ACG. chp. 6

Which of the following is true of a company that uses absorption costing?

Unit product costs can change as a result of changes in the number of units manufactured.

Which of the following is a common mistake made by companies when assigning costs to segments?

They assign the costs of the corporate headquarters buildings to segments because the segments must cover those costs.

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

Variable

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 ________.

fixed overhead costs

When the number of units produced is greater than the number of units sold, variable costing net operating income will be ________.

less than absorption costing net operating income

Allocating common fixed expenses to business segments:

may cause managers to erroneously discontinue business segments.

The use of absorption costing for segmented income statements results in ________.

omission of upstream and downstream costs

Higado Confectionery Corporation has a number of store locations throughout North America. In income statements segmented by store, which of the following would be considered a common fixed cost with respect to the stores?

the cost of corporate advertising aired during the Super Bowl

Net operating income computed under variable costing would exceed net operating income computed using absorption costing if:

units sold exceed units produced.

Absorption costing income statements ignore ________.

variable and fixed cost distinctions

The costing method that treats all fixed costs as period costs is:

variable costing.