Question 1

The systematic examination of differences between planned and actual contribution margins is termed contribution margin analysis.

Accepted Answer

A) True 
 B)False

Question 2

The absorption costing income statement does not distinguish between variable and fixed costs.

Accepted Answer

A) True 
 B)False

Question 3

The level of inventory of a manufactured product has increased by 5,000 units during a period.The following data are also available:  What would be the effect on income from operations if variable costing is used rather than absorption costing?

Accepted Answer

A) $50,000 decrease 
B) $50,000 increase 
C) $65,000 increase 
D) $65,000 decrease

Question 4

In the long run, for a business to remain in operation, the revenues from products sold should normally cover all costs and expenses and provide a reasonable income.

Accepted Answer

A) True 
 B)False

Question 5

If the ability to sell and the amount of production facilities devoted to each of two products is equal, it is profitable to increase the sales of that product with the highest contribution margin.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would not be an appropriate activity base for cost analysis in a service firm?

Accepted Answer

A) lawns mowed 
B) inventory produced 
C) customers served 
D) haircuts given

Question 7

Another name for variable costing is:

Accepted Answer

A) indirect costing 
B) process costing 
C) direct costing 
D) differential costing

Question 8

For a period during which the quantity of inventory at the end was larger than that at the beginning, income from operations reported under variable costing will be larger than income from operations reported under absorption costing.

Accepted Answer

A) True 
 B)False

Question 9

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost?

Accepted Answer

A) Standard costing 
B) Variable costing 
C) Absorption costing 
D) Marginal costing

Question 10

In the variable costing income statement, deduction of variable selling and administrative expenses from manufacturing margin yields:

Accepted Answer

A) differential margin 
B) contribution margin 
C) gross profit 
D) marginal expenses

Question 11

The following data are for Trendy Fashion Apparel:
  Determine the contribution margin for a Skirts and b the South Region.

Accepted Answer

The answer of The following data are for Trendy Fashion...

Question 12

Ford's Expedition sport utility vehicle is its most profitable model.Therefore, Ford need not promote its Expedition model anymore.

Accepted Answer

A) True 
 B)False

Question 13

The taxes on the factory superintendent's salary would be included as part of the cost of products manufactured under the variable costing concept.

Accepted Answer

A) True 
 B)False

Question 14

Sales mix is generally defined as the relative distribution of sales among the various products sold.

Accepted Answer

A) True 
 B)False

Question 15

In variable costing, the cost of products manufactured is composed of only those manufacturing costs that increase or decrease as the volume of production rises or falls.

Accepted Answer

A) True 
 B)False

Question 16

For a period during which the quantity of product manufactured equals the quantity sold, income from operations reported under absorption costing will equal the income from operations reported under variable costing.

Accepted Answer

A) True 
 B)False

Question 17

Costs that can be influenced by management at a specific level of management are called:

Accepted Answer

A) direct costs. 
B) variable costs. 
C) noncontrollable costs. 
D) controllable costs.

Question 18

On what effects does contribution margin analysis focus?

Accepted Answer

A) the quantity factor 
B) the unit cost factor 
C) the unit sales price factor 
D) all of the above

Question 19

A business operated at 100% of capacity during its first month and incurred the following costs:  If 1,500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

Accepted Answer

A) $62,500 
B) $73,500 
C) $60,000 
D) $52,500

Question 20

For a period during which the quantity of product manufactured was less than the quantity sold, income from operations reported under absorption costing will be smaller than income from operations reported under variable costing.

Accepted Answer

A) True 
 B)False

Exam 5: Variable Costing for Management Analysis

The systematic examination of differences between planned and actual contribution margins is termed contribution margin analysis.

The absorption costing income statement does not distinguish between variable and fixed costs.

The level of inventory of a manufactured product has increased by 5,000 units during a period.The following data are also available: What would be the effect on income from operations if variable costing is used rather than absorption costing?

In the long run, for a business to remain in operation, the revenues from products sold should normally cover all costs and expenses and provide a reasonable income.

If the ability to sell and the amount of production facilities devoted to each of two products is equal, it is profitable to increase the sales of that product with the highest contribution margin.

Which of the following would not be an appropriate activity base for cost analysis in a service firm?

Another name for variable costing is:

For a period during which the quantity of inventory at the end was larger than that at the beginning, income from operations reported under variable costing will be larger than income from operations reported under absorption costing.

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost?

In the variable costing income statement, deduction of variable selling and administrative expenses from manufacturing margin yields:

The following data are for Trendy Fashion Apparel: Determine the contribution margin for a Skirts and b the South Region.

Ford's Expedition sport utility vehicle is its most profitable model.Therefore, Ford need not promote its Expedition model anymore.

The taxes on the factory superintendent's salary would be included as part of the cost of products manufactured under the variable costing concept.

Sales mix is generally defined as the relative distribution of sales among the various products sold.

In variable costing, the cost of products manufactured is composed of only those manufacturing costs that increase or decrease as the volume of production rises or falls.

For a period during which the quantity of product manufactured equals the quantity sold, income from operations reported under absorption costing will equal the income from operations reported under variable costing.

Costs that can be influenced by management at a specific level of management are called:

On what effects does contribution margin analysis focus?

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

For a period during which the quantity of product manufactured was less than the quantity sold, income from operations reported under absorption costing will be smaller than income from operations reported under variable costing.