ACCT TEST 2

Contribution approach

An income statement that separates costs into variable variable and fixed categories

variable costing approach (Fixed manufacturing overhead)

Period Cost

5. Variable costing approach (Variable selling and administrative expenses)

Period cost

Variable costing approach (Fixed selling and administrative expenses)

Period cost

Variable costing approach (Variable manufacturing overhead)

Product Cost

variable costing approach (Direct labor)

Product Cost

Which of the following costing approaches is best suited for cost-volume-profit analysis? Absorption Normal Standard Variable

Variable

Segment

any part or activity of an organization about which managers seek cost, revenue or profit data

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.

equal to

The difference between absorption costing net operating income and variable costing net operating income can be explained by the way these two methods account for _________ all overhead costs fixed overhead costs selling and administrative expenses variable overhead costs

fixed overhead costs

When the units produced are less than the units sold, the net operating income computed using the variable costing method is _________ the net operating income using the absorption costing method.

greater 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.

less than

When the number of units produced is greater than the number of units sold, variable costing net operating income will be _________ the same as absorption costing net operating income greater than absorption costing net operating income less than absorption costing net operating income

less than absorption costing net operating income

Break Even Point

the level of sales at which profit is 0

Absorption costing income statements ignore _________ direct materials and direct labor costs direct and indirect cost distinctions product and period cost distinctions variable and fixed cost distinctions

variable and fixed cost distinctions Correct