Managerial Accounting Exam 2

What is used to calculate COGS?

Unit product cost

What is the equation for variable cost of goods sold?

Unit product cost x total units sold

Direct materials, direct labor, variable MOH are considered what kind of manufacturing costs?

Variable

What form of costing is easier for CVP analysis?

Variable

What kind of costing correctly identifies the additional variable costs incurred to make one more unit and emphasizes the impact of total fixed costs on products?

Variable

What kind of costing income is only affected by changes in unit sales?

Variable

What kind of income statement can you find the contribution margin on?

Variable costing

What kind of manufacturing cost is considered when calculating unit product cost and the COGS?

Variable manufacturing costs

traceable fixed cost is:

a fixed cost that is incurred because of the existence of the segment

Which of the following statements are correct regarding income statements prepared under variable and absorption costing?

-Both income statements include product and period costs -Reported net income on the statements often differ

When preparing a segment margin income statement

-traceable fixed expenses are deducted from contribution margin -cost of goods sold consists of only variable manufacturing costs

Blissful Breeze manufactures and sells ceiling fans. Each fan has a unit product cost of $112 and a unit selling price of $190. If Blissful Breeze produces 900 fans and sells 842 fans this month, the total cost of goods sold will be

94,304

A ____ is a formal detailed ____ quantitative plan for acquiring and using financial and other resources over a specified forthcoming time period

Budget, quantitative

The two general costing approaches used by manufacturing companies to prepare income statements are _______ costing and costing and _______

Variable and absorption

Under what kind of costing is only the variable manufacturing cost included in the unit product cost?

Variable costing

Net operating income is less under absorption costing than under variable costing when inventory for the period:

decreases

An example of a traceable fixed cost for General Motors Corvette division is the

depreciation cost on the equipment used to manufacture the Corvettes

When using variable costing, fixed manufacturing overhead is:

expensed in the period incurred

An absorption costing income statement calculates:

gross margin by deducting cost of goods sold from sales

Net operating income under absorption costing is generally ____ net operating income under variable costing in periods in which inventory increases

higher than

When units sold exceed units produced, net income under variable costing will generally be _______ net income under absorption costing

higher than

Segmented income statements

may be prepared for activities at many levels in a company

If a segment is entirely eliminated, common fixed costs will:

not change

Absorption costing treats fixed manufacturing overhead as a ____ cost

product

Absorption costing treats fixed manufacturing overhead as a ______ cost

product

Assigning common fixed costs to segments impacts

segment margin only

The segment margin represents the

the margin available after a segment has covered all of its own costs

Only costs that would disappear over time if a segment disappeared should be treated as _____ fixed costs

traceable

What kind of income statements results in: the disadvantage of non manufacturing costs are sometimes omitted which results in under-costing and affects probability

Segmented income statements

What happens when the number of units produced is greater than the number of units sold?

Some fixed MOH costs are now defers in inventory (will be counted later) under absorption costing

What happens to the fixed MOH when number of units sold is less than number of units produced?

Some fixed MOH costs are now differed in inventory (counted later) under absorption costing

What happens to the fixed MOH when number of units sold is greater than number of units produced?

Some of the previously deferred fixed MOH costs are now released (counted) under absorption costing

What happens if number of units sold is greater than number of units produced?

Some of the previously differed fixed MOH costs are now released (counted) under absorption costing

When units produced exceed units sold, net income will generally be:

higher under absorption costing than variable costing

Direct costing or marginal costing are other terms for ___ costing

variable

What is included in absorption costing?

Fixed MOH

_____ is developing objectives and preparing various budgets to achieve those objectives?

Planning

The variable costing income statement separates

variable and fixed expenses

Blink sells and manufactures frames for eyeglasses. The unit product cost for frame #47320 is $76.35. Last period, Blink produced 200 frames and sold 155 of them. Total cost of goods sold equals:

$11,834.25

Citrus Scents produces body sprays. Each bottle has a unit product cost of $5.38. This month 1,490 bottles were produced and 1,203 bottles were sold. Total cost of goods sold is

$6,472.14

Frames, Inc. picture frames each require $19 of direct materials and $40 of direct labor. Variable manufacturing overhead cost is $9 per frame and variable selling and administrative expense is $13 per frame sold. Total fixed manufacturing overhead cost per month is $15,000 and the company produces 5,000 frames each month. The unit product cost of each frame using variable costing is $

$68

What kind of costing is influenced by changes in unit sales and units of production?

Absorption

What kind of income statement can you find the gross margin on?

Absorption costing

A fixed cost supports the operations of more than one segment, but is not traceable in whole or part to any one segment is a(n) ______ fixed cost

Common

What kind of costs are not allocated to segments>

Common costs

What kind of costs arise because of the overall operation of the company and would not disappear if any particular segment were eliminated?

Common fixed costs

What is unit product cost under variable?

Direct materials cost per unit + direct labor cost per unit + variable MOH per unit

What is unit product cost under absorption?

Direct materials cost per unit + direct labor costs per unit + variable MOH per unit +fixed MOH per unit

What is considered a fixed manufacturing cost?

Fixed MOH

What is not included under variable costing?

Fixed MOH

What is a period cost under variable costing?

Fixed manufacturing overhead

The difference between reported net income on variable costing and absorption costing income statements is based on how

Fixed overhead is accounted for

What 2 key purposes are budgets used for?

Planning and controlling

Absorption costing treats all manufacturing costs (both variable and mixed) as part of the:

Product cost

What is any part or activity of an organization about which a manager seeks cost, revenue, or profit data?

Segment

What is the best gauge of the long-run profitability of a segment?

Segment margin

What income statement is useful for analyzing the profitability of segments, making decisions, and measuring the performance of segment managers?

Segmented income statement

What income statement fails to trace costs directly to specific segments?

Segmented income statements

What happens to inventory when the number of units produced in greater than the number of units sold?

The excess inventory is saved for future use

What kind of costs arise because of the existence of a particular segment and would disappear over Time if the segment itself disappeared?

Traceable fixed costs

Segment margin is obtained by deducting each segments

traceable fixed costs from its contribution margin

Under absorption costing, fixed overhead is treated like a variable cost because a portion of the total cost is allocated to each unit produced, rather than being expensed as one large sum

True