Question 1

What is the amount of the income from operations that would be reported on the absorption costing income statement?

Accepted Answer

A)  $21,000
B)  $18,900
C)  $18,200
D)  $27,900E) B) and D)
F) A) and D)

Question 2

In contribution margin analysis, the effect of a difference in the number of units sold, assuming no change in unit sales price or cost, is termed the quantity factor.

Accepted Answer

A) True 
 B)False

Question 3

A business operated at 100% of capacity during its first month and incurred the following costs:  If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what is the amount of the contribution margin that would be reported on the variable costing income statement?

Accepted Answer

A)  $51,400
B)  $52,000
C)  $54,000
D)  $53,000E) B) and C)
F) A) and D)

Question 4

The level of inventory of a manufactured product has increased by 8,000 units during a period.The following data are also available:  What would be the effect on income from operations if absorption costing is used rather than variable costing?

Accepted Answer

A)  $80,000 decrease
B)  $80,000 increase
C)  $104,000 increase
D)  $104,000 decreaseE) A) and B)
F) A) and C)

Question 5

In the absorption costing income statement, deduction of the cost of goods sold from sales yields net profit.

Accepted Answer

A) True 
 B)False

Question 6

For a period during which the quantity of inventory at the end equals the inventory at the beginning, income from operations reported under variable costing will equal income from operations reported under absorption costing.

Accepted Answer

A) True 
 B)False

Question 7

Under absorption costing, the cost of finished goods includes only direct materials, direct labor, and variable factory overhead.

Accepted Answer

A) True 
 B)False

Question 8

If variable cost of goods sold totaled $90,000 for the year 18,000 units at $5.00 each and the planned variable cost of goods sold totaled $86,400 16,000 units at $5.40 each, the effect of the unit cost factor on the change in contribution margin is:

Accepted Answer

A)  $6,400 decrease
B)  $6,400 increase
C)  $7,200 increase
D)  $7,200 decreaseE) A) and B)
F) A) and C)

Question 9

Tony's Company has the following information for March:
  Determine the March a manufacturing margin, b contribution margin, and c income from operations for Tony's Company.

Accepted Answer

a $510,000 $1,000,000 - $490,0...

Question 10

In a service firm, it may be necessary to have several activity bases to properly match the change in costs with the changes in various activities.

Accepted Answer

A) True 
 B)False

Question 11

A business operated at 100% of capacity during its first month and incurred the following costs:  If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, what would be the amount of income from operations reported on the variable costing income statement?

Accepted Answer

A)  $100,800
B)  $100,000
C)  $114,800
D)  $140,000E) A) and B)
F) A) and C)

Question 12

Under which inventory costing method could increases or decreases in income from operations be misinterpreted to be the result of operating efficiencies or inefficiencies?

Accepted Answer

A)  only variable costing
B)  only absorption costing
C)  both variable and absorption costing
D)  neither variable nor absorption costingE) A) and B)
F) A) and D)

Question 13

Which of the following statements is correct using the direct costing concept?

Accepted Answer

A)  All manufacturing costs are included in the calculation of cost of goods manufactured.
B)  Only fixed costs are included in the calculation of cost of goods manufactured while variable costs are considered period costs.
C)  Only variable manufacturing costs are included in the calculation of cost of goods manufactured while fixed costs are considered period costs.
D)  All manufacturing costs are considered period costs.E) A) and B)
F) A) and C)

Question 14

The contribution margin and the manufacturing margin are usually equal.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not true when determining the selling price for a product?

Accepted Answer

A)  Absorption costing should be used to determine routine pricing which includes both fixed and variable costs.
B)  As long as the selling price is set above the variable costs, the company will make a profit in short run.
C)  Variable costing is effective when determining short run decisions, but absorption costing is only used for long-term pricing policies.
D)  Both variable and absorption pricing plans should be considered, to include several pricing alternatives.E) All of the above
F) C) and D)

Question 16

On October 31, the end of the first month of operations, Morristown & Co.prepared the following income statement based on absorption costing:
Morristown & Co.
Absorption Costing Income Statement
For Month Ended October 31, 20-
  If the fixed manufacturing costs were $42,900 and the variable selling and administrative expenses were $14,600, prepare an income statement using variable costing.

Accepted Answer

Computations:
Variable cost o...

Question 17

Under variable costing, which of the following costs would be included in finished goods inventory?

Accepted Answer

A)  neither variable nor fixed factory overhead cost
B)  both variable and fixed factory overhead cost
C)  only variable factory overhead cost
D)  only fixed factory overhead costE) All of the above
F) B) and C)

Question 18

A business operated at 100% of capacity during its first month and incurred the following costs:  If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what would be the amount of income from operations reported on the absorption costing income statement?

Accepted Answer

A)  $50,400
B)  $70,000
C)  $52,000
D)  $68,400E) All of the above
F) B) and D)

Question 19

What is the amount of the income from operations that would be reported on the variable costing income statement?

Accepted Answer

A)  $18,900
B)  $18,200
C)  $18,000
D)  $21,000E) A) and C)
F) All of the above

Question 20

In contribution margin analysis, the effect of a difference in unit sales price or unit cost on the number of units sold is termed the quantity factor.

Accepted Answer

A) True 
 B)False

Exam 5: Variable Costing for Management Analysis

The level of inventory of a manufactured product has increased by 8,000 units during a period.The following data are also available: What would be the effect on income from operations if absorption costing is used rather than variable costing?

Correct Answer
verified

Correct Answer
verified
Computations:
Variable cost o...
View Answer

In contribution margin analysis, the effect of a difference in the number of units sold, assuming no change in unit sales price or cost, is termed the quantity factor.

Correct Answer
verified

Tony's Company has the following information for March: Determine the March a manufacturing margin, b contribution margin, and c income from operations for Tony's Company.

Correct Answer
verified
a $510,000 $1,000,000 - $490,0...
View Answer

In contribution margin analysis, the effect of a difference in unit sales price or unit cost on the number of units sold is termed the quantity factor.

Correct Answer
verified

Under variable costing, which of the following costs would be included in finished goods inventory?

Correct Answer
verified

The contribution margin and the manufacturing margin are usually equal.

Correct Answer
verified

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what would be the amount of income from operations reported on the absorption costing income statement?

Correct Answer
verified

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what is the amount of the contribution margin that would be reported on the variable costing income statement?

Correct Answer
verified

Under which inventory costing method could increases or decreases in income from operations be misinterpreted to be the result of operating efficiencies or inefficiencies?

Correct Answer
verified

What is the amount of the income from operations that would be reported on the absorption costing income statement?

Correct Answer
verified

In a service firm, it may be necessary to have several activity bases to properly match the change in costs with the changes in various activities.

Correct Answer
verified

A business operated at 100% of capacity during its first month and incurred the following costs: If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, what would be the amount of income from operations reported on the variable costing income statement?

Correct Answer
verified

For a period during which the quantity of inventory at the end equals the inventory at the beginning, income from operations reported under variable costing will equal income from operations reported under absorption costing.

Correct Answer
verified

Which of the following statements is correct using the direct costing concept?

Correct Answer
verified

If variable cost of goods sold totaled $90,000 for the year 18,000 units at $5.00 each and the planned variable cost of goods sold totaled $86,400 16,000 units at $5.40 each, the effect of the unit cost factor on the change in contribution margin is:

Correct Answer
verified

Which of the following is not true when determining the selling price for a product?

Correct Answer
verified

Under absorption costing, the cost of finished goods includes only direct materials, direct labor, and variable factory overhead.

Correct Answer
verified

What is the amount of the income from operations that would be reported on the variable costing income statement?

Correct Answer
verified

In the absorption costing income statement, deduction of the cost of goods sold from sales yields net profit.

Correct Answer
verified

Exam 5: Variable Costing for Management Analysis

The level of inventory of a manufactured product has increased by 8,000 units during a period.The following data are also available: What would be the effect on income from operations if absorption costing is used rather than variable costing?

Correct AnswerverifiedShow Answer

Correct Answerverified Computations:Variable cost o...View AnswerShow Answer

In contribution margin analysis, the effect of a difference in the number of units sold, assuming no change in unit sales price or cost, is termed the quantity factor.

Correct AnswerverifiedShow Answer

Tony's Company has the following information for March: Determine the March a manufacturing margin, b contribution margin, and c income from operations for Tony's Company.

Correct Answerverifieda $510,000 $1,000,000 - $490,0...View AnswerShow Answer

In contribution margin analysis, the effect of a difference in unit sales price or unit cost on the number of units sold is termed the quantity factor.

Correct AnswerverifiedShow Answer

Under variable costing, which of the following costs would be included in finished goods inventory?

Correct AnswerverifiedShow Answer

The contribution margin and the manufacturing margin are usually equal.

Correct AnswerverifiedShow Answer

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what would be the amount of income from operations reported on the absorption costing income statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under which inventory costing method could increases or decreases in income from operations be misinterpreted to be the result of operating efficiencies or inefficiencies?

Correct AnswerverifiedShow Answer

What is the amount of the income from operations that would be reported on the absorption costing income statement?

Correct AnswerverifiedShow Answer

In a service firm, it may be necessary to have several activity bases to properly match the change in costs with the changes in various activities.

Correct AnswerverifiedShow Answer

A business operated at 100% of capacity during its first month and incurred the following costs: If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, what would be the amount of income from operations reported on the variable costing income statement?

Correct AnswerverifiedShow Answer

For a period during which the quantity of inventory at the end equals the inventory at the beginning, income from operations reported under variable costing will equal income from operations reported under absorption costing.

Correct AnswerverifiedShow Answer

Which of the following statements is correct using the direct costing concept?

Correct AnswerverifiedShow Answer

If variable cost of goods sold totaled $90,000 for the year 18,000 units at $5.00 each and the planned variable cost of goods sold totaled $86,400 16,000 units at $5.40 each, the effect of the unit cost factor on the change in contribution margin is:

Correct AnswerverifiedShow Answer

Which of the following is not true when determining the selling price for a product?

Correct AnswerverifiedShow Answer

Under absorption costing, the cost of finished goods includes only direct materials, direct labor, and variable factory overhead.

Correct AnswerverifiedShow Answer

What is the amount of the income from operations that would be reported on the variable costing income statement?

Correct AnswerverifiedShow Answer

In the absorption costing income statement, deduction of the cost of goods sold from sales yields net profit.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Computations:
Variable cost o...
View Answer

Correct Answer
verified

Correct Answer
verified
a $510,000 $1,000,000 - $490,0...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified