Question 1

The costing method that can be used most easily with break-even analysis and other cost-volume-profit techniques is:

Accepted Answer

A)  variable costing. 
B)  absorption costing. 
C)  process costing. 
D)  job-order costing. 
A)  variable costing. 
B)  absorption costing. 
C)  process costing. 
D)  job-order costing.

Question 2

Dewiel Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years:  
-What was the absorption costing net operating income this year?

Accepted Answer

A)  $105,900 
B)  $115,500 
C)  $89,700 
D)  $109,500 
A)  $105,900 
B)  $115,500 
C)  $89,700 
D)  $109,500

Question 3

Schubert Corporation manufactures a variety of products. Variable costing net operating income last year was $59,000 and this year was $70,000. Last year, $31,000 in fixed manufacturing overhead costs were released from inventory under absorption costing. This year, $22,000 in fixed manufacturing overhead costs were deferred in inventory under absorption costing.
-What was the absorption costing net operating income last year?

Accepted Answer

A)  $90,000 
B)  $59,000 
C)  $28,000 
D)  $68,000 
A)  $90,000 
B)  $59,000 
C)  $28,000 
D)  $68,000

Question 4

Under the absorption costing method, a company can increase profits by increasing production rather than by increasing sales.

Accepted Answer

A) True 
 B)False

Question 5

Roberts Company produces a single product. During the year just ended, the company's net operating income under absorption costing was $3,000 lower than under variable costing. The company sold 9,000 units during the year, and its variable costs were $9 per unit, of which $3 was variable selling expense. If production cost is $11 per unit under absorption costing every year, then how many units did the company produce during the year?

Accepted Answer

A)  8,000 
B)  10,000 
C)  9,600 
D)  8,400 
A)  8,000 
B)  10,000 
C)  9,600 
D)  8,400

Question 6

If production exceeds sales for the period, variable costing net operating income will typically be greater than absorption costing net operating income.

Accepted Answer

A) True 
 B)False

Question 7

Pachur Company, which has only one product, has provided the following data concerning its most recent month of operations:   
The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.
Required:
a. What is the unit product cost for the month under variable costing?
b. Prepare a contribution format income statement for the month using variable costing.
c. Without preparing an income statement, determine the absorption costing net operating income for the month. (Hint: Use the reconciliation method.)

Accepted Answer

The answer of Pachur Company, which has only one product,...

Question 8

Przygocki Inc., which produces a single product, has provided the following data for its most recent month of operation:   
The company had no beginning or ending inventories.
Required:
Compute the unit product cost under absorption costing. Show your work!

Accepted Answer

The answer of Przygocki Inc., which produces a single product,...

Question 9

Net operating income computed using variable costing would exceed net operating income computed using absorption costing if:

Accepted Answer

A)  units sold exceed units produced. 
B)  units sold are less than units produced. 
C)  units sold equal units produced. 
D)  the average fixed cost per unit is zero. 
A)  units sold exceed units produced. 
B)  units sold are less than units produced. 
C)  units sold equal units produced. 
D)  the average fixed cost per unit is zero.

Question 10

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:  
The total contribution margin for the month under variable costing is:

Accepted Answer

A)  $83,900 
B)  $221,400 
C)  $135,000 
D)  $270,000 
A)  $83,900 
B)  $221,400 
C)  $135,000 
D)  $270,000

Question 11

Walsh Company produces a single product. Last year, the company manufactured 25,000 units and sold 22,000 units. Production costs were as follows:   Sales totaled $440,000, variable selling and administrative expenses were $110,000, and fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labor is a variable cost.
-Under variable costing, the total amount of fixed manufacturing cost in the ending inventory would be:

Accepted Answer

A)  $0 
B)  $9,000 
C)  $14,400 
D)  $27,000 
A)  $0 
B)  $9,000 
C)  $14,400 
D)  $27,000

Question 12

Crystal Company produces a single product. The company's variable costing income statement for the month of May appears below:   The company produced 80,000 units in May and the beginning inventory consisted of 25,000 units. Variable production costs per unit and total fixed costs have remained constant over the past several months.
-Under absorption costing, for the month ended May 31, the company would report a:

Accepted Answer

A)  $30,000 loss 
B)  $0 profit 
C)  $30,000 profit 
D)  $60,000 profit 
A)  $30,000 loss 
B)  $0 profit 
C)  $30,000 profit 
D)  $60,000 profit

Question 13

Walsh Company produces a single product. Last year, the company manufactured 25,000 units and sold 22,000 units. Production costs were as follows:   Sales totaled $440,000, variable selling and administrative expenses were $110,000, and fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labor is a variable cost.
-The net operating income under variable costing would be:

Accepted Answer

A)  $2,000 
B)  $21,000 
C)  $12,000 
D)  $9,000 
A)  $2,000 
B)  $21,000 
C)  $12,000 
D)  $9,000

Question 14

O'Bannion Company, which has only one product, has provided the following data concerning its most recent month of operations:   
Required:
a. Prepare a contribution format income statement for the month using variable costing.
b. Prepare an income statement for the month using absorption costing.

Accepted Answer

The answer of O'Bannion Company, which has only one product,...

Question 15

Abdol 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 variable costing approach?

Accepted Answer

A)  $263,500 
B)  $71,500 
C)  $302,500 
D)  $231,000 
A)  $263,500 
B)  $71,500 
C)  $302,500 
D)  $231,000

Question 16

Which of the following statements is true for a company that uses variable costing?

Accepted Answer

A)  The unit product cost changes because of changes in the number of units manufactured. 
B)  Profit fluctuates with sales. 
C)  Any underapplied overhead is included in the product cost. 
D)  Product costs include variable administration costs. 
A)  The unit product cost changes because of changes in the number of units manufactured. 
B)  Profit fluctuates with sales. 
C)  Any underapplied overhead is included in the product cost. 
D)  Product costs include variable administration costs.

Exam 7: Variable Costing: a Tool for Management

The costing method that can be used most easily with break-even analysis and other cost-volume-profit techniques is:

Dewiel Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years: -What was the absorption costing net operating income this year?

Under the absorption costing method, a company can increase profits by increasing production rather than by increasing sales.

If production exceeds sales for the period, variable costing net operating income will typically be greater than absorption costing net operating income.

Przygocki Inc., which produces a single product, has provided the following data for its most recent month of operation: The company had no beginning or ending inventories. Required: Compute the unit product cost under absorption costing. Show your work!

Net operating income computed using variable costing would exceed net operating income computed using absorption costing if:

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: The total contribution margin for the month under variable costing is:

O'Bannion Company, which has only one product, has provided the following data concerning its most recent month of operations: Required: a. Prepare a contribution format income statement for the month using variable costing. b. Prepare an income statement for the month using absorption costing.

Abdol 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 variable costing approach?

Which of the following statements is true for a company that uses variable costing?

Managerial Accounting and the Business Environment

Managerial Accounting and Cost Concepts

Systems Design: Job-Order Costing

Systems Design: Process Costing

Cost Behavior Analysis and Use

Cost-Volume-Profit Relationship

Activity Based Costing: a Tool to Aid Decision-Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Operating Performance Measures

Segment Reporting, Decentralization, and the Balanced Scorecard

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

Pricing Products and Services

Profitability Analysis

Further Classification of Labor Costs

Cost of Quality

the Predetermined Overhead Rate and Capacity

Fifo Method

Service Department Allocations

Least-Squares Regression Computations

Abc Action Analysis

Using a Modified Form of Activity-Based Costing to

Predetermined Overhead Rates and Overhead Analysis

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

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