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| 1 | |
Product cost under absorption costing is characteristically: |
| | A) | Higher than under variable costing. |
| | B) | Lower than under variable costing. |
| | C) | Equal to variable costing. |
| | D) | Higher sometimes and lower sometimes than variable costing. |
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| 2 | |
When production is equal to sales, which of the following is true? |
| | A) | No change occurs to inventories for either absorption costing or variable costing methods. |
| | B) | The use of absorption costing produces a higher net income than the use of variable costing. |
| | C) | The use of absorption costing produces a lower net income than the use of variable costing. |
| | D) | The use of absorption costing causes inventory value to increase more than they would through the use of variable costing. |
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| 3 | |
Advantages of variable costing include which of the following? |
| | A) | Data that are required for CVP analysis can be take directly from the contribution margin format income statement. |
| | B) | All things being equal, profit for the period is not affected by changing inventories. |
| | C) | Profits tend to move in the same direction as sales. |
| | D) | All of the above. |
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| 4 | |
Using absorption costing, a unit of product includes what costs? |
| | A) | Direct materials, direct labor, and fixed overhead. |
| | B) | Direct materials, direct labor, and variable overhead. |
| | C) | Direct materials, direct labor, variable overhead, and fixed overhead. |
| | D) | Only direct materials and direct labor. |
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| 5 | |
Using variable costing, a unit of product includes which costs? |
| | A) | Direct materials, direct labor, and fixed overhead. |
| | B) | Direct materials, direct labor, and variable overhead. |
| | C) | Direct materials, direct labor, variable overhead, and fixed overhead |
| | D) | Only direct materials and direct labor. |
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| 6 | |
Variable costing is also known as: |
| | A) | Indirect costing. |
| | B) | Direct costing. |
| | C) | Marginal costing. |
| | D) | Both (B) and (C). |
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| 7 | |
Using the following data, determine the unit product cost under absorption costing.
| Units produced | 1,000 | | Direct materials | $6 | | Direct labor | $10 | | Fixed overhead | $6,000 | | Variable overhead | $6 | | Fixed selling and administrative | $2,000 | | Variable selling and administrative | $2 |
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| | A) | $22 |
| | B) | $24 |
| | C) | $28 |
| | D) | $30 |
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| 8 | |
Using the following data, determine the unit product cost under variable costing.
| Units produced | 1,000 | | Direct materials | $6 | | Direct labor | $10 | | Fixed overhead | $6,000 | | Variable overhead | $6 | | Fixed selling and administrative | $2,000 | | Variable selling and administrative | $2 |
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| | A) | $22 |
| | B) | $24 |
| | C) | $28 |
| | D) | $30 |
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| 9 | |
Variable costing is attractive to managers as an alternative to absorption costing because: |
| | A) | Absorption costing makes distinctions between fixed and variable product costs. |
| | B) | Absorption costing is well suited to CVP analysis techniques. |
| | C) | Absorption costing provides useful tools to managers for planning and control. |
| | D) | To generate data for CVP analysis, considerable time would have to be invested to rework income statements constructed under absorption costing. |
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| 10 | |
Which of the following statements is (are) true? |
| | A) | Net operating income is not affected by changes in production under absorption costing. |
| | B) | Net operating income is not affected by changes in production under variable costing. |
| | C) | Both of the above statements are true. |
| | D) | Neither of the above statements is true. |
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