Managerial Accounting Chapter 6

The reason of difference in net operating income under variable costing and absorption costing is: Change in selling price Change in inventory Change in variable cost Change in fixed cost

Change in inventory

A variable costing income statement is helpful in performing cost, volume, and profit (CVP) analysis. It is therefore also known as: Contribution margin income statement Gross margin income statement Net operating income statement Final income statement

Contribution margin income statement

Under variable costing system, the unit product cost includes: Direct materials, direct labor, variable overhead, and fixed overhead Direct materials, direct labor, and variable overhead Direct materials, direct labor, and fixed overhead Direct materials and direct labor

Direct materials, direct labor, and variable overhead

A company manufactures 1,000 units of product X per year. The cost data is given below: Direct Materials $5 Per Unit Direct Labor $4 Per Unit Variable Manufacturing Overhead $3 Per Unit Fixed Manufacturing Overhead $6,000 Per Year Based on the above information, the variable cost to manufacture one unit of product X is: $18 $9 $15 $12

$12

Consider the following information: Units produced and sold 1,000 units Direct materials cost $5 per unit Direct labor cost $4 per unit Variable manufacturing overhead cost $3 per unit Fixed manufacturing overhead cost $4,000 Based on above information, the variable cost of goods sold is: $16,000 $9,000 $5,000 $12,000

$12,000

If sales revenue is $35,000, fixed cost is $5,000, and net operating income is $10,000, what is the contribution margin? $30,000 $15,000 $5,000 $25,000

$15,000

If the sales revenue is $5,000, fixed cost is $1,000, and net operating income is $2,000, what is the variable cost? $8,000 $4,000 $2,000 $6,000

$2,000

If the contribution margin is $5,000, variable cost is $4,000, and net operating income is $2,000, what is the fixed cost? $3,000 $7,000 $1,000 $9,000

$3,000

Consider the following information: Number of units produced 2,000 units Direct materials cost $8 per unit Direct labor cost $12 per unit Variable manufacturing overhead $6 per unit Fixed manufacturing overhead $8,000 Variable selling and administrative cost $2 per unit Fixed selling and administrative cost $6,000 Based on the information, what is the unit product cost under absorption costing system? $26 $30 $28 $32

$30

Consider the following information: Net operating income under variable costing $50,000 Decrease in inventory during the period 5,000 units Fixed manufacturing overhead $100,000 Number of units produced during the period 25,000 units Based on the above information, the net income under absorption costing is: $70,000 $50,000 $150,000 $30,000

$30,000

Consider the following information: Net operating income under variable costing $25,000 Increase in inventory during the period 2,000 units Fixed manufacturing overhead $50,000 Number of units produced during the period 10,000 units Based on the above information, the net operating income under absorption costing is: $15,000 $35,000 $75,000 $10,000

$35,000

Consider the following information: Opening inventory 25,000 units Closing inventory 10,000 units Sales 150,000 Based on the above information, the number of units produced during the period is: 135,000 units 165,000 units 185,000 units 115,000 units

135,000 units

Consider the following information: Units produced 50,000 units Units in opening inventory 5,000 units Units in closing inventory 10,000 units Based on the above information, what were the total units sold? 55,000 units 35,000 units 45,000 units 65,000 units

45,000 units

When inventory increases, the fixed manufacturing overhead is deferred in inventory under: Variable costing Absorption costing Internal costing External costing

Absorption costing

The reports generated by absorption costing (also known as full costing) is used by: Creditors Investors Government agencies All of the above

All of the above

When inventory increases, the net operating income under absorption costing is: Always equal to variable costing Always lower than variable costing Always higher than variable costing Always equal to the break-even point

Always higher than variable costing

When inventory decreases, the net operating income under absorption costing is: Always lower than variable costing Always higher than variable costing Always equal to break-even point Always equal to variable costing

Always lower than variable costing

Under absorption costing, the unit product cost includes: Direct materials, direct labor, variable overhead, and fixed overhead Direct materials, direct labor, and variable overhead Direct materials, direct labor, and fixed overhead Direct materials and direct labor

Direct materials, direct labor, variable overhead, and fixed overhead

Variable costing is also known as: Absorption costing Activity based costing Normal costing Direct/marginal costing

Direct/marginal costing

Absorption costing is also known as: Change in selling price Change in inventory Change in variable cost Change in fixed cost

Full costing

The inventories do not change under either absorption costing or variable costing when: Production is more than sales Production is less than sales Production is equal to sales Production is equal to break-even point

Production is equal to sales

A business segment that is responsible for all of its revenues and expenses is known as: Investment center Production center Profit center Cost center

Profit center

Under absorption costing, when inventory decreases the fixed manufacturing overhead is: Deferred in inventory Added to inventory Subtracted from inventory Released from inventory

Released from inventory

Which of the following statements is true? The change in production does not affect net operating income under variable costing system The change in production does not affect net operating income under absorption costing system Both of the above statements are true Both of the above statements are false

The change in production does not affect net operating income under variable costing system

Which of the following is not included while computing unit product cost under variable costing: Direct labor cost direct materials cost fixed manufacturing overhead cost variable manufacturing overhead cost

fixed manufacturing overhead cost

The reports generated by variable costing system of a company is mostly used by: Lenders and creditors internal management government and tax agencies investors and stockholders

internal management