Chapter 6 Quiz
Using variable costing, a unit of product includes which costs? Direct materials, direct labor, and xed overhead. Direct materials, direct labor, and variable overhead. Direct materials, direct labor, variable overhead, and xed overhead Only direct materials and direct labor.
Direct materials, direct labor, and variable overhead.
Using variable costing, a unit of product includes which costs? Direct materials, direct labor, and fixed overhead. Direct materials, direct labor, and variable overhead. Direct materials, direct labor, variable overhead, and xed overhead Only direct materials and direct labor.
Direct materials, direct labor, and variable overhead.
Using absorption costing, a unit of product includes what costs? Direct materials, direct labor, and fixed overhead. Direct materials, direct labor, and variable overhead. Direct materials, direct labor, variable overhead, and fixed overhead. Only direct materials and direct labor.
Direct materials, direct labor, variable overhead, and fixed overhead.
Product cost under absorption costing is generally: Higher than under variable costing. Lower than under variable costing. Equal to variable costing. Higher sometimes and lower sometimes than variable costing.
Higher than under variable costing.
Which of the following are considered to be product costs under variable costing? I. Variable manufacturing overhead. II. Fixed manufacturing overhead. III. Selling and administrative expenses.
I.
Selling and administrative expenses are considered to be: a product cost under variable costing. a product cost under absorption costing. part of xed manufacturing overhead under variable costing. a period cost under variable costing.
a period cost under variable costing
A contribution format income statement emphasizes _____. cost behavior (fixed vs. variable) cost type (product vs. period)
cost behavior (fixed vs. variable)
A contribution format income statement emphasizes _____. cost type (product vs. period) cost behavior (fixed vs. variable)
cost behavior (fixed vs. variable)
If production exceeds sales for the period, variable costing net operating income will typically be greater than absorption costing net operating income. true or false
false
Net operating income is affected by changes in production under both variable costing and absorption costing true or false
false
Net operating income is affected by changes in production under both variable costing and absorption costing. true or false
false
Net operating income is not affected by changes in production when absorption costing is used true or false
false
Net operating income is not affected by changes in production when absorption costing is used true or false
false
The costs assigned to units in inventory are typically lower under absorption costing than under variable costing true or false
false
The costs assigned to units in inventory are typically lower under absorption costing than under variable costing. true or false
false
The unit product cost under absorption costing does not include fixed manufacturing overhead cost. true or false
false
Under variable costing, all variable costs are treated as product costs. true or false
false
The costing method that can be used most easily with break-even analysis and other cost volume-profit techniques is: variable costing. absorption costing. process costing. job-order costing
variable costing. ( I think this one)
A cost that would be included in product costs under both absorption costing and variable costing would be: supervisory salaries. equipment depreciation. variable manufacturing costs. variable selling expenses.
variable manufacturing costs.
A cost that would be included in product costs under both absorption costing and variable costing would be: supervisory salaries. equipment depreciation. variable manufacturing costs. variable selling expenses
variable manufacturing costs.
A cost that would be included in product costs under both absorption costing and variable costing would be: supervisory salaries. equipment depreciation. variable manufacturing costs. variable selling expenses.
variable manufacturing costs.
What is the cause of the difference between absorption costing net operating income and variable costing net operating income? Absorption costing deducts all manufacturing costs from net operating income; variable costing deducts only prime costs. Absorption costing allocates fixed manufacturing costs between cost of goods sold and inventories; variable costing considers all fixed manufacturing costs to be period costs. Absorption costing includes variable manufacturing costs in product costs; variable costing considers variable manufacturing costs to be period costs. Absorption costing includes fixed administrative costs in product costs; variable costing considers fixed administrative costs to be period costs.
Absorption costing allocates fixed manufacturing costs between cost of goods sold and inventories; variable costing considers all fixed manufacturing costs to be period costs. ( I think this one)
Advantages of variable costing include which of the following? Data that are required for CVP analysis can be take directly from the contribution margin format income statement. All things being equal, profit for the period is not affected by changing inventories. Prots tend to move in the same direction as sales. All of the above.
All of the above
Advantages of variable costing include which of the following? Data that are required for CVP analysis can be take directly from the contribution margin format income statement. All things being equal, prot for the period is not aected by changing inventories. Prots tend to move in the same direction as sales. All of the above
All of the above
Advantages of variable costing include which of the following? Data that are required for CVP analysis can be take directly from the contribution margin format income statement. All things being equal, profit for the period is not affected by changing inventories. Prots tend to move in the same direction as sales. All of the above.
All of the above.
Using absorption costing, a unit of product includes what costs? Direct materials, direct labor, and fixed overhead. Direct materials, direct labor, and variable overhead. Direct materials, direct labor, variable overhead, and fixed overhead. Only direct materials and direct labor.
Direct materials, direct labor, variable overhead, and fixed overhead.
Which of the following are considered to be product costs under variable costing? I. Variable manufacturing overhead. II. Fixed manufacturing overhead. III. Selling and administrative expenses
I.
Which of the following are considered to be product costs under absorption costing? I. Variable manufacturing overhead. II. Fixed manufacturing overhead. III. Selling and administrative expenses.
I. and II.
When production is equal to sales, which of the following is true? No change occurs to inventories for either absorption costing or variable costing methods. The use of absorption costing produces a higher net income than the use of variable costing. The use of absorption costing produces a lower net income than the use of variable costing. The use of absorption costing causes inventory value to increase more than they would through the use of variable costing.
No change occurs to inventories for either absorption costing or variable costing methods.
Selling and administrative expenses are considered to be: a product cost under variable costing. a product cost under absorption costing. part of fixed manufacturing overhead under variable costing. a period cost under variable costing.
a period cost under variable costing.
Selling and administrative expenses are considered to be: a product cost under variable costing. a product cost under absorption costing. part of fixed manufacturing overhead under variable costing. a period cost under variable costing.
a period cost under variable costing. ( I think this one)
A portion of the total fixed manufacturing overhead cost incurred during a period may: be excluded from cost of goods sold under absorption costing. be charged as a period cost with the remainder deferred under variable costing. never be excluded from cost of goods sold under absorption costing. never be excluded from cost of goods sold under variable costing.
be charged as a period cost with the remainder deferred under variable costing.
A portion of the total fixed manufacturing overhead cost incurred during a period may: be excluded from cost of goods sold under absorption costing. be charged as a period cost with the remainder deferred under variable costing. never be excluded from cost of goods sold under absorption costing. never be excluded from cost of goods sold under variable costing.
be excluded from cost of goods sold under absorption costing.
A portion of the total fixed manufacturing overhead cost incurred during a period may: be excluded from cost of goods sold under absorption costing. be charged as a period cost with the remainder deferred under variable costing. never be excluded from cost of goods sold under absorption costing. never be excluded from cost of goods sold under variable costing.
be excluded from cost of goods sold under absorption costing. (I think this one)
If the number of units produced exceeds the number of units sold, then net operating income under absorption costing will: be equal to the net operating income under variable costing. be greater than net operating income under variable costing. be equal to the net operating income under variable costing plus total fixed manufacturing costs. be equal to the net operating income under variable costing less total fixed manufacturing costs.
be greater than net operating income under variable costing.
If the number of units produced exceeds the number of units sold, then net operating income under absorption costing will: be equal to the net operating income under variable costing. be greater than net operating income under variable costing. be equal to the net operating income under variable costing plus total fixed manufacturing costs. be equal to the net operating income under variable costing less total fixed manufacturing costs.
be greater than net operating income under variable costing.
The gross margin for a manufacturing company is the excess of sales over: cost of goods sold, excluding fixed manufacturing overhead. all variable costs, including variable selling and administrative expenses. cost of goods sold, including fixed manufacturing overhead. variable costs, excluding variable selling and administrative expenses.
cost of goods sold, including fixed manufacturing overhead.
A traditional format income statement emphasizes _____. cost behavior (fixed vs. variable) cost type (product vs. period)
cost type (product vs. period)
A traditional format income statement emphasizes _____. cost behavior (fixed vs. variable) cost type (product vs. period)
cost type (product vs. period)
A traditional format income statement emphasizes _____. cost type (product vs. period) cost behavior (xed vs. variable)
cost type (product vs. period)
Fixed manufacturing overhead is included in product costs under: Absorption Costing Variable Costing a) yes yes b) no no c) no yes d) yes no
d)
A traditional format income statement is used primarily for _____. external reporting internal decision making
external reporting
Under variable costing, fixed manufacturing overhead cost is treated as a product cost. true or false
false
Under variable costing, product cost contains some fixed manufacturing overhead cost. true or false
false
Under variable costing, product cost contains some xed manufacturing overhead cost. true or false
false
Variable selling and administrative expenses are part of product costs under the variable costing approach. true or false
false
When sales exceeds production for a period, absorption costing net operating income will generally be greater than variable costing net operating income. true or false
false
Weber Company computes net operating income under both the absorption costing approach and the variable costing approach. For a given year the absorption costing net operating income was greater than the variable costing net operating income. This fact suggests that: variable manufacturing costs were less than fixed manufacturing costs. more units were produced during the year than were sold. more units were sold during the year than were produced. common costs were greater than variable costs for the year.
more units were produced during the year than were sold.
Direct labor is always considered to be a product cost under variable costing. true or false
true
Direct materials are always considered to be a product cost under variable costing true or false
true
Under the absorption costing method, a company can increase profits by increasing production rather than by increasing sales true or false
true
Under the absorption costing method, a company can increase profits by increasing production rather than by increasing sales. true or false
true
When production is less than sales for the period, absorption costing net operating income will generally be less than variable costing net operating income. true or false
true
When reconciling variable costing and absorption costing net operating income, fixed manufacturing overhead costs released from inventory under absorption costing should be deducted from variable costing net operating income to arrive at the absorption costing net operating income. true or false
true
Net operating income computed using variable costing would exceed net operating income computed using absorption costing if units sold exceed units produced. units sold are less than units produced. units sold equal units produced. the average xed cost per unit is zero.
units sold exceed units produced
The costing method that can be used most easily with break-even analysis and other cost-volume-profit techniques is: variable costing. absorption costing. process costing. job-order costing.
variable
When production is equal to sales, which of the following is true? No change occurs to inventories for either absorption costing or variable costing methods. The use of absorption costing produces a higher net income than the use of variable costing. The use of absorption costing produces a lower net income than the use of variable costing. The use of absorption costing causes inventory value to increase more than they would through the use of variable costing.
No change occurs to inventories for either absorption costing or variable costing methods. ( I think so on this one)
Assuming that direct labor is a variable cost, product costs under variable costing include only direct materials and direct labor. direct materials, direct labor, and variable manufacturing overhead. direct materials, direct labor, variable manufacturing overhead, and variable selling and administrative expenses. direct material, variable manufacturing overhead, and variable selling and administrative expenses.
direct materials, direct labor, and variable manufacturing overhead.
A traditional format income statement is used primarily for _____. internal decision making external reporting internal decision making external reporting
external reporting
Absorption costing is more compatible with cost-volume-profit analysis than is variable costing true or false
false
Absorption costing is more compatible with cost-volume-profit analysis than is variable costing. true or false
false
Absorption costing is more compatible with cost-volume-profit analysis than is variable costing. true or false
false
If production exceeds sales for the period, variable costing net operating income will typically be greater than absorption costing net operating income. true or false
false
Net operating income reported under absorption costing will exceed net operating income reported under variable costing for a given period if: production equals sales for that period. production exceeds sales for that period. sales exceed production for that period. the variable manufacturing overhead exceeds the fixed manufacturing overhead.
production exceeds sales for that period.
Net operating income reported under absorption costing will exceed net operating income reported under variable costing for a given period if: production equals sales for that period. production exceeds sales for that period. sales exceed production for that period. the variable manufacturing overhead exceeds the fixed manufacturing overhead.
production exceeds sales for that period.
Since variable costing emphasizes costs by behavior, it works well with cost-volume-profit analysis. true or false
true
When reconciling variable costing and absorption costing net operating income, xed manufacturing overhead costs released from inventory under absorption costing should be deducted from variable costing net operating income to arrive at the absorption costing net operating income. true or false
true
Net operating income computed using variable costing would exceed net operating income computed using absorption costing if: units sold exceed units produced. units sold are less than units produced. units sold equal units produced. the average xed cost per unit is zero.
units sold exceed units produced.
Net operating income computed using variable costing would exceed net operating income computed using absorption costing if: units sold exceed units produced. units sold are less than units produced. units sold equal units produced. the average fixed cost per unit is zero.
units sold exceed units produced. ( I think on this one)