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PRACTICE QUIZ 8

1. Which of the following types of costs is a product cost for absorption costing but a period cost for variable costing?
a. Direct materials
b. Total administrative expense
c. Direct labor
d. Fixed factory overhead per unit sold
e. Variable selling expense
2. When production is less than sales volume, income under absorption costing will be ____ income using variable
costing procedures.
a. equal to
b. randomly different than
c. greater than
d. less than
3. What is the primary difference between variable and absorption costing?
a. Inclusion of fixed selling expenses in period costs
b. Inclusion of fixed selling expenses in product costs
c. Inclusion of fixed factory overhead in product costs
d. Inclusion of variable factory overhead in period costs
4.

Refer to Figure 8-1. Assuming that beginning inventory was zero, what is the value of ending inventory under variable
costing?
a. $5,000

300 c.200 5.520 6.000 d. Refer to Figure 8-2.60 c. $3. $67. $45. $85. $7. Refer to Figure 8-1.900 b.20 b. $2. What is the unit product cost under absorption costing? a.720 e. $8. $111. $3.20 . $8. $10.500 d.300 c.b. What is operating income for last year under absorption costing? a.

000 c. What is the value of the ending inventory using the absorption costing method? a.d.340 c. $600.000 9.20 e.740 e. $7.60 7.980 b. $3. $7.000 b. Answer is D Refer to Figure 8-2. Refer to Figure 8-4. $11. $240.000 d. What is operating income under variable costing? a. . $360. $10.540 d. $420. -$540 8. $3.

$520.000 b.000 c. .000 c.000 11.000 d.000 d. $420. $500. What is the income for Sanders using the variable costing method? a. $260.Refer to Figure 8-5.000 10. Refer to Figure 8-8. $78. What is the January ending inventory for Steele Corporation using the variable costing method? a.000 b. $480. $90. $108.

$120. $15. $104. $50.Refer to Figure 8-8.000 c. $50.000 12. Refer to Figure 8-9.000 d. What is the March ending inventory for Steele Corporation using the variable costing method? a. $260. . Absorption costing income would be ____ the variable costing income.000 greater than b.000 greater than d. $70.000 b.000 less than c. a. $70.000 less than 13.

$310. $40.000 c. $310. .000 c.000 b.Refer to Figure 8-9. $250.000 b.000 15. $210.000 d.000 14. $200. What is the value of ending inventory using the absorption costing method? a. $390. $240. Refer to Figure 8-10.000 d. What is the segment margin for Division Y? a.

$80 b. b. Carter Company orders 250 units at a time. $65. e. $300. Answer is B 17. The economic order quantity (EOQ) is less than 250 c.000 16. $325. Total inventory-related cost is lower than it would be at the economic order quantity (EOQ) d. What is the average annual carrying cost of Martin's new policy? a. Total ordering cost is $1. None of these choices are correct. Stockout cost. $90 . Which of the following statements is true? a. Setup cost.000 d. $4 d. The economic order quantity (EOQ) is more than 250 e. and places 15 orders per year.000 b.750. cost of insurance for shipping and unloading is called a. d. What is the income for Nauman Company? a. Answer is B 18. $160 c. Martin has decided to begin ordering 40 units at a time. Storing cost.Refer to Figure 8-10. Refer to Figure 8-3. The inventory cost that can include processing costs.000 c. c. The economic order quantity (EOQ) is 250 b. $41. Ordering cost. Carrying cost.100 and total carrying cost is $1. $60 e.

What is the EOQ for Martin? a. $125 c. Refer to Figure 8-3. $150 b. $100 d. $145 e. 20 b. Refer to Figure 8-3.19. 50 . 30 e. $190 20. 45 d. What is the average annual ordering cost of Martin's new policy? a. Martin has decided to begin ordering 40 units at a time. 100 c.