Test Bank for Managerial Accounting: Creating Value in a Dynamic Business Environment, 12th Edition, Ronald Hilton, David Platt
To download the complete and accurate content document, go to: https://testbankbell.com/download/test-bank-for-managerial-accounting-creating-valu e-in-a-dynamic-business-environment-12th-edition-ronald-hilton-david-platt-13/
Award: 1.00 point
Fixed manufacturing overhead is not inventoried under absorption costing.
References
True / False Difficulty: 1 Easy Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Absorption costing is required for tax purposes.
References
True / False Difficulty: 1 Easy Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Variable manufacturing overhead becomes part of a unit's cost when variable costing is used.
True
False References
True / False Learning Objective: 0801 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Difficulty: 1 Easy Learning Objective: 0802 Prepare an income statement under absorption costing.
Award: 1.00 point
Learning Objective: 08-03 Prepare an income statement under variable costing.
On an absorption-costing income statement, fixed overhead costs are period costs.
True
False References
True / False Difficulty: 1 Easy Learning Objective: 08-02 Prepare an income statement under absorption costing.
Award: 1.00 point
6.
On a variable-costing income statement, fixed overhead is not treated as a period cost. True
False References
True / False Difficulty: 1 Easy Learning Objective: 08-03 Prepare an income statement under variable costing.
Award: 1.00 point
On a variable-costing income statement, the cost of goods sold is measured at variable cost, which includes direct material, direct labor, and variable manufacturing overhead.
References
True / False Difficulty: 1 Easy Learning Objective: 08-03 Prepare an income statement under variable costing.
Award: 1.00 point
Income reported under absorption and variable costing can be reconciled by focusing on the effects of the five places where the two statements differ True False References
True / False Difficulty: 2 Medium
Learning Objective: 08-04 Reconcile reported income under absorption and variable costing.
Award: 1.00 point
9.
When units sold exceed units produced, absorption-costing income will be lower than variable-costing income
True
False References
True / False Difficulty: 2 Medium
Learning Objective: 08-04 Reconcile reported income under absorption and variable costing.
Absorption costing is inconsistent with CVP analysis.
True
False
References
True / False Difficulty: 2 Medium
Award: 1.00 point
Award: 1.00 point 10.
Learning Objective: 08-05 Explain the implications of absorption and variable costing for cost-volume-profit analysis.
Cost-volume-profit analysis and break-even calculations account for fixed manufacturing overhead as a lump sum.
True
False
References
True / False Difficulty: 2 Medium
Learning Objective: 08-05 Explain the implications of absorption and variable costing for cost-volume-profit analysis.
For external-reporting purposes, generally accepted accounting principles require that net income be based on variable costing.
True
False References
Award: 1.00 point 12.
True / False Difficulty: 1 Easy Learning Objective: 08-06 Evaluate absorption and variable costing.
Many managers prefer to use absorption-costing data in cost-based pricing decisions.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 08-06 Evaluate absorption and variable costing.
Award: 1.00 point
Award: 1.00 point 13.
The quality of conformance refers to how well a product is conceived or designed for its intended use
True
False References
True / False Difficulty: 1 Easy Learning Objective: 08-07 Prepare a qualitycost report.
Award: 1.00 point
When discussing the costs of quality, the costs of determining whether defects exist are known as appraisal costs.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 08-07 Prepare a qualitycost report.
Award: 1.00 point
An analytical method that aims at achieving near-perfect results in a production process is known as the zerodefect perspective
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 08-08 Discuss two contrasting views of the optimal level of product quality
Award: 1.00 point
Total quality management or TQM refers to the broad set of management and control processes designed to focus the entire organization and all of its employees on providing products or services that do the best possible job of satisfying the customer True
False
References
True / False Difficulty: 1 Easy Learning Objective: 08-08 Discuss two contrasting views of the optimal level of product quality.
Award: 1.00 point
On a global scale, there are four primary environmental agreements addressing the atmosphere, hazardous substances, the marine environment, nature conservation, and nuclear power issues. True False
References
True / False Difficulty: 1 Easy Learning Objective: 08-09 Define ESG outcomes and costs, explain their significance, and discuss the management of environmental costs.
Award: 1.00 point
Hidden private environmental costs are those that are caused by environmental issues but have not been so identified by the accounting system.
True
False References
True / False Difficulty: 1 Easy Learning Objective: 08-09 Define ESG outcomes and costs, explain their significance, and discuss the management of environmental costs.
Award: 1.00 point
Under variable costing, which of the following is not considered a product cost?
Fixed manufacturing overhead.
Variable manufacturing overhead.
Direct labor
Direct materials.
Indirect materials.
Under variable costing, fixed manufacturing overhead is not considered a product cost.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Under variable costing, fixed manufacturing overhead is: expensed immediately when incurred. never expensed. applied directly to Finished-Goods Inventory
applied directly to Work-in-Process Inventory
treated in the same manner as variable manufacturing overhead.
Under variable costing, fixed manufacturing overhead is expensed immediately when incurred.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Award: 1.00 point 21.
All of the following are inventoried under variable costing except:
direct materials.
direct labor
variable manufacturing overhead.
fixed manufacturing overhead.
variable manufacturing overhead and fixed manufacturing overhead.
Fixed manufacturing overhead is not inventoried under variable costing.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
23.
All of the following are expensed under variable costing except:
variable manufacturing overhead.
fixed manufacturing overhead.
variable selling and administrative costs.
fixed selling and administrative costs.
variable selling and administrative costs and fixed selling and administrative costs.
Variable manufacturing overhead is not expensed under variable costing.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
All of the following costs are inventoried under absorption costing except:
direct materials.
direct labor
variable manufacturing overhead.
fixed manufacturing overhead.
fixed administrative salaries.
Fixed Administrative Salaries would not be inventoried under absorption costing.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
24.
Award: 1.00 point
25.
All of the following are inventoried under absorption costing except:
direct labor
raw materials used in production.
utilities cost consumed in manufacturing.
sales commissions.
machine lubricant used in production.
Sales commissions would not be inventoried under absorption costing.
References
Multiple Choice Difficulty: 2 Medium
Award: 1.00 point
Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Under absorption costing, which of the following is not considered a product cost?
direct labor
direct materials.
variable manufacturing overhead.
administrative costs.
fixed manufacturing overhead.
Administrative costs are not product costs when using absorption costing.
References
Multiple Choice Difficulty: 2 Medium
Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
The underlying difference between absorption costing and variable costing lies in the treatment of:
direct labor
variable manufacturing overhead.
fixed manufacturing overhead.
variable selling and administrative expenses.
fixed selling and administrative expenses.
The underlying difference between absorption costing and variable costing lies in the treatment of fixed manufacturing overhead.
References
Multiple Choice Difficulty: 2 Medium
Award: 1.00 point
Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Which of the following statements is false regarding absorption costing?
Variable overhead is treated as a product cost.
Fixed overhead is treated as a product cost.
Fixed overhead is expensed in the period incurred.
Absorption costing is required for tax purposes.
Absorption costing is required for external financial statements prepared in accordance with generally accepted accounting principles (GAAP).
Fixed cost is not expensed in the period incurred under absorption costing.
References
Multiple Choice Difficulty: 2 Medium
Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Which of the following costs would be treated differently under absorption costing and variable costing?
None of these are treated differently under absorption and variable costing.
References
Multiple Choice Difficulty: 2 Medium
Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Which of the following descriptions would not be found on an income statement prepared using variable costing?
Sales.
Fixed Costs.
Cost of Goods Sold.
Net income
All of these options are on the income statement prepared using variable costing.
Cost of Goods Sold is not found on an income statement prepared using variable costing.
References
Multiple Choice Difficulty: 2 Medium
Award: 1.00 point
Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Which of the following descriptions would not be found on an income statement prepared using absorption costing?
Sales.
Contribution Margin.
Cost of Goods Sold.
Net income
All of these options are on the income statement prepared using absorption costing.
Contribution Margin is not found on an income statement prepared using absorption costing.
References
Multiple Choice Difficulty: 2 Medium
Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Vega Enterprises has computed the following unit costs for the year just ended:
Under variable costing, each unit of the company's inventory would be carried at:
None of the answers is correct.
Direct materials + Direct labor + Variable Manufacturing Overhead = $12 + $18 + $25 = $55
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Vega Enterprises has computed the following unit costs for the year just ended:
Under absorption costing, each unit of the company's inventory would be carried at:
None of the answers is correct.
Direct materials + Direct labor + Variable Manufacturing Overhead + Fixed Manufacturing Overhead = $12 + $18 + $25 + $29 = $84.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Romano Corporation has computed the following unit costs for the year just ended:
Under absorption costing, each unit of the company's inventory would be carried at:
None of the answers is correct.
Direct materials + Direct labor + Variable Manufacturing Overhead + Fixed Manufacturing Overhead = $11 + $17 + $21 + $23 = $72.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Romano Corporation has computed the following unit costs for the year just ended:
Under variable costing, each unit of the company's inventory would be carried at:
$104. None of the answers is correct.
Direct materials + Direct labor + Variable Manufacturing Overhead = $11 + $17 + $21 = $49
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Falisari Corporation has computed the following unit costs for the year just ended:
Which of the following choices correctly depicts the per-unit cost of inventory under variable costing and absorption costing?
of the answers is correct.
Variable costing = Direct materials + Direct labor + Variable Manufacturing Overhead = $25 + $19 + $35 = $79; Absorption costing = Direct materials + Direct labor + Variable Manufacturing Overhead + Fixed Manufacturing Overhead = $25 + $19 + $35 + $40 = $119.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Montana Industries has the following costs for the year just ended:
What is the difference between operating incomes under absorption costing and variable costing?
None of the answers is correct.
The difference between absorption costing and variable costing is $15,000 = $60,000 $45,000
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Mallory Industries has the following cost information for the year just ended:
Direct materials $ 6.00 per unit
Direct labor $ 2.00 per unit
Variable manufacturing overhead $ 1.50 per unit
Fixed manufacturing overhead $40,000
Variable selling and administrative cost $ 3.00 per unit
Fixed selling and administrative cost $50,000
During the year, Mallory produced 10,000 units, out of which 9,100 were sold for $50 each.
What is net income under variable costing?
$251,250
$254,850
$285,000.
$291,250
None of the answers is correct.
Net income under variable costing is $251,250 = ($50 × 9,100) [($12.50 × 9,100) + $90,000].
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Mallory Industries has the following cost information for the year just ended:
Direct materials $ 6.00 per unit
Direct labor $ 2.00 per unit
Variable manufacturing overhead $ 1.50 per unit
Fixed manufacturing overhead $40,000
Variable selling and administrative cost $ 3.00 per unit
Fixed selling and administrative cost $50,000
During the year, Mallory produced 10,000 units, out of which 9,100 were sold for $50 each.
What is net income under absorption costing?
$251,250
$254,850
$285,000.
$299,850
None of the answers is correct.
Net income under absorption costing is $254,850 = ($50 × 9,100) [($12.50 × 9,100) + $50,000 + (($40,000 ÷ 10,000) × 9,100)].
References
Multiple Choice Difficulty: 3 Hard
Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Cagney Industries has the following cost information for the year just ended:
Direct materials $ 1.00 per unit
Direct labor $ 2.00 per unit
Variable manufacturing overhead $ 1.50 per unit
Fixed manufacturing overhead $30,000
Variable selling and administrative cost $ 0.50 per unit
Fixed selling and administrative cost $25,000
During the year, Cagney produced 6,000 units, out of which 5,400 were sold for $20 each.
What is net income under variable costing?
$26,000
$35,000
$29,000.
$23,000
None of the answers is correct.
Net income under variable costing is $26,000 = ($20 × 5,400) [($5.00 × 5,400) + $55,000].
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Cagney Industries has the following cost information for the year just ended:
Direct materials $ 1.00 per unit
Direct labor $ 2.00 per unit
Variable manufacturing overhead $ 1.50 per unit
Fixed manufacturing overhead $30,000
Variable selling and administrative cost $ 0.50 per unit
Fixed selling and administrative cost $25,000
During the year, Cagney produced 6,000 units, out of which 5,400 were sold for $20 each.
What is net income under absorption costing?
$26,000 $35,000 $29,000. $23,000
None of the answers is correct.
Net income under absorption costing is $29,000 = ($20 × 5,400) [($5.00 × 5,400) + $25,000 + (($30,000 / 6,000) × 5,400)].
References
Multiple Choice Difficulty: 3 Hard
Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Fort Smith Technologies incurred the following costs during the past year when planned production and actual production each totaled 20,000 units:
If Fort Smith uses variable costing, the total inventoriable costs for the year would be: $400,000 $460,000 $560,000 $620,000 $660,000.
Variable costing = Direct materials + Direct labor + Variable Manufacturing Overhead = $280,000 + $120,000 + $160,000 = $560,000
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Fort Smith Technologies incurred the following costs during the past year when planned production and actual production each totaled 20,000 units:
Fort Smith’s per-unit inventoriable cost under variable costing is:
Total variable costs ÷ units = $560,000 ÷ 20,000 = $28.00
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Fort Smith Technologies incurred the following costs during the past year when planned production and actual production each totaled 20,000 units:
If Fort Smith uses absorption costing, the total inventoriable costs for the year would be:
Absorption costing = Direct materials + Direct labor + Variable Manufacturing Overhead + Fixed Manufacturing Overhead = $280,000 + $120,000 + $160,000 + $100,000 = $660,000
References
Multiple Choice Difficulty: 3 Hard
Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Fort Smith Technologies incurred the following costs during the past year when planned production and actual production each totaled 20,000 units:
Fort Smith’s per-unit inventoriable cost under absorption costing is:
Total absorption costs ÷ units = $660,000 ÷ 20,000 = $33.00
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Award: 1.00 point
Consider the following comments about absorption- and variable-costing income statements:
I. A variable-costing income statement discloses a firm's contribution margin.
II. Cost of goods sold on an absorption-costing income statement includes fixed costs.
III. The amount of variable selling and administrative cost is the same on absorption- and variable-costing income statements.
Which of the above statements is (are) true?
I only
II only
I and II.
II and III.
I, II, and III.
All of these statements are true
References
Multiple Choice Learning Objective: 0802 Prepare an income statement under absorption costing.
Difficulty: 2 Medium Learning Objective: 0803 Prepare an income statement under variable costing.
Award: 1.00 point
Consider the following comments about absorption- and variable-costing income statements:
I. A variable-costing income statement discloses a firm's gross margin.
II. Cost of goods sold on an absorption-costing income statement includes fixed costs.
III. The amount of variable selling and administrative cost is the same on absorption- and variable-costing income statements.
Which of the above statements is (are) true?
I only
II only
I and II.
II and III.
I, II, and III.
Both statements II and III are true
References
Multiple Choice Learning Objective: 0802 Prepare an income statement under absorption costing.
Difficulty: 2 Medium Learning Objective: 0803 Prepare an income statement under variable costing.
Riverton Corp., which began business at the start of the current year, had the following data:
Planned and actual production: 40,000 units
Sales: 37,000 units at $15 per unit
Production costs:
Variable: $4 per unit
Fixed: $260,000
Selling and administrative costs:
Variable: $1 per unit
Fixed: $32,000
The gross margin that the company would disclose on an absorption-costing income statement is:
$97,500
$147,000
$166,500.
$370,000
None of the answers is correct.
Fixed production per unit = $260,000 ÷ 40,000 = $6.50; Sales Variable costs fixed costs = $15 $4 $6.50 = $4.50 × 37,000 = $166,500
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-02 Prepare an income statement under absorption costing.
Riverton Corp., which began business at the start of the current year, had the following data:
Planned and actual production: 40,000 units
Sales: 37,000 units at $15 per unit
Production costs:
Variable: $4 per unit
Fixed: $260,000
Selling and administrative costs:
Variable: $1 per unit
Fixed: $32,000
The contribution margin that the company would disclose on a variable-costing income statement is:
$97,500
$147,000
$166,500.
$370,000
None of the answers is correct.
Sales Variable costs = $15 $4 $1 = $10 × 37,000 = $370,000
References
Multiple Choice Difficulty: 3 Hard
Learning Objective: 08-02 Prepare an income statement under absorption costing.
Award: 1.00 point
Callaway Corp., which began business at the start of the current year, had the following data:
Planned and actual production: 40,000 units
Sales: 38,000 units at $15 per unit
Production costs:
Variable: $5 per unit
Fixed: $260,000
Selling and administrative costs:
Variable: $1 per unit
Fixed: $32,000
The gross margin that the company would disclose on an absorption-costing income statement is: $0 $133,000 $166,500. $342,000
None of the answers is correct.
Fixed production per unit = $260,000 ÷ 40,000 = $6.50; Sales Variable costs fixed costs = $15 $5 $6.50 = $3.50 × 38,000 = $133,000
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-02 Prepare an income statement under absorption costing.
Award: 1.00 point
Callaway Corp., which began business at the start of the current year, had the following data:
Planned and actual production: 40,000 units
Sales: 38,000 units at $15 per unit
Production costs:
Variable: $5 per unit
Fixed: $260,000
Selling and administrative costs:
Variable: $1 per unit
Fixed: $32,000
The contribution margin that the company would disclose on a variable-costing income statement is: $0
$120,000
$166,500.
$342,000
None of the answers is correct.
Sales Variable costs = $15 $5 $1 = $9 × 38,000 = $342,000
References
Multiple Choice Difficulty: 3 Hard
Learning Objective: 08-02 Prepare an income statement under absorption costing.
Sawyer Industries began business at the start of the current year. The company planned to produce 25,000 units, and actual production conformed to expectations. Sales totaled 22,000 units at $30 each. Costs incurred were:
If there were no variances, the company's absorption-costing income would be: $190,000 $202,000 $208,000 $220,000
None of the answers is correct.
Fixed manufacturing per unit = $150,000 ÷ 25,000 = $6; (Per Unit: Sales Variable costs Fixed OH = $30 $2 $8 $6 = $14 × 22,000 = $308,000); $308,000 fixed S & A = $308,000 $100,000 = $208,000 References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-02 Prepare an income statement under absorption costing.
Which of the following statements pertain to variable costing?
This method must be used for external financial reporting.
Fixed manufacturing overhead is attached to each unit produced.
The income statement not does disclose a company's contribution margin.
Variable manufacturing overhead becomes part of a unit's cost. None of the answers is correct.
It is true that variable manufacturing overhead becomes part of a unit’s cost when using variable costing.
References
Multiple Choice Learning Objective: 0801 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Difficulty: 1 Easy Learning Objective: 0802 Prepare an income statement under absorption costing.
Learning Objective: 08-03 Prepare an income statement under variable costing.
Which of the following statements pertain to both variable costing and absorption costing?
The income statement discloses the amount of gross margin generated during the reporting period.
Fixed selling and administrative expenses are treated in the same manner as fixed manufacturing overhead.
Both variable and absorption costing can be used for external financial reporting.
Variable selling costs are written-off as expenses of the accounting period.
Fixed manufacturing overhead is attached to each unit produced.
It is true that variable selling costs are written-off as expenses of the accounting period for both variable and absorption costing.
References
Multiple Choice Learning Objective: 0801 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Difficulty: 1 Easy Learning Objective: 0802 Prepare an income statement under absorption costing.
Learning Objective: 08-03 Prepare an income statement under variable costing.
Award: 1.00 point
Variable costing of inventory and absorption costing of inventory is relevant for which of the following types of businesses?
Manufacturing firms.
Not-for-profit companies.
Governmental units.
Service firms.
All of the answers are correct.
Variable costing of inventory and absorption costing of inventory is relevant for manufacturing firms.
References
Multiple Choice Learning Objective: 0801 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
Difficulty: 1 Easy Learning Objective: 0802 Prepare an income statement under absorption costing.
Learning Objective: 08-03 Prepare an income statement under variable costing.
Award: 1.00 point
Which of the following product-costing systems is/are required for tax purposes?
Absorption costing.
Variable costing.
Throughput costing.
Either absorption or variable costing.
Absorption, variable costing, or throughput costing.
The product-costing system required for tax purposes is absorption costing.
References
Multiple Choice Difficulty: 1 Easy
Learning Objective: 08-01 Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing.
ProTech began business at the start of the current year. The company planned to produce 40,000 units, and actual production conformed to expectations. Sales totaled 37,000 units at $42 each. Costs incurred were:
If there were no variances, the company's variable-costing income would be: $155,000
$212,000
$240,500
$592,000
None of the answers is correct.
Fixed costs per unit = $240,000 ÷ 40,000 = $6; Sales Variable OH Fixed OH = $42 ($19 + $7) = $16 × 37,000 = $592,000; $592,000 Fixed costs = $592,000 ($240,000 + $140,000) = $212,000 References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-03 Prepare an income statement under variable costing.
Award: 1.00 point
ProTech began business at the start of the current year. The company planned to produce 40,000 units, and actual production conformed to expectations. Sales totaled 37,000 units at $42 each. Costs incurred were:
If there were no variances, the company's absorption-costing income would be:
$155,000
$230,000.
$240,500
$592,000
None of the answers is correct.
Fixed manufacturing per unit = $240,000 ÷ 40,000 = $6; (Per Unit: Sales Variable costs Fixed OH = $42 $19 $7 $6 = $10 × 37,000 = $370,000); $370,000 fixed S & A = $370,000 $140,000 = $230,000
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-03 Prepare an income statement under variable costing.
Award: 1.00 point
Jordan Manufacturing has the following cost information for year 20X9:
During 20X9, Jordan produced 12,500 units, out of which 11,000 were sold for $60 each.
What is Jordan’s net income assuming the company uses variable costing: $421,600 $412,000
None of the answers is correct.
See calculation below
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-03 Prepare an income statement under variable costing.
Award: 1.00 point
Jordan Manufacturing has the following cost information for year 20X9:
During 20X9, Jordan produced 12,500 units, out of which 11,000 were sold for $60 each.
What is Jordan’s net income assuming the company uses absorption costing:
$421,600
$412,000 $425,000.
$457,600
None of the answers is correct.
See calculation below
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 08-03 Prepare an income statement under variable costing.
The following data relate to Lebeaux Corporation for the year just ended:
Which of the following statements is correct?
Lebeaux's variable-costing income statement would show a gross margin of $270,000
Lebeaux's variable-costing income statement would show a contribution margin of $330,000
Lebeaux's absorption-costing income statement would show a contribution margin of $330,000
Lebeaux's absorption-costing income statement would show a gross margin of $330,000
Lebeaux's absorption-costing income statement would show a gross margin of $145,000.
Based on the data, Lebeaux’s variable costing income statement would show a contribution margin of $330,000 (or $750,000 ($370,000 + $50,000)).
References
Multiple Choice Learning Objective: 0802 Prepare an income statement under absorption costing.
Difficulty: 3 Hard Learning Objective: 0803 Prepare an income statement under variable costing.