Accounting Exam 2 Study Guide Chapter 6

Option D

Fixed manufacturing overhead is included in product costs under: [absorption & . Variable ]costing A) Yes Yes B) No No C) No Yes D) Yes No Answ: ( Option ____ )

Option D

In an income statement segmented by product line, a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be: a) allocated to the product lines on the basis of sales dollars. b) allocated to the product lines on the basis of segment margin. c) classified as a traceable fixed expense and not allocated. d) classified as a common fixed expense and not allocated. Answ: ( Option ____ )

Option C

Segment margin is sales minus: a) traceable fixed expenses. b) variable expenses and common fixed expenses. c) variable expenses and traceable fixed expenses. d) variable expenses. Answ: ( Option ____ )

Option A

Selling and administrative expenses are considered to be: a) a period cost under variable costing. b) part of the fixed manufacturing overhead under variable costing. c) a product cost under variable costing. d) a product cost under absorption costing. Answ: ( Option ____ )

False

True or False: Under variable costing, fixed manufacturing overhead cost is treated as a product cost.

True

True or False: The salary of the treasurer of a corporation is an example of a common cost which normally cannot be traced to product segments.

Option C

Under variable costing, costs that are treated as period costs include: a) only fixed selling and administrative costs. b) both variable and fixed manufacturing costs. c) all fixed costs. d) only fixed manufacturing costs. Answ: ( Option ____ )

I and II. Variable and Fixed manufacturing O.H.

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. Variable manufactoring O.H.

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.

Option D

Would the following costs be classified as product or period costs under variable costing at a retail clothing store? Salary of: Sales clerk Cost accountant A) *Product* *Product* B) *Product* *Period* C) *Period* *Product* D) *Period* *Period* Answ: ( Option ____ )