acct exam 2 ch 6
absorption costing
fixed manuf costs MUST be assigned to products to properly match revenues and costs
absorption costing income
is influenced by changes in unit sales and units of production
ex of traceable fixed costs of one segment being a common fixed cost to another
landing fee paid to land an airplane at an airport is traceable to the certain flight, but its not traceable to first-class, business- class, and economy-class passengerse
ex of common fixed cost
salary of the CEO of general motors is a ______ _____ ___ of the various divisions of motors
traceable fixed costs of a segment - contribution margin
segment margin equation?
true
t or f: most companies use absorption costing for external AND internal reports so they don't incur additional costs
true
t or f: selling and administrative exp are NOT treated as product costs under either absorption or variable costing
true
t or f: the variable manuf. costs per unit and the total fixed manuf. overhead costs per period remain constant
true
t or f: to build segmented income statements traceable fixed costs should be separated from common fixed costs to enable the calculation of a segment margin
true
t or f: variable costing income is NOT affected by the number of units produced
actual number of units produced
the __________ ________ ___ _____ _____ is always used as the allocation base for assigning actual fixed manufacturing overhead costs to products
fixed overhead costs
the difference bw absorption and costing net operating income and variable costing net operating income can be explained by the way these two methods account for
ex of traceable fixed cost
the salary of the Fritos product manager at PepsiCo, (fritos business segment of pepsi co)
contribution format, fixed, variable, contribution
to build segmented income statements a _______ ______ should be used because it separates ______ from ______ costs and it enables the calculation of a ______ margin
variable and fixed cost distinctions
absorption costing income statements ignore
changes in unit sales
variable costing income is only affected by ______ ____ _____ _____
fixed manuf. overhead, variable selling and admin exp, fixed selling and admin exp
variable costing period costs are?
direct materials, direct labor, variable manuf. overhead
variable costing product costs are?
period costs and are charged against the current periods rev
what are selling and admin exp treated as?
segment margin
what is the best gauge of the long run profitability of a segment?
goes up
when sales go up, net operating income ____ ____, and vice versa
less than absorption costing net operating income
when the number of units produced is greater than the number of units sold, variable costing net operating income will be
is equal to
when the units produced are equal to the units sold, the net operating income computed using the variable costing method is _______ the net operating income using the absorption costing method
is greater than
when the units produced are less than the units sold, the net operating income computed using the variable costing method id _______ the net operating income using the absorption costing method
is less than
when the units produced exceed the units sold, the net operating income computed using the variable costing method is _______ the net operating income using the absorption costing method
variable
which of the following costing approaches is best suited for cost volume profit analysis?
may be a common
traceable fixed costs of one segment ______ _____ _____ ______ fixed cost of another segment
inventory decreases, absorption less than variable
units produced < (less than) units sold results in...
inventory increases, absorption greater than variable
units produced > (greater than) units sold results in...
no change in inventory, absorption = variable
units produced equals units sold results in..
variable selling and admin. expenses AND fixed selling and admin exps
absorption costing period costs are?
Direct Materials, direct labor, variable manuf, overhead, fixed manuf. overhead
absorption costing product costs are?
segement
any part of activity of an organization about which a manager seeks cost, rev, or profit data ex: an individual store, sales territory, service center
traceable fixed costs
arise bc of the existence of a particular segment and would disappear over time if the segment itself disappeared
common fixed costs
arise bc of the overall operation of the company and would not disappear if any particular segment were eliminated
absorption costing
both US GAAP and IFRS require what for external reports?
net operating income
can be increased simply by producing more units even if those units arent sold
variable manuf cost
cogs consists of ______ _______ _____
sales - variable costs
contribution margin equation?
ex of common fixed cost
cost of heating a safeway or kroger grocery store is a _____ of the various departments
dont
fixed costs ____ allocate common costs to segments
variable costing
fixed manuf costs are CAPACITY costs and will be incurred even if nothing is produced