Accounting ch 6

1. 1Under variable costing, variable production costs are not treated as production costs.

   1. ATrue
   2. BFalse
2. 2Under variable costing, fixed manufacturing overhead cost is not treated as a product cost.

   1. ATrue
   2. BFalse
3. 3Under variable costing, product costs consist of direct materials, direct labor, and variable manufacturing overhead.

   1. ATrue
   2. BFalse
4. 4The costs assigned to units in inventory are typically lower under variable costing than under absorption costing.

   1. ATrue
   2. BFalse
5. 5Under variable costing, product cost does not contain any fixed manufacturing overhead cost.

   1. ATrue
   2. BFalse
6. 6Under absorption costing, fixed manufacturing overhead is treated as a product cost.

   1. ATrue
   2. BFalse
7. 7Under absorption costing, fixed manufacturing overhead cost is not included in product cost.

   1. ATrue
   2. BFalse
8. 8Under conventional absorption costing, the fixed costs associated with idle production capacity are not included as part of the product cost.

   1. ATrue
   2. BFalse
9. 9Under absorption costing, the profit for a period is affected by a change in the number of units of finished goods in inventory.

   1. ATrue
   2. BFalse
10. 10When variable costing is used, and if selling prices exceed variable expenses and if the unit contribution margins, the sales mix, and fixed costs remain the same, profits move in the same direction as sales.

    1. ATrue
    2. BFalse

11. 11Because absorption costing emphasizes costs by behavior, it works well with cost - volume - profit analysis.

    1. ATrue
    2. BFalse
12. 12Net operating income is affected by the number of units produced when absorption costing is used.

    1. ATrue
    2. BFalse
13. 13Under absorption costing, it is possible to defer a portion of the fixed manufacturing overhead costs of the current period to future periods through the inventory account.

    1. ATrue
    2. BFalse
14. 14When the number of units in work in process and finished goods inventories decrease, absorption costing net operating income will typically be greater than variable costing net operating income.

    1. ATrue
    2. BFalse
15. 15The principal difference between variable costing and absorption costing centers on:

    1. AWhether variable manufacturing costs should be included in product costs.
    2. BWhether fixed manufacturing costs should be included in product costs.
    3. CWhether fixed manufacturing costs and fixed selling and administrative costs should be included in product cost.
    4. Dwhether selling and administrative costs should be included in product cost.
16. 16Under absorption costing, fixed manufacturing overhead costs:

    1. AAre deferred in inventory when production exceeds sales.
    2. BAre always treated as period costs.
    3. CAre released from inventory when production exceeds sales.
    4. DAre ignored.
17. 17Under variale costing, fixed manufacturing overhead is:

    1. ACarried in a liability account.
    2. BCarried in an asset account.
    3. CIgnored
    4. DExpensed as a period cost.
18. 18Under variable costing, which of the following is not expensed in its entirety in the period in which it is incurred?

    1. AFxed manufacturing overhead cost
    2. BFixed selling and administrative expense
    3. CVariable selling and administrative expense
    4. DVariable manufacturing overhead cost.
19. 19The term gross margin is used in reports prepared using:

    1. ABoth absorption costing and variable costing.
    2. BAbsorption costing but not variable costing.
    3. CVariable costing but not absorption costing.
    4. DNeither variable costing nor absorption costing.
20. 20When sales are constant, but the number of units produced fluctuates, net operating income determined by the absorption costing method will:

    1. ATend to fluctuate in the same direction as fluctuations in the number of units produced.
    2. Btend to remain constant
    3. Ctend to fluctuate in the opposite direction as fluctuations in the number of units produced.
    4. DFluctuate without any relation to the number of units produced.
21. 21George corporation has no beginning inventory and manufactures single product. If the number of units produced exceeds the number of units sold, then net operating income under the absorption method for the year will:

    1. ABe equal to the net operating income under variable costing.
    2. BBe greater than the net operating income under variable costing.
    3. CBe equal to the net operating income under variable costing plus total fixed manufacturing costs.
    4. DBe equal to the net operating income under variable costing less total fixed manufacturing costs.
22. 22When production exceeds sales an the company uses the LIFO inventory flow assumption the net operating income reported under absorption costing generally will be:

    1. ALess than net operating income reported under variable costing.
    2. BGreater than net operating income reported under variable costing.
    3. CEqual to net operating income reported under variable costing.
    4. DHigher or lower because no generalization can be made.
23. 23If a cost is a common cost of the segments on a segmented income statement, the cost should:

    1. ABe allocated to the segments on the basis of segment sales.
    2. BNot be allocated to the segments.
    3. CExcluded from the income statement.
    4. DTreated as a product cost rather than as a period cost.
24. 24A national retail company has segmented its income statement by sales territories. If each sales territory statement is further segmented by individual stores, which of the following will most likely occur?

    1. ASome common fixed expenses in the sales territory segmented statement will become traceable fixed expenses in the individual store segmented statement.
    2. BSome traceable fixed expenses in the sales territory segmented statement will become common fixed expenses in the individual store segmented statement.
    3. CThe sum total of the individual stores' segment margins in each sales territory will be equal to the segment margin for the sales territory.
25. 25When using data from a segmented income statement, the dollar sales for the company to break even overall is equal to:

    1. A(Allocated fixed expenses + Traceable fixed expenses) / overall CM ratio
    2. B(Traceable fixed expenses + common fixed expenses) / overall CM ratio
    3. C(Non - Traceable fixed expenses + Common fixed expenses) / overall CM ratio
    4. D(Traceable fixed expenses) / overall CM Ratio

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Quiz on Accounting ch 6, created by nick oversby on 02/11/2016.

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