Question 1

The variable costing income statement classifies costs based on cost behavior rather than function.

Accepted Answer

A) True 
 B)False

Question 2

[The following information applies to the questions displayed below.]
Red and White Company reported the following monthly data:
  
-What is Red and White's net income under absorption costing if 980 units are sold and selling and administrative expenses are $12,000?

Accepted Answer

A)  $(1,380) 
B)  $(2,000) 
C)  $2,700 
D)  $6,620 
E)  $10,620 
A)  $(1,380) 
B)  $(2,000) 
C)  $2,700 
D)  $6,620 
E)  $10,620

Question 3

Gage Company reports the following information for its first year of operations:   If the company's cost per unit of finished goods using variable costing is $63, what is total variable overhead?

Accepted Answer

A)  $21,000 
B)  $71,500 
C)  $77,000 
D)  $19,500 
E)  $16,590 
A)  $21,000 
B)  $71,500 
C)  $77,000 
D)  $19,500 
E)  $16,590

Question 4

[The following information applies to the questions displayed below.]
Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year.
  
-Given Advanced Company's data, and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under absorption costing.

Accepted Answer

A)  $55,000 
B)  $67,500 
C)  $80,500 
D)  $122,500 
E)  $205,000 
A)  $55,000 
B)  $67,500 
C)  $80,500 
D)  $122,500 
E)  $205,000

Question 5

What is the formula to compute manufacturing margin?

Accepted Answer

Manufacturing margin

Question 6

The use of absorption costing can result in misleading product cost information.

Accepted Answer

A) True 
 B)False

Question 7

Assuming fixed costs remain constant, and a company sells more units than it produces, then income under absorption costing is less than income under variable costing.

Accepted Answer

A) True 
 B)False

Question 8

Quaker Corporation sold 6,600 units of its product at a price of $42.40 per unit. Total variable cost per unit is $19.25, consisting of $10.15 in variable production cost and $9.10 in variable selling and administrative cost. Compute contribution margin for the company.

Accepted Answer

A)  $279,840 
B)  $119,130 
C)  $66,990 
D)  $152,790 
E)  $60,060 
A)  $279,840 
B)  $119,130 
C)  $66,990 
D)  $152,790 
E)  $60,060

Question 9

Brush Industries reports the following information for May:   Calculate the operating income for May under absorption costing.

Accepted Answer

A)  $650,000 
B)  $325,000 
C)  $525,000 
D)  $550,000 
E)  $350,000 
A)  $650,000 
B)  $325,000 
C)  $525,000 
D)  $550,000 
E)  $350,000

Question 10

[The following information applies to the questions displayed below.]
Galaxy, Inc., a manufacturer of telescopes, began operations on June 1 of the current year. During this time, the company produced 60,000 units and sold 40,000 units at a sales price of $600 per unit. Cost information for this year is shown in the following table:
  
-Given the Galaxy Inc. data, what is net income using variable costing?

Accepted Answer

A)  $16,220,000 
B)  $17,400,000 
C)  $16,360,000 
D)  $11,275,000 
E)  $16,800,000 
A)  $16,220,000 
B)  $17,400,000 
C)  $16,360,000 
D)  $11,275,000 
E)  $16,800,000

Question 11

Absorption costing is useful because it reflects the full costs that sales must exceed for the company to be profitable.

Accepted Answer

A) True 
 B)False

Question 12

Under absorption costing, which of the following statements is not true?

Accepted Answer

A)  Over production and inventory buildup can occur because of how managers are evaluated and rewarded. 
B)  The fixed costs per unit decline as more units are produced. 
C)  Variable inventory costs are treated in the same manner as they are under variable costing. 
D)  Fixed inventory costs are treated in the same manner as they are under variable costing. 
E)  All manufacturing costs are assigned to products. 
A)  Over production and inventory buildup can occur because of how managers are evaluated and rewarded. 
B)  The fixed costs per unit decline as more units are produced. 
C)  Variable inventory costs are treated in the same manner as they are under variable costing. 
D)  Fixed inventory costs are treated in the same manner as they are under variable costing. 
E)  All manufacturing costs are assigned to products.

Question 13

________ costing is the only acceptable basis for both external reporting and tax reporting.

Accepted Answer

The answer of ________ costing is the only acceptable basis...

Question 14

Milton Company reports the following information for the current year:   If the company's cost per unit of finished goods using absorption costing is $18, what is total fixed overhead?

Accepted Answer

A)  $225,000 
B)  $180,000 
C)  $270,000 
D)  $315,000 
E)  $720,000 
A)  $225,000 
B)  $180,000 
C)  $270,000 
D)  $315,000 
E)  $720,000

Question 15

________ costing treats fixed overhead as a period cost.

Accepted Answer

The answer of ________ costing treats fixed overhead as a...

Question 16

Geneva Co. reports the following information for July:   Calculate the contribution margin for July.

Accepted Answer

A)  $525,000 
B)  $425,000 
C)  $650,000 
D)  $750,000 
A)  $525,000 
B)  $425,000 
C)  $650,000 
D)  $750,000

Question 17

What are the limitations of using variable costing?

Accepted Answer

Variable costing is

Question 18

________ and ________ are product costs that can be directly traced to the product.

Accepted Answer

Direct lab

Question 19

Assume a company sells a given product for $33.28 per unit. How many units must the company sell to break-even if variable selling costs are $1.40 per unit, variable production costs are $23.56 per unit, and total fixed costs are $2,080,000?

Accepted Answer

$2,080,000/($33.28 -

Question 20

Blackbird, Incorporated reports the following information regarding its production cost:
 $$\begin{array} { | l | l | } 
\hline \text { Units produced } & 39,000 \text { units } \
\hline \text { Direct labor } & \$ 13 \text { per unit } \
\hline \text { Direct materials } & \$ 17 \text { per unit } \
\hline \text { Variable overhead } & \$ 200 \text { per unit } \
\hline \text { Fixed overhead } & \$ 9,750,000 \text { in total } \
\hline
\end{array}$$ a. Compute production cost per unit under variable costing.
b. Compute production cost per unit under absorption costing.

Accepted Answer

a. $13 DL + $17 DM + $200 VOH

The variable costing income statement classifies costs based on cost behavior rather than function.

[The following information applies to the questions displayed below.] Red and White Company reported the following monthly data: -What is Red and White's net income under absorption costing if 980 units are sold and selling and administrative expenses are $12,000?

Gage Company reports the following information for its first year of operations: If the company's cost per unit of finished goods using variable costing is $63, what is total variable overhead?

What is the formula to compute manufacturing margin?

The use of absorption costing can result in misleading product cost information.

Assuming fixed costs remain constant, and a company sells more units than it produces, then income under absorption costing is less than income under variable costing.

Quaker Corporation sold 6,600 units of its product at a price of $42.40 per unit. Total variable cost per unit is $19.25, consisting of $10.15 in variable production cost and $9.10 in variable selling and administrative cost. Compute contribution margin for the company.

Brush Industries reports the following information for May: Calculate the operating income for May under absorption costing.

Absorption costing is useful because it reflects the full costs that sales must exceed for the company to be profitable.

Under absorption costing, which of the following statements is not true?

________ costing is the only acceptable basis for both external reporting and tax reporting.

Milton Company reports the following information for the current year: If the company's cost per unit of finished goods using absorption costing is $18, what is total fixed overhead?

________ costing treats fixed overhead as a period cost.

Geneva Co. reports the following information for July: Calculate the contribution margin for July.

What are the limitations of using variable costing?

and are product costs that can be directly traced to the product.

Assume a company sells a given product for $33.28 per unit. How many units must the company sell to break-even if variable selling costs are $1.40 per unit, variable production costs are $23.56 per unit, and total fixed costs are $2,080,000?

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

Filters

Exam 6: Variable Costing and Analysis

The variable costing income statement classifies costs based on cost behavior rather than function.

[The following information applies to the questions displayed below.] Red and White Company reported the following monthly data: -What is Red and White's net income under absorption costing if 980 units are sold and selling and administrative expenses are $12,000?

Gage Company reports the following information for its first year of operations: If the company's cost per unit of finished goods using variable costing is $63, what is total variable overhead?

What is the formula to compute manufacturing margin?

The use of absorption costing can result in misleading product cost information.

Assuming fixed costs remain constant, and a company sells more units than it produces, then income under absorption costing is less than income under variable costing.

Quaker Corporation sold 6,600 units of its product at a price of $42.40 per unit. Total variable cost per unit is $19.25, consisting of $10.15 in variable production cost and $9.10 in variable selling and administrative cost. Compute contribution margin for the company.

Brush Industries reports the following information for May: Calculate the operating income for May under absorption costing.

Absorption costing is useful because it reflects the full costs that sales must exceed for the company to be profitable.

Under absorption costing, which of the following statements is not true?

________ costing is the only acceptable basis for both external reporting and tax reporting.

Milton Company reports the following information for the current year: If the company's cost per unit of finished goods using absorption costing is $18, what is total fixed overhead?

________ costing treats fixed overhead as a period cost.

Geneva Co. reports the following information for July: Calculate the contribution margin for July.

What are the limitations of using variable costing?

________ and ________ are product costs that can be directly traced to the product.

Assume a company sells a given product for $33.28 per unit. How many units must the company sell to break-even if variable selling costs are $1.40 per unit, variable production costs are $23.56 per unit, and total fixed costs are $2,080,000?

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

Filters

and are product costs that can be directly traced to the product.