Question 1

Which of the following inventory costing methods results in the least amount of costs being inventoried?

Accepted Answer

A)  absorption costing 
B)  variable costing 
C)  throughput costing 
D)  direct costing 
A)  absorption costing 
B)  variable costing 
C)  throughput costing 
D)  direct costing C

Question 2

Which of the following approaches spreads underallocated or overallocated overhead among ending balances in Work-in-Process Control,Finished Goods Control,and Cost of Goods Sold?

Accepted Answer

A)  the adjusted allocation-rate approach 
B)  the proration approach 
C)  the write-off variances to cost of goods sold approach 
D)  the reinstatement approach 
A)  the adjusted allocation-rate approach 
B)  the proration approach 
C)  the write-off variances to cost of goods sold approach 
D)  the reinstatement approach B

Question 3

Which of the following statements is true of contribution-margin format of the income statement?

Accepted Answer

A)  It is used for absorption costing. 
B)  It highlights the lump sum of fixed manufacturing costs. 
C)  It distinguishes manufacturing costs from nonmanufacturing costs. 
D)  It calculates gross margin. 
A)  It is used for absorption costing. 
B)  It highlights the lump sum of fixed manufacturing costs. 
C)  It distinguishes manufacturing costs from nonmanufacturing costs. 
D)  It calculates gross margin. B

Question 4

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 5

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

Accepted Answer

A) True 
 B)False

Question 6

Ways to "produce for inventory" that result in increasing operating income include ________.

Accepted Answer

A)  switching production to products that absorb the least amounts of fixed manufacturing costs 
B)  delaying items that absorb the greatest amount of fixed manufacturing costs 
C)  deferring maintenance to accelerate production 
D)  undervaluing ending inventory by not recording certain costs that have been incurred 
A)  switching production to products that absorb the least amounts of fixed manufacturing costs 
B)  delaying items that absorb the greatest amount of fixed manufacturing costs 
C)  deferring maintenance to accelerate production 
D)  undervaluing ending inventory by not recording certain costs that have been incurred

Question 7

Throughput margin equals revenues minus all product costs.

Accepted Answer

A) True 
 B)False

Question 8

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

Question 9

Answer the following questions using the information below:
Greene Manufacturing incurred the following expenses during 2015:
 $$\begin{array} { l c } 
\text { Fixed manufacturing costs } & \$ 112,500 \
\text { Fixed nonmanufacturing costs } & \$ 87,500 \
\text { Unit selling price } & \$ 250 \
\text { Total unit cost } & \$ 100 \
\text { Variable manufacturing cost rate } & \$ 50 \
\text { Units produced } & 1,340 \text { units }
\end{array}$$
-What is the breakeven point in units using absorption costing if the units produced are actually 2,250?

Accepted Answer

A)  1,330 units 
B)  1,000 units 
C)  887 units 
D)  584 units 
A)  1,330 units 
B)  1,000 units 
C)  887 units 
D)  584 units

Question 10

Which of the following is true of theoretical capacity?

Accepted Answer

A)  It will be less than the real capacity available to a company. 
B)  It provides the best perspective of actual long-run costs. 
C)  It results in the lowest cost estimate of the four capacity options when used for product costing. 
D)  It replicates the cost of capacity in a competitor's cost structure. 
A)  It will be less than the real capacity available to a company. 
B)  It provides the best perspective of actual long-run costs. 
C)  It results in the lowest cost estimate of the four capacity options when used for product costing. 
D)  It replicates the cost of capacity in a competitor's cost structure.

Question 11

World Statues produces a specialty statue item.The following information has been provided by management:
 $\begin{array}{lr}
\text { Actual sales } & 10,000 \text { units } \
\text { Budgeted production } & 12,000 \text { units } \
\text { Selling price } & \$ 425 \text { per unit } \
& \
\text { Direct material costs } & \$ 87.50 \text { per unit } \
\text { Fixed manufacturing costs } & \$ 62.50 \text { per unit } \
\text { Variable manufacturing costs } & \$ 50.00 \text { per unit } \
\text { Variable administrative costs } & \$ 25.00 \text { per unit }
\end{array}$ Required:
a.What is the cost per statue if absorption costing is used?
b.What is the cost per statue if "super-variable costing" is used?
c.What is the total throughput contribution?

Accepted Answer

a.The cost per statue = $87.50

Question 12

Stiller Corporation incurred fixed manufacturing costs of $24,000 during 2015. Other information for 2015 includes:
The budgeted denominator level is 2,000 units.
Units produced total 1,500 units.
Units sold total 1,200 units.
Beginning inventory was zero.
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.
-Fixed manufacturing costs included in ending inventory total ________.

Accepted Answer

A)  $4,800 
B)  $6,000 
C)  $3,600 
D)  0 
A)  $4,800 
B)  $6,000 
C)  $3,600 
D)  0

Question 13

Absorption costing enables managers to increase operating income by increasing the unit level of sales,as well as by producing more units.

Accepted Answer

A) True 
 B)False

Question 14

________ method includes fixed manufacturing overhead costs as inventoriable costs.

Accepted Answer

A)  Variable costing 
B)  Absorption costing 
C)  Throughput costing 
D)  Activity-based costing 
A)  Variable costing 
B)  Absorption costing 
C)  Throughput costing 
D)  Activity-based costing

Question 15

When production quantity exceeds sales,throughput costing results in reporting lower operating income than variable costing.

Accepted Answer

A) True 
 B)False

Question 16

Using practical capacity as the denominator level sets the cost of capacity at the cost of supplying the capacity,regardless of the demand for the capacity.

Accepted Answer

A) True 
 B)False

Question 17

Practical capacity can never exceed theoretical capacity.

Accepted Answer

A) True 
 B)False

Question 18

Answer the following questions using the information below:
Jupiter Corporation incurred fixed manufacturing costs of $16,000 during 2015. Other information for 2015 includes:
The budgeted denominator level is 2,000 units.
Units produced total 2,200 units.
Units sold total 1,900 units.
Variable cost per unit is $4.
Beginning inventory is zero.
The fixed manufacturing cost rate is based on the budgeted denominator level.
-Under absorption costing,the production-volume variance is ________.

Accepted Answer

A)  $2,400 
B)  $2,000 
C)  $1,600 
D)  0 
A)  $2,400 
B)  $2,000 
C)  $1,600 
D)  0

Question 19

Proration approach restates all amounts in the general and subsidiary ledgers by using actual rather than budgeted cost rates.

Accepted Answer

A) True 
 B)False

Question 20

When comparing the operating incomes between absorption costing and variable costing,and ending finished inventory exceeds beginning finished inventory,it may be assumed that ________.

Accepted Answer

A)  sales decreased during the period 
B)  variable cost per unit is more than fixed cost per unit 
C)  there is a favorable production-volume variance 
D)  absorption costing operating income exceeds variable costing operating income 
A)  sales decreased during the period 
B)  variable cost per unit is more than fixed cost per unit 
C)  there is a favorable production-volume variance 
D)  absorption costing operating income exceeds variable costing operating income

Which of the following inventory costing methods results in the least amount of costs being inventoried?

Which of the following approaches spreads underallocated or overallocated overhead among ending balances in Work-in-Process Control,Finished Goods Control,and Cost of Goods Sold?

Which of the following statements is true of contribution-margin format of the income statement?

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

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

Ways to "produce for inventory" that result in increasing operating income include ________.

Throughput margin equals revenues minus all product costs.

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

Which of the following is true of theoretical capacity?

Absorption costing enables managers to increase operating income by increasing the unit level of sales,as well as by producing more units.

________ method includes fixed manufacturing overhead costs as inventoriable costs.

When production quantity exceeds sales,throughput costing results in reporting lower operating income than variable costing.

Using practical capacity as the denominator level sets the cost of capacity at the cost of supplying the capacity,regardless of the demand for the capacity.

Practical capacity can never exceed theoretical capacity.

Proration approach restates all amounts in the general and subsidiary ledgers by using actual rather than budgeted cost rates.

When comparing the operating incomes between absorption costing and variable costing,and ending finished inventory exceeds beginning finished inventory,it may be assumed that ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 9: Inventory Costing and Capacity Analysis

Which of the following inventory costing methods results in the least amount of costs being inventoried?

Which of the following approaches spreads underallocated or overallocated overhead among ending balances in Work-in-Process Control,Finished Goods Control,and Cost of Goods Sold?

Which of the following statements is true of contribution-margin format of the income statement?

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

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

Ways to "produce for inventory" that result in increasing operating income include ________.

Throughput margin equals revenues minus all product costs.

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

Which of the following is true of theoretical capacity?

Absorption costing enables managers to increase operating income by increasing the unit level of sales,as well as by producing more units.

________ method includes fixed manufacturing overhead costs as inventoriable costs.

When production quantity exceeds sales,throughput costing results in reporting lower operating income than variable costing.

Using practical capacity as the denominator level sets the cost of capacity at the cost of supplying the capacity,regardless of the demand for the capacity.

Practical capacity can never exceed theoretical capacity.

Proration approach restates all amounts in the general and subsidiary ledgers by using actual rather than budgeted cost rates.

When comparing the operating incomes between absorption costing and variable costing,and ending finished inventory exceeds beginning finished inventory,it may be assumed that ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters