Question 1

In variable costing,all fixed manufacturing overhead costs are expensed in the period incurred.

Accepted Answer

A) True 
 B)False

Question 2

If all other factors remain constant,an increase in fixed costs will increase the breakeven point.

Accepted Answer

A) True 
 B)False

Question 3

Molina Company has provided the following information: $$\begin{array} { | l | r |} 
\hline \text { Sales } & \$ 779,000 \
\hline \text { Variable expenses } & 508,000 \
\hline \text { Fixed expenses } & 213,000 \
\hline
\end{array}$$ Which of the following statements is true,if the sales volume increases by 10%?

Accepted Answer

A)  Operating income will increase by $5,800. 
B)  Operating income will increase by $27,100. 
C)  Fixed expenses will increase by $21,300. 
D)  Contribution margin will increase by $77,900. 
A)  Operating income will increase by $5,800. 
B)  Operating income will increase by $27,100. 
C)  Fixed expenses will increase by $21,300. 
D)  Contribution margin will increase by $77,900.

Question 4

Absorption costing considers fixed selling and administrative costs as product costs.

Accepted Answer

A) True 
 B)False

Question 5

Mendoza Company's highest point of total cost was $80,000 in June.Their point of lowest cost was $65,000 in January.The company makes a single product.Production volume in June and January were 16,000 and 8,000 units,respectively.What is the fixed cost per month?

Accepted Answer

A)  $65,000 
B)  $64,960 
C)  $49,920 
D)  $50,000 
A)  $65,000 
B)  $64,960 
C)  $49,920 
D)  $50,000

Question 6

When there is no beginning Finished Goods Inventory and all the goods that are produced are sold,the operating income ________.

Accepted Answer

A)  will be higher under absorption costing than variable costing 
B)  will be lower under absorption costing than variable costing 
C)  will be higher than the gross profit under variable costing 
D)  will be the same for both absorption costing and variable costing 
A)  will be higher under absorption costing than variable costing 
B)  will be lower under absorption costing than variable costing 
C)  will be higher than the gross profit under variable costing 
D)  will be the same for both absorption costing and variable costing

Question 7

In variable costing,fixed manufacturing overhead is considered a period cost because ________.

Accepted Answer

A)  these costs are indirectly related to production 
B)  these are not incurred in the period in which the units are produced 
C)  these costs are incurred whether or not the company manufactures any goods 
D)  these costs are direct costs incurred for production 
A)  these costs are indirectly related to production 
B)  these are not incurred in the period in which the units are produced 
C)  these costs are incurred whether or not the company manufactures any goods 
D)  these costs are direct costs incurred for production

Question 8

The phone bill for a law firm consists of both fixed and variable costs.Refer to the four month data below and apply the high-low method to answer the question. $$\begin{array} { | l | r | r | } 
\hline & \text { Minutes } & \text { Total Bill } \
\hline \text { May } & 490 & \$ 3,200 \
\hline \text { June } & 210 & \$ 2,700 \
\hline \text { July } & 160 & \$ 2,650 \
\hline \text { August } & 330 & \$ 2,800 \
\hline
\end{array}$$ If the company uses 390 minutes in September,how much will the total bill be? (Round your intermediate calculations to two decimal places.)

Accepted Answer

A)  $2,381.70 
B)  $2,587.23 
C)  $3,033.00 
D)  $3,356.70 
A)  $2,381.70 
B)  $2,587.23 
C)  $3,033.00 
D)  $3,356.70

Question 9

The high-low method requires the identification of lowest and highest levels of total costs,not activity,over a period of time.

Accepted Answer

A) True 
 B)False

Question 10

Birch Company sells two products,X and Y.For the coming year,Birch predicts the sale of 6,000 units of X and 12,000 units of Y.The contribution margins of the two products are $6 and $4,respectively.The weighted-average contribution margin would be $5.00.

Accepted Answer

A) True 
 B)False

Question 11

Gross profit is calculated by deducting ________ from sales revenue.

Accepted Answer

A)  total fixed costs 
B)  cost of goods sold 
C)  total variable costs 
D)  selling and administrative costs 
A)  total fixed costs 
B)  cost of goods sold 
C)  total variable costs 
D)  selling and administrative costs

Question 12

Hooper Business Machines provided the following manufacturing costs for the month of March. $$\begin{array} { | l | r | } 
\hline \text { Direct labor cost } & \$ 140,000 \
\hline \text { Direct materials cost } & 85,000 \
\hline \text { Equipment depreciation (straight-line) } & 28,000 \
\hline \text { Factory insurance } & 21,000 \
\hline \text { Factory manager's salary } & 13,000 \
\hline \text { Janitor's salary } & 5,100 \
\hline \text { Packaging costs } & 18,800 \
\hline \text { Property taxes } & 16,300 \
\hline
\end{array}$$ From the above information,calculate Hooper's total fixed costs.

Accepted Answer

A)  $327,200 
B)  $57,300 
C)  $76,100 
D)  $83,400 
A)  $327,200 
B)  $57,300 
C)  $76,100 
D)  $83,400

Question 13

Danby,Inc.has the following cost data:
 $$\begin{array} { | l | r | } 
\hline \text { Direct materials } & \text { \$38per unit } \
\hline \text { Direct labor } & 52 \text { per unit } \
\hline \text { Variable manufacturing overhead } & 15 \text { per unit } \
\hline \text { Fixed manufacturing overhead } & 10,000 \text { per year } \
\hline
\end{array}$$ Calculate the unit product cost using absorption costing when production is 200 units,400 units,and 800 units.

Accepted Answer

Absorption costing for 200 units:
 \[\be

Question 14

When production is greater than sales,the operating income will be higher under absorption costing than variable costing.Assume zero beginning and ending inventories.Which of the following gives the correct reason for the above statement?

Accepted Answer

A)  All costs incurred have been recorded as expenses. 
B)  A portion of the fixed manufacturing overhead is still in the ending Finished Goods Inventory account. 
C)  All selling and administrative expenses have been recorded as period costs. 
D)  Fixed manufacturing costs have not been considered when calculating the operating profits. 
A)  All costs incurred have been recorded as expenses. 
B)  A portion of the fixed manufacturing overhead is still in the ending Finished Goods Inventory account. 
C)  All selling and administrative expenses have been recorded as period costs. 
D)  Fixed manufacturing costs have not been considered when calculating the operating profits.

Question 15

Zertrax,Inc.reports the following information for July: $$\begin{array} { | l | r | } 
\hline \text { Sales Revenue } & \$ 1,000,000 \
\hline \text { Variable Costs } & 170,000 \
\hline \text { Operating Income } & 320,000 \
\hline
\end{array}$$ What is the total fixed cost using variable costing?

Accepted Answer

A)  $830,000 
B)  $510,000 
C)  $150,000 
D)  $490,000 
A)  $830,000 
B)  $510,000 
C)  $150,000 
D)  $490,000

Question 16

Rickman,Inc.reports the following information: $$\begin{array} { | l | r | } 
\hline \text { Units produced } & 610 \text { units } \
\hline \text { Units sold } & 420 \text { units } \
\hline \text { Sales price } & \$ 160 \text { per unit } \
\hline \text { Direct materials } & \$ 27 \text { per unit } \
\hline \text { Direct labor } & \$ 12 \text { per unit } \
\hline \text { Variable manufacturing overhead } & \$ 13 \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 17,200 \text { per year } \
\hline \text { Variable selling and administrative costs } & \$ 4 \text { per unit } \
\hline \text { Fixed selling and administrative costs } & \$ 14,200 \text { per year } \
\hline
\end{array}$$ There are no beginning inventories.What is the ending balance in Finished Goods Inventory using variable costing?

Accepted Answer

A)  $9,880 
B)  $7,410 
C)  $10,640 
D)  $15,237 
A)  $9,880 
B)  $7,410 
C)  $10,640 
D)  $15,237

Question 17

Missan,Inc.reports the following information: $$\begin{array} { | l | r | } 
\hline \text { Units produced } & 560 \text { units } \
\hline \text { Units sold } & 480 \text { units } \
\hline \text { Sales price } & \$ 170 \text { per unit } \
\hline \text { Direct materials } & \$ 27 \text { per unit } \
\hline \text { Direct labor } & \$ 11 \text { per unit } \
\hline \text { Variable manufacturing overhead } & \$ 13 \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 17,900 \text { per year } \
\hline \text { Variable selling and administrative costs } & \$ 5 \text { per unit } \
\hline \text { Fixed selling and administrative costs } & \$ 14,300 \text { per year } \
\hline
\end{array}$$ There are no beginning inventories.What is the ending balance in Finished Goods Inventory using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

Accepted Answer

A)  $5,597 
B)  $2,557 
C)  $4,080 
D)  $6,637 
A)  $5,597 
B)  $2,557 
C)  $4,080 
D)  $6,637

Question 18

Which of the following statements is true of absorption costing?

Accepted Answer

A)  It considers variable selling and administrative costs as product costs. 
B)  It considers fixed selling and administrative costs as product costs. 
C)  It considers fixed manufacturing overhead cost as product costs. 
D)  It considers variable manufacturing overhead cost as period costs. 
A)  It considers variable selling and administrative costs as product costs. 
B)  It considers fixed selling and administrative costs as product costs. 
C)  It considers fixed manufacturing overhead cost as product costs. 
D)  It considers variable manufacturing overhead cost as period costs.

Question 19

Variable cost per unit is constant throughout various relevant ranges.

Accepted Answer

A) True 
 B)False

Question 20

Absorption costing considers direct materials,direct labor,variable manufacturing overhead,and fixed manufacturing overhead as product costs.

Accepted Answer

A) True 
 B)False

In variable costing,all fixed manufacturing overhead costs are expensed in the period incurred.

If all other factors remain constant,an increase in fixed costs will increase the breakeven point.

Molina Company has provided the following information: Sales \ 779,000 Variable expenses 508,000 Fixed expenses 213,000 Which of the following statements is true,if the sales volume increases by 10%?

Absorption costing considers fixed selling and administrative costs as product costs.

Mendoza Company's highest point of total cost was $80,000 in June.Their point of lowest cost was $65,000 in January.The company makes a single product.Production volume in June and January were 16,000 and 8,000 units,respectively.What is the fixed cost per month?

When there is no beginning Finished Goods Inventory and all the goods that are produced are sold,the operating income ________.

In variable costing,fixed manufacturing overhead is considered a period cost because ________.

The high-low method requires the identification of lowest and highest levels of total costs,not activity,over a period of time.

Birch Company sells two products,X and Y.For the coming year,Birch predicts the sale of 6,000 units of X and 12,000 units of Y.The contribution margins of the two products are $6 and $4,respectively.The weighted-average contribution margin would be $5.00.

Gross profit is calculated by deducting ________ from sales revenue.

Danby,Inc.has the following cost data: Direct materials \3 8per unit Direct labor 52 per unit Variable manufacturing overhead 15 per unit Fixed manufacturing overhead 10,000 per year Calculate the unit product cost using absorption costing when production is 200 units,400 units,and 800 units.

When production is greater than sales,the operating income will be higher under absorption costing than variable costing.Assume zero beginning and ending inventories.Which of the following gives the correct reason for the above statement?

Zertrax,Inc.reports the following information for July: Sales Revenue \ 1,000,000 Variable Costs 170,000 Operating Income 320,000 What is the total fixed cost using variable costing?

Which of the following statements is true of absorption costing?

Variable cost per unit is constant throughout various relevant ranges.

Absorption costing considers direct materials,direct labor,variable manufacturing overhead,and fixed manufacturing overhead as product costs.

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 21: Cost-Volume-Profit Analysis

In variable costing,all fixed manufacturing overhead costs are expensed in the period incurred.

If all other factors remain constant,an increase in fixed costs will increase the breakeven point.

Molina Company has provided the following information: Sales \ 779,000 Variable expenses 508,000 Fixed expenses 213,000 Which of the following statements is true,if the sales volume increases by 10%?

Absorption costing considers fixed selling and administrative costs as product costs.

Mendoza Company's highest point of total cost was $80,000 in June.Their point of lowest cost was $65,000 in January.The company makes a single product.Production volume in June and January were 16,000 and 8,000 units,respectively.What is the fixed cost per month?

When there is no beginning Finished Goods Inventory and all the goods that are produced are sold,the operating income ________.

In variable costing,fixed manufacturing overhead is considered a period cost because ________.

The high-low method requires the identification of lowest and highest levels of total costs,not activity,over a period of time.

Birch Company sells two products,X and Y.For the coming year,Birch predicts the sale of 6,000 units of X and 12,000 units of Y.The contribution margins of the two products are $6 and $4,respectively.The weighted-average contribution margin would be $5.00.

Gross profit is calculated by deducting ________ from sales revenue.

Danby,Inc.has the following cost data: Direct materials \3 8per unit Direct labor 52 per unit Variable manufacturing overhead 15 per unit Fixed manufacturing overhead 10,000 per year Calculate the unit product cost using absorption costing when production is 200 units,400 units,and 800 units.

When production is greater than sales,the operating income will be higher under absorption costing than variable costing.Assume zero beginning and ending inventories.Which of the following gives the correct reason for the above statement?

Zertrax,Inc.reports the following information for July: Sales Revenue \ 1,000,000 Variable Costs 170,000 Operating Income 320,000 What is the total fixed cost using variable costing?

Which of the following statements is true of absorption costing?

Variable cost per unit is constant throughout various relevant ranges.

Absorption costing considers direct materials,direct labor,variable manufacturing overhead,and fixed manufacturing overhead as product costs.

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters