Chapter 6 Theory and Number Crunching Questions

Under variable costing, fixed manufacturing overhead cost is treated as a product cost.

False

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.

I

If the number of units produced exceeds the number of units sold, then net operating income under absorption costing will:

be greater than net operating income under variable costing.

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Selling Price 126 units beginning 0 unitsproduced 8500 units sold 8300 units in ending 200 Variable cost per unit dm 36 dl 52 vmoh 2 vsell and admin 9 fixed costs fmoh 127500 fixed selling and admin 91300 What is the net operating income for the month under absorption costing?

8300

Net operating income reported under absorption costing will exceed net operating income reported under variable costing for a given period if:

production exceeds sales for that period.