Internal Financial Reporting

An income Statement is prepared as an internal report. Under which of the following methods would the term contribution margin appear: Absorption costing; Variable Costing? a. no; yes b. no; no c. yes; no d. yes; yes

a. no; yes

If a firm uses absorption costing, fixed manufacturing overhead will be included a. only on the balance sheet b. on both the balance sheet and income statement c. on neither the balance sheet nor income statement d. only on the income statement

b. on both the balance sheet and income statement

If a firm produces more units than it sells, absorption costing, relative to variable costing, will result in a. higher income but lower assets b. lower income and assets c. higher income and assets d. lower income but higher assets

c. higher income and assets

Under absorption costing, fixed manufacturing overhead could be found in all of the following EXCEPT the a. Cost of Goods Sold b. finished goods inventory account c. period costs d. work-in-process account

c. period costs

Profit under absorption costing may differ from profit determined under variable costing. How is this difference calculated? a. Change in the quantity of all units produced times the relevant fixed costs per unit b. Change in the quantity of all units in inventory times the relevant variable cost per unit c. Change in the quantity of all units produced times the relevant variable cost per unit d. Change in the quantity of all units in inventory times the relevant fixed costs per unit

d. Change in the quantity of all units in inventory times the relevant fixed costs per unit

Variable costing considers which of the following to be product costs : Fixed Mfg. Costs; Fixed Selling & Admin; Variable Mfg. Costs; Variable Selling & Admin? a. yes; no; yes; yes b. no; no; yes; yes c. yes; no; yes; no d. no; no; yes; no

d. no; no; yes; no