Chapter 7: Variable Costing and Segment Reporting Smart Book

Under both variable costing and absorption costing, variable and fixed selling and administrative costs are treated as ______ costs.

period

Variable costing treats fixed manufacturing overhead as a(n) ______ cost.

period

Absorption costing treats fixed manufacturing overhead as a ______ cost.

product

A company's operations can be divided by product lines, geographical area, manufacturing plants, service centers or sales territories, which are known as ______.

segments

Select all that apply Product costs under absorption costing include ______. direct materials direct labor fixed manufacturing overhead fixed selling and administrative variable manufacturing overhead variable selling and administrative

direct materials direct labor fixed manufacturing overhead variable manufacturing overhead

Select all that apply Which of the following statements are correct regarding income statements prepared under variable and absorption costing? The difference between the statements is how total manufacturing overhead is accounted for. Absorption costing categorizes costs based on cost behavior. Both income statements include product and period costs. Reported net income on the statements often differ.

Both income statements include product and period costs. Reported net income on the statements often differ.

Fixed manufacturing overhead costs are expensed as units are sold as part of cost of goods sold under ______ costing, and expensed in full with period costs under ______ costing.

absorption or full; variable , marginal, or direct

For external reporting, income statements are generally prepared using ______ costing, while ______ costing is used for internal decision making purposes.

absorption or full; variable , marginal, or direct

The two general costing approaches used by manufacturing companies to prepare income statements are _________ costing and _________ costing.

absorption or full; variable , marginal, or direct

The difference between reported net income on variable costing and absorption costing income statements is based on how ______.

fixed overhead is accounted for

A part or activity within an organization about which managers would like cost, revenue or profit data is called a(n) ______.

segment

Direct costing or marginal costing are other terms for ______ costing.

variable