Question 1

MATCHING
Match the type of income statement to the costs it includes.
a.
Variable costing income statement
b.
Absorption costing income statement
c.
Both types of income statements
-Fixed selling expense

Accepted Answer

The answer of MATCHING
Match the type of income statement to...

Question 2

Figure 8-8.
Steele Corporation has the following information for January, February, and March:
  Production costs per unit (based on 10,000 units) are as follows:
  There were no beginning inventories for January, and all units were sold for $50. Costs are stable over the three months.
-Refer to Figure 8-8. What is the February ending inventory for Steele Corporation using the absorption costing method?

Accepted Answer

A)  $39,000 
B)  $45,000 
C)  $135,000 
D)  $300,000

Question 3

Which of the following types of costs is a product cost for absorption costing but a period cost for variable costing?

Accepted Answer

A)  direct materials 
B)  direct labor 
C)  fixed factory overhead per unit sold 
D)  variable selling expense 
E)  total administrative expense

Question 4

Figure 8-4.
The following information pertains to Mayberry Corporation:
 
-Refer to Figure 8-4. What is the value of the ending inventory using the absorption costing method?

Accepted Answer

A)  $240,000 
B)  $360,000 
C)  $600,000 
D)  $420,000

Question 5

The inventory cost that can include processing costs, cost of insurance for shipping, and unloading is called

Accepted Answer

A)  ordering cost. 
B)  carrying cost. 
C)  stockout cost. 
D)  setup cost. 
E)  storing cost.

Question 6

Simon Company sells 900 units of its deluxe product each year. The cost of setting up for one production run is $150; the cost of carrying one unit in inventory for a year is $3.

Accepted Answer

The answer of Simon Company sells 900 units of its...

Question 7

Laird Company uses 405 units of a part each year. The cost of placing one order is $5; the cost of carrying one unit in inventory for a year is $2. Laird currently orders 81 units at a time.

Accepted Answer

The answer of Laird Company uses 405 units of a...

Question 8

Figure 8-12.
Assume the following information for a product line:
 
-Refer to Figure 8-12. What is the segment margin of the product line?

Accepted Answer

A)  $200,000 
B)  $325,000 
C)  $350,000 
D)  $240,000

Question 9

Gross margin is to absorption costing as ____ is to variable costing.

Accepted Answer

A)  gross profit 
B)  contribution margin 
C)  income 
D)  territory margin

Question 10

Inventory values calculated using variable costing as opposed to absorption costing will generally be

Accepted Answer

A)  equal. 
B)  less. 
C)  greater. 
D)  twice as much.

Question 11

Figure 8-9.
The following information pertains to Stark Corporation:
 
-Refer to Figure 8-9. What is the value of ending inventory using the absorption costing method?

Accepted Answer

A)  $310,000 
B)  $250,000 
C)  $200,000 
D)  $390,000

Question 12

Inventory under absorption costing includes only direct materials and direct labor.

Accepted Answer

A) True 
 B)False

Question 13

______________ is computed by multiplying the lead time by the difference between the maximum rate of usage and the average rate of usage.

Accepted Answer

The answer of ______________ is computed by multiplying the lead...

Question 14

Which of the following could be considered a segment?

Accepted Answer

A)  division 
B)  product-line 
C)  sales territory 
D)  All of these.

Question 15

On a segmented income statement, fixed expenses are broken down into _____________ and ______________.

Accepted Answer

The answer of On a segmented income statement, fixed expenses...

Question 16

The _______________ income statement groups expenses according to cost behavior.

Accepted Answer

The answer of The _______________ income statement groups expenses according...

Question 17

When production is less than sales volume, income under absorption costing will be ____ income using variable costing procedures.

Accepted Answer

A)  greater than 
B)  less than 
C)  equal to 
D)  randomly different than

Question 18

Figure 8-2.
Loring Company had the following data for the month:
  Fixed overhead is $4,000 per month; it is applied to production based on normal activity of 2,000 units. During the month, 2,000 units were produced. Loring started the month with 300 units in beginning inventory, with unit product cost equal to this month's unit product cost. A total of 2,100 units were sold during the month at price of $14. Selling and administrative expense for the month, all fixed, totaled $3,600.
-Refer to Figure 8-2. What is operating income under variable costing?

Accepted Answer

A)  $3,540 
B)  $7,980 
C)  $11,340 
D)  -$540 
E)  $3,740

Question 19

MATCHING
Match the type of income statement to the costs it includes.
a.
Variable costing income statement
b.
Absorption costing income statement
c.
Both types of income statements
-Administrative expense

Accepted Answer

The answer of MATCHING
Match the type of income statement to...

Question 20

Figure 8-9.
The following information pertains to Stark Corporation:
 
-Refer to Figure 8-9. Absorption costing income would be ____ the variable costing income.

Accepted Answer

A)  $50,000 greater than 
B)  $70,000 greater than 
C)  $70,000 less than 
D)  $50,000 less than

Exam 8: Absorption and Variable Costing, and Inventory Management

MATCHING Match the type of income statement to the costs it includes. a. Variable costing income statement b. Absorption costing income statement c. Both types of income statements -Fixed selling expense

Which of the following types of costs is a product cost for absorption costing but a period cost for variable costing?

Figure 8-4. The following information pertains to Mayberry Corporation: -Refer to Figure 8-4. What is the value of the ending inventory using the absorption costing method?

The inventory cost that can include processing costs, cost of insurance for shipping, and unloading is called

Simon Company sells 900 units of its deluxe product each year. The cost of setting up for one production run is $150; the cost of carrying one unit in inventory for a year is $3.

Laird Company uses 405 units of a part each year. The cost of placing one order is $5; the cost of carrying one unit in inventory for a year is $2. Laird currently orders 81 units at a time.

Figure 8-12. Assume the following information for a product line: -Refer to Figure 8-12. What is the segment margin of the product line?

Gross margin is to absorption costing as ____ is to variable costing.

Inventory values calculated using variable costing as opposed to absorption costing will generally be

Figure 8-9. The following information pertains to Stark Corporation: -Refer to Figure 8-9. What is the value of ending inventory using the absorption costing method?

Inventory under absorption costing includes only direct materials and direct labor.

______________ is computed by multiplying the lead time by the difference between the maximum rate of usage and the average rate of usage.

Which of the following could be considered a segment?

On a segmented income statement, fixed expenses are broken down into _ and __.

The _______________ income statement groups expenses according to cost behavior.

When production is less than sales volume, income under absorption costing will be ____ income using variable costing procedures.

MATCHING Match the type of income statement to the costs it includes. a. Variable costing income statement b. Absorption costing income statement c. Both types of income statements -Administrative expense

Figure 8-9. The following information pertains to Stark Corporation: -Refer to Figure 8-9. Absorption costing income would be ____ the variable costing income.