Concept checks Acct 230
Absorption costing income statements ignore ________. direct materials and direct labor costs direct and indirect cost distinctions product and period cost distinctions variable and fixed cost distinctions
variable and fixed cost distinctions
Which of the following statements about processing costing is false? Process costing accumulates costs by department. Process costing assigns departmental costs uniformly to all identical units that pass through the department during a period. Process costing systems compute unit costs by department. Process costing is used when a company produces a continuous flow of units that are distinguishable from one another.
Process costing is used when a company produces a continuous flow of units that are distinguishable from one another.
Conversion cost is composed of _______. direct labor and manufacturing overhead direct material and manufacturing overhead equivalent units in ending inventory manufacturing overhead
direct labor and manufacturing overhead
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 ________. all overhead costs fixed overhead costs selling and administrative expenses variable overhead costs
fixed overhead costs
when units produced > units sold net operating income using absorption costing is _____________ then if you used variable
greater
when units produced < units sold net operating income using absorption costing is _____________ then if you used variable
less than
When the number of units produced is greater than the number of units sold, variable costing net operating income will be ________. the same as absorption costing net operating income greater than absorption costing net operating income less than absorption costing net operating income
less than absorption costing net operating income
The measure of how sensitive net operating income is to a given percentage change in dollar sales is called _______.
operating leverage
Which of the following is a product-level activity Processing units by hand General factory administration Processing purchase orders Administering parts inventories
Administering parts inventories
Equivalent units is computed using which of the following formulas? Equivalent units = Number of completed units x Percentage completion Equivalent units = Number of partially completed units x Percentage completion Equivalent units = Number of completed units x (100% - Percentage completion) Equivalent units = Number of partially completed units x (100% ÷ Percentage completion)
Equivalent units = Number of partially completed units x Percentage completion
Sneaker Styles Company manufactures a wide variety of sneakers. Which of the following systems is most suitable for Sneaker Styles? Job-Order Costing Process Costing Operation Costing Variable Costing
Operation Costing
Which of the following statements about companies that use processing costing is false A processing department is an organizational unit where work is performed on a product and where materials, labor, or overhead costs are added to the product. Costs are accumulated by department. Raw material costs are added only to the first processing department. A separate Work in Process account is maintained for each processing department.
Raw material costs are added only to the first processing department.
Which of the costing approaches is best suited for cost-volume-profit analysis
Variable
Under an ABC system, overhead costs are allocated to the products using a two-stage process. What happens during the second stage of that process?
We allocate the costs in the activity pools to the products using activity rates and activity measures
in an activity based costing system, the ___________________ expresses how much of the activity is carried out and is used as the allocation based for assigning OH costs
activity measure
Which of the following is a reason for the popularity of plantwide overhead rates to allocate overhead costs?
simplicity
