixed expenses of $80,000. During the same month, the West business segment had sales revenues of $970,000, variable expenses of $514,000, and traceable fixed expenses of $184,000. The common fixed expenses totaled $280,000 and were allocated as follows: $112,000 to the East business segment and $168,000 to the West business segment.
-The contribution margin of the West business segment is:

Accepted Answer

A) $456,000 
B) $140,000 
C) $28,000 
D) $676,000 
A) $456,000 
B) $140,000 
C) $28,000 
D) $676,000

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Ingerson Company, which has only one product, has provided the following data concerning its most recent month of operations:  
-What is the unit product cost for the month under variable costing?

Accepted Answer

A) $109 
B) $79 
C) $99 
D) $89 
A) $109 
B) $79 
C) $99 
D) $89

Question 18

Clements Company, which has only one product, has provided the following data concerning its most recent month of operations: 
-The total contribution margin for the month under the variable costing approach is:

Accepted Answer

A) $61,500 
B) $51,000 
C) $55,500 
D) $43,600 
A) $61,500 
B) $51,000 
C) $55,500 
D) $43,600

Question 19

Pong Incorporated's income statement for the most recent month is given below.  
-The marketing department believes that a promotional campaign for Store H costing $8,000 will increase the store's sales by $15,000.If the campaign is adopted,overall company net operating income should:

Accepted Answer

A) decrease by $5,000 
B) decrease by $5,500 
C) increase by $2,000 
D) increase by $7,000 
A) decrease by $5,000 
B) decrease by $5,500 
C) increase by $2,000 
D) increase by $7,000

Question 20

Green Enterprises produces a single product. The following data were provided by the company for the most recent period:  
-For the period above,one would expect the net operating income under absorption costing to be:

Accepted Answer

A) higher than the net operating income under variable costing. 
B) lower than the net operating income under variable costing. 
C) the same as the net operating income under variable costing. 
D) The relation between absorption costing net operating income and variable costing net operating income cannot be determined. 
A) higher than the net operating income under variable costing. 
B) lower than the net operating income under variable costing. 
C) the same as the net operating income under variable costing. 
D) The relation between absorption costing net operating income and variable costing net operating income cannot be determined.

Exam 5: Variable Costing and Segment Reporting: Tools for Management

The unit product cost under absorption costing does not include fixed manufacturing overhead cost.

Favini Company, which has only one product, has provided the following data concerning its most recent month of operations: -What is the unit product cost for the month under absorption costing?

Carr Company produces a single product. During the past year, Carr manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows: -Under absorption costing,the ending inventory for the year would be valued at:

Under variable costing,costs that are treated as period costs include:

Tsuchiya Corporation manufactures a variety of products.Last year,the company's variable costing net operating income was $57,500.Fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $35,400.What was the absorption costing net operating income last year?

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the net operating income for the month under absorption costing?

Mennig Corporation produces a single product and has the following cost structure: -The unit product cost under variable costing is:

The salary of the treasurer of a corporation is an example of a common cost which normally cannot be traced to product segments.

Deboer Company, which has only one product, has provided the following data concerning its most recent month of operations: -What is the total period cost for the month under the absorption costing approach?

The Rial Company's income statement for June is given below: -If sales for Division F increase $40,000 with a $10,000 increase in the Division's traceable fixed costs,the overall company net operating income should:

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

Ingerson Company, which has only one product, has provided the following data concerning its most recent month of operations: -What is the unit product cost for the month under variable costing?

Clements Company, which has only one product, has provided the following data concerning its most recent month of operations: -The total contribution margin for the month under the variable costing approach is:

Pong Incorporated's income statement for the most recent month is given below. -The marketing department believes that a promotional campaign for Store H costing $8,000 will increase the store's sales by $15,000.If the campaign is adopted,overall company net operating income should:

Green Enterprises produces a single product. The following data were provided by the company for the most recent period: -For the period above,one would expect the net operating income under absorption costing to be:

Managerial Accounting and Cost Concepts

Job-Order Costing

Process Costing

Cost-Volume-Profit Relationships

Activity-Based Costing: a Tool to Aid Decision Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Statement of Cash Flows

Financial Statement Analysis

Least-Squares Regression Computations

Appendix B: Cost of Quality

The Predetermined Overhead Rate and Capacity

Further Classification of Labor Costs

Fifo Method

Service Department Allocations

Abc Action Analysis

Using a Modified Form of Activity-Based Costing to Determine Product Costs for External Reports

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Journal Entries to Record Variances

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

The Direct Method of Determining the Net Cash Provided by Operating Activities

Pricing Products and Services

Profitability Analysis

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