Question 1

The gross-margin format of the income statement highlights the lump sum of fixed manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 2

Use the information below to answer the following question(s).Beauty Supply Company manufactures shampoo.The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs.     There were no beginning or ending inventories of materials or work-in-process.
-What is the per unit manufacturing cost using absorption costing?

Accepted Answer

A) $23.00 
B) $18.00 
C) $27.00 
D) $12.00 
E) $10.00 
A) $23.00 
B) $18.00 
C) $27.00 
D) $12.00 
E) $10.00

Question 3

Sierra Tool Manufacturing Ltd.manufactures hammers at their Hamilton facility.For next month the vice-president of production plans on producing 2,700 hammers per day.The company can produce as many as 4,000 hammers per day, but are more likely to produce 3,500 per day.The demand for wrenches for the next three years is expected to average 3,100 wrenches per day.Fixed manufacturing costs per month total $282,400.The company works 22 days a month due to local zoning restrictions.Fixed manufacturing overhead is charged on a per wrench basis.Required:
a.What is the theoretical fixed manufacturing overhead rate per wrench?
b.What is the practical fixed manufacturing overhead rate per wrench?
c.What is the normal fixed manufacturing overhead rate per wrench?
d.What is the master-budget fixed manufacturing overhead rate per wrench?

Accepted Answer

a.Theoretical overhead rate = $282,400/(

Question 4

You are the management accountant for the West coast division of a musical instrument manufacturing company.There are three manufacturing plants in your division.Each plant manager was given decision making authority in terms of production, as long as income for their plant kept on pace.The manager at Plant A has consistently been the leader in profit for the division, but the other two managers are complaining that Plant A doesn't seem to be selling any more product than they are.The division manager has noticed higher inventory levels at Plant A, which the plant manager justifies by saying the higher levels are needed to ensure adequate sales.The division manager suspects that there could be other reasons, and she has asked you to provide three proposals for revising performance evaluation.

Accepted Answer

Any three of the following:
1.Change the

Question 5

Use the information below to answer the following question(s).Beauty Supply Company manufactures shampoo.The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs.     There were no beginning or ending inventories of materials or work-in-process.
-What would Beauty Supply Company's operating income (loss)be for January and February, respectively, using the variable costing approach?

Accepted Answer

A) $18,000 and $24,200 
B) $(45,000)and $(35,500) 
C) $(44,000)and $(33,809) 
D) $(42,000)and $(35,800) 
E) $(22,000)and $(15,800) 
A) $18,000 and $24,200 
B) $(45,000)and $(35,500) 
C) $(44,000)and $(33,809) 
D) $(42,000)and $(35,800) 
E) $(22,000)and $(15,800)

Question 6

Throughput costing results in a higher amount of manufacturing costs being placed in inventory than either variable or absorption costing.

Accepted Answer

A) True 
 B)False

Question 7

Using practical capacity is best for evaluating the marketing manager's performance for a particular year.

Accepted Answer

A) True 
 B)False

Question 8

Use the information below to answer the following question(s).Honda Heaven produces and sells an auto part for $20.00 per unit.Direct materials are $8 per unit, while direct manufacturing labour averages $1.50 per unit.Variable manufacturing overhead is $0.50 per unit and fixed manufacturing overhead is $250,000 per year.Administrative expenses, all fixed, run $90,000 per year, with sales commissions of $2 per part.Production is 100,000 parts per year.And this year, 75,000 boxes were sold.
-What is Honda Heaven's inventory cost per box using variable costing?

Accepted Answer

A) $9.50 
B) $10.00 
C) $12.50 
D) $13.40 
E) $15.40 
A) $9.50 
B) $10.00 
C) $12.50 
D) $13.40 
E) $15.40

Question 9

Companies using absorption costing do not need to make any distinction between variable and fixed costs in their accounting system for inventory costing purposes.

Accepted Answer

A) True 
 B)False

Question 10

Answer the following question(s)using the information below.Peggy's Pillows produces and sells a decorative pillow for $75.00 per unit.In the first month of operation, 2,000 units were produced and 1,750 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes:
  
-What is operating income using variable costing?

Accepted Answer

A) $52,500 
B) $78,750 
C) $65,750 
D) $47,000 
E) $40,000 
A) $52,500 
B) $78,750 
C) $65,750 
D) $47,000 
E) $40,000

Question 11

Power Foods produces food products for people active in sports.The following budgeted volume and costs has been provided for one of their post-workout beverages:
     Required:
What is the inventoriable cost per drink under each of the following methods?
a.absorption costing
b.variable costing
c.throughput costing

Accepted Answer

a.$1.25 + $0.20 + $0

Question 12

Period-to-period changes in operating income under absorption costing are driven by variations in both the unit level of sales and the unit level of production.

Accepted Answer

A) True 
 B)False

Question 13

Evaluate the statement, "The breakeven points are generally different under both variable costing and absorption costing." Include in your discussion the factors that can cause the breakeven in absorption costing to vary.

Accepted Answer

The breakeven points are generally diffe

Question 14

The marketing manager's performance evaluation is most fair when based on a denominator level using

Accepted Answer

A) practical capacity. 
B) theoretical capacity. 
C) master-budget capacity. 
D) normal capacity. 
E) supply capacity. 
A) practical capacity. 
B) theoretical capacity. 
C) master-budget capacity. 
D) normal capacity. 
E) supply capacity.

Question 15

The heart of the difference between variable and absorption costing for financial reporting is accounting for fixed manufacturing and variable non-manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 16

Master-budget capacity utilization can be more reliably estimated than normal capacity utilization.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is TRUE concerning operating income calculated under variable costing as compared to absorption costing?

Accepted Answer

A) Operating income is lower under variable costing when production exceeds sales. 
B) Operating income is higher under variable costing when production exceeds sales. 
C) Operating income is lower under variable costing when sales exceeds production only if there is a production-volume variance. 
D) operating income is higher under variable costing when production exceeds sales only if there is a production-volume variance. 
E) The relationship between production and sales has no bearing on the differences in operating income between the two methods. 
A) Operating income is lower under variable costing when production exceeds sales. 
B) Operating income is higher under variable costing when production exceeds sales. 
C) Operating income is lower under variable costing when sales exceeds production only if there is a production-volume variance. 
D) operating income is higher under variable costing when production exceeds sales only if there is a production-volume variance. 
E) The relationship between production and sales has no bearing on the differences in operating income between the two methods.

Question 18

Which denominator-level concept results in the highest amount of fixed manufacturing overhead costs per unit of ending inventory when seasonal demand is low?

Accepted Answer

A) theoretical capacity 
B) practical capacity 
C) normal capacity 
D) master-budget capacity 
E) supply capacity 
A) theoretical capacity 
B) practical capacity 
C) normal capacity 
D) master-budget capacity 
E) supply capacity

Question 19

Answer the following question(s)using the information below.Greene Manufacturing incurred the following expenses during the current year:
  
-What will be the break-even point in units if absorption costing is used?

Accepted Answer

A) 1,330 units 
B) 1,000 units 
C) 887 units 
D) 563 units 
E) 2,660 units 
A) 1,330 units 
B) 1,000 units 
C) 887 units 
D) 563 units 
E) 2,660 units

Question 20

The Canada Revenue Agency requires companies to use practical capacity as the denominator-level concept.

Accepted Answer

A) True 
 B)False

The gross-margin format of the income statement highlights the lump sum of fixed manufacturing costs.

Throughput costing results in a higher amount of manufacturing costs being placed in inventory than either variable or absorption costing.

Using practical capacity is best for evaluating the marketing manager's performance for a particular year.

Companies using absorption costing do not need to make any distinction between variable and fixed costs in their accounting system for inventory costing purposes.

Period-to-period changes in operating income under absorption costing are driven by variations in both the unit level of sales and the unit level of production.

Evaluate the statement, "The breakeven points are generally different under both variable costing and absorption costing." Include in your discussion the factors that can cause the breakeven in absorption costing to vary.

The marketing manager's performance evaluation is most fair when based on a denominator level using

The heart of the difference between variable and absorption costing for financial reporting is accounting for fixed manufacturing and variable non-manufacturing costs.

Master-budget capacity utilization can be more reliably estimated than normal capacity utilization.

Which of the following is TRUE concerning operating income calculated under variable costing as compared to absorption costing?

Which denominator-level concept results in the highest amount of fixed manufacturing overhead costs per unit of ending inventory when seasonal demand is low?

Answer the following question(s)using the information below.Greene Manufacturing incurred the following expenses during the current year: -What will be the break-even point in units if absorption costing is used?

The Canada Revenue Agency requires companies to use practical capacity as the denominator-level concept.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 9: Income Effects of Denominator Level on Inventory Valuation

The gross-margin format of the income statement highlights the lump sum of fixed manufacturing costs.

Throughput costing results in a higher amount of manufacturing costs being placed in inventory than either variable or absorption costing.

Using practical capacity is best for evaluating the marketing manager's performance for a particular year.

Companies using absorption costing do not need to make any distinction between variable and fixed costs in their accounting system for inventory costing purposes.

Period-to-period changes in operating income under absorption costing are driven by variations in both the unit level of sales and the unit level of production.

Evaluate the statement, "The breakeven points are generally different under both variable costing and absorption costing." Include in your discussion the factors that can cause the breakeven in absorption costing to vary.

The marketing manager's performance evaluation is most fair when based on a denominator level using

The heart of the difference between variable and absorption costing for financial reporting is accounting for fixed manufacturing and variable non-manufacturing costs.

Master-budget capacity utilization can be more reliably estimated than normal capacity utilization.

Which of the following is TRUE concerning operating income calculated under variable costing as compared to absorption costing?

Which denominator-level concept results in the highest amount of fixed manufacturing overhead costs per unit of ending inventory when seasonal demand is low?

Answer the following question(s)using the information below.Greene Manufacturing incurred the following expenses during the current year: -What will be the break-even point in units if absorption costing is used?

The Canada Revenue Agency requires companies to use practical capacity as the denominator-level concept.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters