Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more ➡
Download
Standard view
Full view
of .
Add note
Save to My Library
Sync to mobile
Look up keyword
Like this
245Activity
×
0 of .
Results for:
No results containing your search query
P. 1
Chapter 07

Chapter 07

Ratings: (0)|Views: 66,780|Likes:
Published by moocow13

More info:

Published by: moocow13 on May 02, 2010
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, DOC, TXT or read online from Scribd
See More
See less

08/05/2013

pdf

text

original

 
True/False Questions
1.Under variable costing, only variable production costs are treated as product costs.Ans: True AACSB: Reflective Thinking AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 1 Level: Easy2.Under variable costing, variable selling and administrative costs are included in product costs.Ans: False AACSB: Reflective Thinking AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 1 Level: Easy3.Absorption costing treats all manufacturing costs as product costs.Ans: True AACSB: Reflective Thinking AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 1 Level: Easy4.In the preparation of financial statements using variable costing, fixed manufacturingoverhead is treated as a period cost.Ans: True AACSB: Reflective Thinking AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 1 Level: Easy5.Absorption costing treats fixed manufacturing overhead as a period cost.Ans: False AACSB: Reflective Thinking AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 1 Level: Easy6.When the number of units in work in process and finished goods inventories increase,absorption costing net operating income will typically be greater than variable costingnet operating income.Ans: True AACSB: Analytic AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 2,3 Level: Easy7.Net operating income computed using absorption costing will always be greater thannet operating income computed using variable costing.Ans: False AACSB: Analytic AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 2 Level: Easy
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition7-5
 
8.When reconciling variable costing and absorption costing net operating income, fixedmanufacturing overhead costs released from inventory under absorption costingshould be added to variable costing net operating income to arrive at the absorptioncosting net operating income.Ans: False AACSB: Reflective Thinking AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 3 Level: Medium9.When production exceeds sales for the period, absorption costing net operatingincome will exceed variable costing net operating income.Ans: True AACSB: Analytic AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 3 Level: Medium10.Under variable costing it may be possible to report a profit even if the company sellsless than the break-even volume of sales.Ans: False AACSB: Analytic AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 4 Level: Medium11.Absorption costing net operating income is closer to the net cash flow of a period thanis variable costing net operating income.Ans: False AACSB: Analytic AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 4 Level: Medium12.Variable costing is not permitted for income tax purposes, but it is widely accepted for external financial reports.Ans: False AACSB: Reflective Thinking AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 4 Level: Medium13.A basic concept of the contribution approach and variable costing is that fixed costsare not important in an organization.Ans: False AACSB: Reflective Thinking AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 4 Level: Medium14.Variable costing is better suited to cost-volume-profit calculations than absorptioncosting.Ans: True AACSB: Analytic AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 4 Level: Easy
 
15.When lean production is introduced, the difference in net operating income computedunder the absorption and variable costing methods is reduced.Ans: True AACSB: Analytic AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 5 Level: Easy
Multiple Choice Questions
16.How would the following costs be classified (product or period) under variable costingat a retail clothing store?Cost of purchasing clothingSales commissionsA)ProductProductB)ProductPeriodC)PeriodProductD)PeriodPeriodAns: B AACSB: Analytic AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 1 Level: Medium17.The principal difference between variable costing and absorption costing centers on:A)whether variable manufacturing costs should be included as product costs.B)whether fixed manufacturing costs should be included as product costs.C)whether fixed manufacturing costs and fixed selling and administrative costsshould be included as product costs.D)none of these.Ans: B AACSB: Analytic AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 1 Level: Easy18.Which of the following costs at a manufacturing company would be treated as a product cost under the variable costing method?A)direct material costB)property taxes on the factory buildingC)sales manager's salaryD)all of the aboveAns: A AACSB: Analytic AICPA BB: Critical ThinkingAICPA FN: Reporting LO: 1 Level: Medium
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition7-

Activity (245)

You've already reviewed this. Edit your review.
1 hundred reads
1 thousand reads
Đường Phương Linh added this note|
in its first year
KhanZsuri liked this
Kelsea Taylor liked this
Kelsea Taylor liked this
Mahfuzul liked this
Danny Mora liked this

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->