3365 FINAL EXAM [CH. 9]
20) Heston Company has the following information for the current year: Beginning fixed manufacturing overhead in inventory $190,000 Fixed manufacturing overhead in production 750,000 Ending fixed manufacturing overhead in inventory 50,000 Beginning variable manufacturing overhead in inventory $20,000 Variable manufacturing overhead in production 100,000 Ending variable manufacturing overhead in inventory 30,000 What is the difference between operating incomes under absorption costing and variable costing? A) $140,000 B) $100,000 C) $80,000 D) $10,000 [) $190,000 - $50,000 = $140,000 ]
A
3) ________ is a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs and all fixed manufacturing costs are excluded. A) Variable costing B) Mixed costing C) Absorption costing D) Standard costing
A
17) One possible means of determining the difference between operating incomes for absorption costing and variable costing is by ________. A) subtracting sales of the previous period from sales of this period B) subtracting fixed manufacturing overhead in beginning inventory from fixed manufacturing overhead in ending inventory C) multiplying the number of units produced by the budgeted fixed manufacturing cost rate D) adding fixed manufacturing costs to the production-volume variance
B
6) Which of the following is true of variable costing? A) It expenses administrative costs as cost of goods sold. B) It treats direct manufacturing costs as a product cost. C) It includes fixed manufacturing overhead as an inventoriable cost. D) It is required for external reporting to shareholders.
B
7) In ________, fixed manufacturing costs are included as inventoriable costs. A) variable costing B) absorption costing C) throughput costing D) activity-based costing
B
8) ________ method includes fixed manufacturing overhead costs as inventoriable costs. A) Variable costing B) Absorption costing C) Throughput costing D) Activity-based costing
B
21) The following information pertains to Brian Stone Corporation: Beginning fixed manufacturing overhead in inventory $60,000 Ending fixed manufacturing overhead in inventory 45,000 Beginning variable manufacturing overhead in inventory $30,000 Ending variable manufacturing overhead in inventory 14,250 Fixed selling and administrative costs $724,000 Units produced 5,000 units Units sold 4,800 units What is the difference between operating incomes under absorption costing and variable costing? A) $750 B) $7,500 C) $15,000 D) $30,750 [$60,000 - $45,000 = $15,000]
C
4) ________ is a method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs. A) Variable costing B) Mixed costing C) Absorption costing D) Standard costing
C
5) Which of the following is true of absorption costing? A) It expenses marketing costs as cost of goods sold. B) It treats direct manufacturing costs as a period cost. C) It includes fixed manufacturing overhead as an inventoriable cost. D) It treats indirect manufacturing costs as a period cost.
C
16) The difference between operating incomes under variable costing and absorption costing centers on how to account for ________.
B
10) Under absorption costing, fixed manufacturing costs ________. A) are period costs B) are inventoriable costs C) are treated as an expense D) are sunk costs
B
11) ________ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs. A) Fixed costing B) Variable costing C) Absorption costing D) Mixed costing
B
14) An favorable production-volume variance occurs when ________. A) the denominator level exceeds production B) production exceeds the denominator level C) production exceeds unit sales D) unit sales exceed production
B
12) Variable costing regards fixed manufacturing overhead as a(n) ________. A) administrative cost B) inventoriable cost C) period cost D) product cost
C
13) The only difference between variable and absorption costing is the expensing of ________. A) direct manufacturing costs B) variable marketing costs C) fixed manufacturing costs D) variable administrative costs
C
14) Operating income reported on the end-of-period financial statements is changed when ________ is used to handle the production-volume variance at the end of the accounting period. A) the adjusted allocation-rate approach B) the proration approach C) the write-off variances to cost of goods sold approach D) the reinstatement approach
C