Question 1

"Super-variable costing" assumes that

Accepted Answer

A) all costs are variable in the long run. 
B) all costs are variable in the short run. 
C) only direct materials are variable in the short run. 
D) fixed costs are period costs in the long run. 
E) all cost are fixed in the long run. 
A) all costs are variable in the long run. 
B) all costs are variable in the short run. 
C) only direct materials are variable in the short run. 
D) fixed costs are period costs in the long run. 
E) all cost are fixed in the long run.

Question 2

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 inventoriable cost per box using absorption 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 3

Direct costing is not truly synonymous with variable costing since variable costing does not include all direct costs as inventoriable costs.

Accepted Answer

A) True 
 B)False

Question 4

Changes in inventory levels do not affect income amounts between variable and absorption costing because the difference in accounting for fixed manufacturing overhead offsets the affect.

Accepted Answer

A) True 
 B)False

Question 5

When all fixed manufacturing costs and variable manufacturing costs are included as inventoriable costs, the method being used is

Accepted Answer

A) absorption costing. 
B) fixed overhead costing. 
C) manufacturing overhead costing. 
D) variable costing. 
E) direct costing. 
A) absorption costing. 
B) fixed overhead costing. 
C) manufacturing overhead costing. 
D) variable costing. 
E) direct costing.

Question 6

Throughput costing considers only direct materials and direct manufacturing labour to be truly variable costs.

Accepted Answer

A) True 
 B)False

Question 7

Determining the "right" level of capacity is an important strategic decision.

Accepted Answer

A) True 
 B)False

Question 8

Use the information below to answer the following question(s).Car Tunes produces car radios.Actual fixed manufacturing overhead is the same as the budgeted amount, $330,000.Production in September increased by 10% over the previous month's production.August production was 5,000 radios.The production level is the same as the budgeted denominator level.At the end of September, 1,000 radios remained in stock.In August, all of the radios were sold by the end of the month and there was no remaining work in process inventory.
-What are Car Tune's appropriate period costs for September if variable costing is used?

Accepted Answer

A) $330,000 
B) $363,000 
C) $550,000 
D) $583,000 
E) $0 
A) $330,000 
B) $363,000 
C) $550,000 
D) $583,000 
E) $0

Question 9

Answer the following question(s)using the information below.The following information pertains to the Bean Company:
  
-What is the variable costing break-even point in units?

Accepted Answer

A) 1,000 units 
B) 5,556 units 
C) 4,445 units 
D) 6,000 units 
E) 445 units 
A) 1,000 units 
B) 5,556 units 
C) 4,445 units 
D) 6,000 units 
E) 445 units

Question 10

Should a company with high fixed costs and unused capacity raise selling prices to try to fully recoup its costs?

Accepted Answer

No, companies in this situation might ex

Question 11

How does the capacity level chosen to compute the budgeted fixed overhead cost rate affect the production-volume variance?

Accepted Answer

a.Theoretical capacity, practical capaci

Question 12

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.
-Variable costing regards fixed manufacturing overhead as

Accepted Answer

A) an unexpired cost. 
B) an inventoriable cost. 
C) a period expense. 
D) a product cost. 
E) a deferred asset. 
A) an unexpired cost. 
B) an inventoriable cost. 
C) a period expense. 
D) a product cost. 
E) a deferred asset.

Question 13

Answer the following question(s)using the information below.Heinrich Corporation budgeted fixed manufacturing costs of $6,000 during 2012.Other information for 2012 includes:
   The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-Which of the following is a weakness particular to the absorption costing method?

Accepted Answer

A) A production manager cannot manipulate operating income. 
B) A manager is always encouraged to match the production schedule to estimated demand. 
C) A manager may be encouraged to switch production to difficult to manufacture products. 
D) A downward demand spiral can be created. 
E) A manager may be encouraged to defer maintenance. 
A) A production manager cannot manipulate operating income. 
B) A manager is always encouraged to match the production schedule to estimated demand. 
C) A manager may be encouraged to switch production to difficult to manufacture products. 
D) A downward demand spiral can be created. 
E) A manager may be encouraged to defer maintenance.

Question 14

Theoretical capacity is based on which of the following assumptions?

Accepted Answer

A) that absorption costing is used 
B) that variable costing is used 
C) production will occur at peak capacity all the time 
D) production will occur at peak capacity where feasible (e. g., except for maintenance downtime) 
E) production can never occur at peak capacity 
A) that absorption costing is used 
B) that variable costing is used 
C) production will occur at peak capacity all the time 
D) production will occur at peak capacity where feasible (e. g., except for maintenance downtime) 
E) production can never occur at peak capacity

Question 15

Throughput costing is also referred to as super-variable costing.

Accepted Answer

A) True 
 B)False

Question 16

Use the information below to answer the following question(s).Western Technologies Inc.produces dashboard displays.Actual fixed manufacturing overhead is the same as the budgeted amount, $687,500.Production in September increased by 10% over the previous month's production.August production was 25,000 displays.The production level is the same as the budgeted denominator level.At the end of September, 2,000 displays remained in stock.In August, all of the displays were sold by the end of the month and there was no remaining work in process inventory.
-What are Western Technologies' appropriate period costs for September if variable costing is used?

Accepted Answer

A) $668,380 
B) $726,500 
C) $632,500 
D) $687,500 
E) $637,500 
A) $668,380 
B) $726,500 
C) $632,500 
D) $687,500 
E) $637,500

Question 17

The break-even point under absorption costing depends on the: fixed costs, contribution margin per unit, unit level sales, unit level of production, and overhead cost rate.

Accepted Answer

A) True 
 B)False

Question 18

Answer the following question(s)using the information below.Stober Company produces a specialty item.Management has provided the following information:
  
-What is the total throughput contribution?

Accepted Answer

A) $1,080,000 
B) $1,260,000 
C) $1,500,000 
D) $1,620,000 
E) $1,800,000 
A) $1,080,000 
B) $1,260,000 
C) $1,500,000 
D) $1,620,000 
E) $1,800,000

Question 19

Briefly discuss two methods of reducing the undesirable incentives associated with the use of absorption
costing to evaluate the performance of a plant manager.

Accepted Answer

There are several ways to reduce the und

Question 20

Answer the following question(s)using the information below.Marie's Decorating produces and sells a mantel clock for $100 per unit.In 2012, 100,000 clocks were produced and 80,000 were sold.Other information for the year includes:
  
-What is the inventoriable cost per unit using absorption costing?

Accepted Answer

A) $32 
B) $35 
C) $40 
D) $60 
E) $75 
A) $32 
B) $35 
C) $40 
D) $60 
E) $75

"Super-variable costing" assumes that

Direct costing is not truly synonymous with variable costing since variable costing does not include all direct costs as inventoriable costs.

Changes in inventory levels do not affect income amounts between variable and absorption costing because the difference in accounting for fixed manufacturing overhead offsets the affect.

When all fixed manufacturing costs and variable manufacturing costs are included as inventoriable costs, the method being used is

Throughput costing considers only direct materials and direct manufacturing labour to be truly variable costs.

Determining the "right" level of capacity is an important strategic decision.

Answer the following question(s)using the information below.The following information pertains to the Bean Company: -What is the variable costing break-even point in units?

Should a company with high fixed costs and unused capacity raise selling prices to try to fully recoup its costs?

How does the capacity level chosen to compute the budgeted fixed overhead cost rate affect the production-volume variance?

Theoretical capacity is based on which of the following assumptions?

Throughput costing is also referred to as super-variable costing.

The break-even point under absorption costing depends on the: fixed costs, contribution margin per unit, unit level sales, unit level of production, and overhead cost rate.

Answer the following question(s)using the information below.Stober Company produces a specialty item.Management has provided the following information: -What is the total throughput contribution?

Briefly discuss two methods of reducing the undesirable incentives associated with the use of absorption costing to evaluate the performance of a plant manager.

Answer the following question(s)using the information below.Marie's Decorating produces and sells a mantel clock for $100 per unit.In 2012, 100,000 clocks were produced and 80,000 were sold.Other information for the year includes: -What is the inventoriable cost per unit using absorption costing?

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

"Super-variable costing" assumes that

Direct costing is not truly synonymous with variable costing since variable costing does not include all direct costs as inventoriable costs.

Changes in inventory levels do not affect income amounts between variable and absorption costing because the difference in accounting for fixed manufacturing overhead offsets the affect.

When all fixed manufacturing costs and variable manufacturing costs are included as inventoriable costs, the method being used is

Throughput costing considers only direct materials and direct manufacturing labour to be truly variable costs.

Determining the "right" level of capacity is an important strategic decision.

Answer the following question(s)using the information below.The following information pertains to the Bean Company: -What is the variable costing break-even point in units?

Should a company with high fixed costs and unused capacity raise selling prices to try to fully recoup its costs?

How does the capacity level chosen to compute the budgeted fixed overhead cost rate affect the production-volume variance?

Theoretical capacity is based on which of the following assumptions?

Throughput costing is also referred to as super-variable costing.

The break-even point under absorption costing depends on the: fixed costs, contribution margin per unit, unit level sales, unit level of production, and overhead cost rate.

Answer the following question(s)using the information below.Stober Company produces a specialty item.Management has provided the following information: -What is the total throughput contribution?

Briefly discuss two methods of reducing the undesirable incentives associated with the use of absorption costing to evaluate the performance of a plant manager.

Answer the following question(s)using the information below.Marie's Decorating produces and sells a mantel clock for $100 per unit.In 2012, 100,000 clocks were produced and 80,000 were sold.Other information for the year includes: -What is the inventoriable cost per unit using absorption costing?

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