Absorption costing
12. Absorption costing of inventories, as required by GAAP, has been criticized for encouraging managers to increase year-end inventories in order to boost reported profits. Which of the following techniques is the most effective at resolving this problem?
A. Senior
management control of inventory levels
B. Adoption
of just-in-time (JIT) production system
C. Reward
managers based upon the residual income approach
D. Use
variable costing to determine income for bonus purposes
13. When absorption costing is used, all of the following costs are considered product costs except
A. direct labor C. variable selling and administrative costs
B. variable overhead D. fixed overhead
14. Unabsorbed fixed overhead costs in an absorption costing system are
A. Fixed factory costs not allocated to units
produced.
B. Variable overhead costs not allocated to units
produced.
C. Excess variable overhead costs.
D. Costs that should be controlled.
Here in a video lecture to explain this concept step by step:
15. What is the primary difference between variable
and absorption costing?
A. inclusion of fixed selling expenses in product
costs
B. inclusion of variable factory overhead in
period costs
C. inclusion of variable selling expenses in
product costs
D. inclusion of fixed factory overhead in product
costs
16. Which of the following statements is true?
A. Absorption costing net income exceeds variable
costing net income when units produced and sold are equal.
B. Variable costing net income exceeds absorption
costing net income when units produced exceed units sold.
C. Variable costing net income exceeds absorption
costing net income when units produced equal units sold.
D. Absorption costing net income exceeds variable
costing net income when units produced are greater than units sold.
17. Net earnings determined using full absorption costing can be reconciled to net earnings determined using direct costing by computing the difference between
A. Inventoried fixed costs in
the beginning and ending inventories and any deferred over- or underapplied fixed factory overhead.
B. Inventoried discretionary
costs in the beginning and ending
inventories.
C. Gross margin (absorption
costing method) and contribution margin
(direct costing method).
D. Sales as recorded under
the direct costing method and sales as recorded under the absorption costing
method.
18. Net profit under absorption costing may differ from net profit determined under direct costing. How is this difference calculated?
A. Change in the quantity of
all units in inventory times the relevant fixed costs per unit.
B. Change in the quantity of
all units produced times the relevant fixed costs per unit.
C. Change in the quantity of
all units in inventory times the relevant variable cost per unit.
D. Change in the quantity of
all units produced times the relevant variable cost per unit.
Sensitivity analysis
19. The level of production affects income under which of the following methods?
A. absorption costing C. variable costing
B. both absorption and variable costing D. neither absorption nor
variable costing
20. Variable-costing income will usually exceed absorption costing income when
A. sales exceed production C. production
exceeds sales
B. production and sales are equal D. none of these
21. Variable costing net income is
A. higher than absorption
net income when more units are sold than produced
B. lower than absorption net
income when more units are produced than sold
C. the same as absorption
net income when all units produced are sold
D. all of the above
22. A manufacturing company prepares income statements using both absorption and variable costing methods. At the end of a period actual sales revenues, total gross profit, and total contribution margin approximated budgeted figures, whereas net income was substantially greater than the budgeted amount. There were no beginning or ending inventories. There most likely explanation of the net income increase is that, compared to budget, actual
A. Manufacturing
fixed costs had increased.
B. Selling
and administrative fixed expenses had decreased.
C. Sales
prices and variable costs had increased proportionately.
D. Sales
prices had declined proportionately less than variable costs.
23. When variable costing is used, fixed manufacturing overhead is recognized as an expense when the
A. cost is incurred C. product is sold
B. product is completed D. product is inventoried
Segment reporting
24. A segment is any part of an organization about which a manager seeks
A. cost data C. quantitative data
B. revenue data D. any of the above
25. Which of the following could be considered a segment?
A. division C. product line
B. sales territory D. all of these
26. The guideline(s) used in assigning costs to a segment include(s) whether
A. costs are fixed C. costs are directly traceable
B. costs are variable D. all of the above
27. Segment margin is equal to
A. sales less variable costs
B. sales less variable costs
and direct fixed costs
C. sales less variable costs
and indirect fixed costs
D. sales less cost of goods
sold
28. Revenue less variable costs and direct fixed costs equals
A. contribution margin C. income before taxes
B. segment margin D. income after taxes
29. Indicate which of the following costs would be avoided if a segment is eliminated.
1.
variable manufacturing
costs
2.
direct fixed costs
3.
common fixed costs
4.
variable selling
costs
5.
direct fixed selling
costs
6. common fixed selling
costs
A. 2, 3, 5, 6 C. 2, 3, 4, 5
B. 1, 2, 4, 5 D. 1, 4, 5, 6
30. Which of the following costs would continue to be incurred even if a segment is eliminated?
A. direct fixed expenses
B. common fixed costs
C. variable cost of goods
sold
D. variable selling and
administrative expenses
No comments:
Post a Comment