Ch 7 HW

What is the product cost under absorption costing? A. $ 147,000 B. $ 129,000 C. $ 142,000 D. $ 117,000

A. $ 147,000

If finished goods inventory increases, income under absorption costing is higher than variable costing. This is because ________________________. A. unit product costs decreases under absorption costing. B. unit product costs increases under variable costing. C. unit product costs increases under absorption costing. D. unit product costs decreases under variable costing.

A. unit product costs decreases under absorption costing.

BBB company ended its first-year operation with 100 units of finished goods inventory. According to absorption costing, unit variable product costs was $50 and unit fixed product cost was $20. Variable costing would result in operating income difference of $ ____________. A. 7,000 B. 2,000 C. 5,000 D. 0

B. 2,000

In the variable costing method, variable selling expenses are A. included in the product cost. B. included in the contribution margin. C. excluded from the operating income. D. included in the inventory cost.

B. included in the contribution margin.

What is the period cost under variable costing? A. $ 80,000 B. $ 70,000 C. $ 120,000 D. $ 90.000

C. $ 120,000

Operating income under absorption costing is ____________ than that under variable costing by $ _______________. A. lower, 20,000 B. higher, 40,000 C. higher, 20,000 D. lower, 40,000

C. higher, 20,000

When sales are constant, but the number of units produced fluctuates, net operating income determined by the absorption costing method will: A. fluctuate without any relation to the number of units produced. B. tend to remain constant. C. tend to fluctuate in the same direction as fluctuations in the number of units produced. D. tend to fluctuate in the opposite direction as fluctuations in the number of units produced.

C. tend to fluctuate in the same direction as fluctuations in the number of units produced.

Under variable costing, which of the following is not expensed in its entirety in the period in which it is incurred? A. variable selling and administrative expense B. fixed selling and administrative expense C. variable manufacturing overhead cost D. fixed manufacturing overhead cost

C. variable manufacturing overhead cost

Under variable costing, product costs include only _______________________. A. direct costs B. manufacturing costs C. variable production costs. D. prime costs and conversion costs

C. variable production costs.

What is the product cost under variable costing? A. $ 142,000 B. $ 147,000 C. $ 129,000 D. $ 117,000

D. $ 117,000

What is the unit product cost under variable costing? A. $ 40 B. $ 80 C. $ 72 D. $ 36

D. $ 36

What is the unit product cost under absorption costing? A. $ 36 B. $ 80 C. $ 72 D. $ 40

D. $ 40

What is the period cost under absorption costing? A. $ 70,000 B. $ 120,000 C. $ 90.000 D. $ 80,000

D. $ 80,000

Because absorption costing emphasizes costs by behavior, it works well with cost-volume-profit analysis.

False

Under conventional absorption costing, the fixed costs associated with idle production capacity are not included as part of the product cost.

False

Under variable costing, the unit product cost varies depending on how many units are manufactured.

False

Net operating income is affected by the number of units produced when absorption costing is used.

True

The costs assigned to units in inventory are typically lower under variable costing than under absorption costing.

True

Under variable costing, fixed manufacturing overhead cost is not treated as a product cost.

True

When production is less than sales, absorption costing income is less than variable costing income.

True