Question 1

Variable selling and administrative expenses are part of product costs under the variable costing approach

Accepted Answer

A) True 
 B)False

Question 2

The costs assigned to units in stock are typically lower under absorption costing than under variable costing

Accepted Answer

A) True 
 B)False

Question 3

Which of the following are considered to be product costs under absorption costing:
I.Variable manufacturing overhead.

II.Fixed manufacturing overhead.

III.Selling and administrative expenses.

Accepted Answer

A) I, II, and III. 
B) I and III. 
C) I and II. 
D) I. 
A) I, II, and III. 
B) I and III. 
C) I and II. 
D) I.

Question 4

A manufacturing company has provided the following data concerning its most recent month of operations
A manufacturing company has provided the following data concerning its most recent month of operations:
What is the unit product cost for the month under absorption costing

Accepted Answer

A) £124 
B) £132 
C) £113 
D) £143 
A) £124 
B) £132 
C) £113 
D) £143

Question 5

Last year, Clayton Company's variable production costs totaled £8,000 and its fixed manufacturing overhead costs totaled £4,800. The company produced 4,000 units during the year and sold 3,600 units. Assuming no units in the beginning stock

Accepted Answer

A) under variable costing, the units in ending stock will be costed at £3.20 each. 
B) the net operating income under absorption costing for the year will be £480 lower than net operating income under variable costing. 
C) the ending stock under variable costing will be £480 lower than the ending stock under absorption costing. 
D) the net operating income under absorption costing for the year will be £800 lower than net operating income under variable costing. 
A) under variable costing, the units in ending stock will be costed at £3.20 each. 
B) the net operating income under absorption costing for the year will be £480 lower than net operating income under variable costing. 
C) the ending stock under variable costing will be £480 lower than the ending stock under absorption costing. 
D) the net operating income under absorption costing for the year will be £800 lower than net operating income under variable costing.

Question 6

A manufacturing company has provided the following data concerning its most recent month of operations: 
What is the unit product cost for the month under absorption costing?

Accepted Answer

A) £96 
B) £83 
C) £87 
D) £100 
A) £96 
B) £83 
C) £87 
D) £100

Question 7

When reconciling variable costing and absorption costing net operating income, fixed manufacturing overhead costs deferred in stock under absorption costing should be added to variable costing net operating income to arrive at the absorption costing net operating income.

Accepted Answer

A) True 
 B)False

Question 8

Leeds Electronics, which has only one product, has provided the following data concerning its most recent month of operations: 
-The market price for direct materials was lower last month. The normal cost of direct materials is £26.
What is the net operating income for the month under variable costing if the cost of direct material is £26?

Accepted Answer

A) £(8,700) 
B) £(5,700) 
C) £14,400 
D) (£9,000) 
A) £(8,700) 
B) £(5,700) 
C) £14,400 
D) (£9,000)

Question 9

What is the unit product cost for the month under variable

Accepted Answer

A) £94 
B) £115 
C) £90 
D) £111 
A) £94 
B) £115 
C) £90 
D) £111

Question 10

Variable costing is not permitted for external reporting, but it is fully acceptable as a costing method for income tax purposes

Accepted Answer

A) True 
 B)False

Question 11

A manufacturing company has provided the following data concerning its most recent month of operations. 
The total gross margin for the month under the absorption costing approach is

Accepted Answer

A) £6,800. 
B) £197,200. 
C) £149,600. 
D) £179,000. 
A) £6,800. 
B) £197,200. 
C) £149,600. 
D) £179,000.

Question 12

Norfolk Engineering, which has only one product, has provided the following data concerning its most recent month of operations: 
-The demand for last month was very good and nearly all of its competitors increased their selling prices. Calculate the total contribution margin for the month under the variable costing approach if the selling price had been increased to £155.

Accepted Answer

A) £176,600 
B) £183,600 
C) £166,600 
D) £189,600 
A) £176,600 
B) £183,600 
C) £166,600 
D) £189,600

Question 13

If an income statement is prepared as an internal report, under which of the following methods would the term gross margin most likely appear

Accepted Answer

A) Both absorption costing and variable costing. 
B) Absorption costing but not variable costing. 
C) Variable costing but not absorption costing. 
D) Neither variable costing nor absorption costing. 
A) Both absorption costing and variable costing. 
B) Absorption costing but not variable costing. 
C) Variable costing but not absorption costing. 
D) Neither variable costing nor absorption costing.

Question 14

Describe the relative advantages and disadvantages of variable (marginal) costing and absorption costing

Accepted Answer

Variable (marginal) costing and absorpti

Question 15

Leeds Electronics, which has only one product, has provided the following data concerning its most recent month of operations: 
-The management accountant has discovered an error in last month's accounts. The fixed manufacturing overhead should have been stated at £230,000.
What is the net operating income for the month under absorption costing if the fixed manufacturing overhead is £230,000?

Accepted Answer

A) £31,333 
B) £23,333 
C) £18,500 
D) (£0) 
A) £31,333 
B) £23,333 
C) £18,500 
D) (£0)

Question 16

Willis Company had a net operating income of £75,000 using variable costing and a net operating income of £57,000 using absorption costing. Variable production costs were £15 per unit. Total fixed manufacturing overhead was £120,000 and 10,000 units were produced. During the year, the stock level

Accepted Answer

A) increased by 1,200 units. 
B) increased by 1,500 units. 
C) decreased by 1,500 units. 
D) decreased by 1,200 units. 
A) increased by 1,200 units. 
B) increased by 1,500 units. 
C) decreased by 1,500 units. 
D) decreased by 1,200 units.

Question 17

A manufacturing company has provided the following data concerning its most recent month of operations: 
The total contribution margin for the month under the variable costing approach is

Accepted Answer

A) £64,200. 
B) £249,900. 
C) £225,400. 
D) £98,000. 
A) £64,200. 
B) £249,900. 
C) £225,400. 
D) £98,000.

Question 18

Explain in your own words how Power Transformers managed to 'achieve' a higher profit on a lower turnover as set out on page 200 of chapter 6.

Accepted Answer

Power Transformers managed to achieve a

Question 19

Routsong Company had the following sales and production data for the past four years:
Selling price per unit, variable costs per unit, and total fixed costs are the same in each year. Which of the following statements is not correct?
$\begin{array}{lrr}
 &\text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } \
  \text {  Production in units.} &6,000&9,000 & 4,000& 5,000\
 \text {Sales in units.  } &6,000&6,000 & 5,000&7,000\
\end{array}$

Accepted Answer

A) Under variable costing, net operating income for Year 1 and Year 2 would be the same. 
B) Because of the changes in production levels, under variable costing the per unit stock value will change each year. 
C) The total net operating income for all four years combined would be the same under variable and absorption costing. 
D) Under absorption costing, net operating income in Year 4 would be less then the net operating income in Year 2. 
A) Under variable costing, net operating income for Year 1 and Year 2 would be the same. 
B) Because of the changes in production levels, under variable costing the per unit stock value will change each year. 
C) The total net operating income for all four years combined would be the same under variable and absorption costing. 
D) Under absorption costing, net operating income in Year 4 would be less then the net operating income in Year 2.

Question 20

Under variable costing, all variable costs are treated as product costs

Accepted Answer

A) True 
 B)False

Variable selling and administrative expenses are part of product costs under the variable costing approach

The costs assigned to units in stock are typically lower under absorption costing than under variable costing

Which of the following are considered to be product costs under absorption costing: I.Variable manufacturing overhead. II.Fixed manufacturing overhead. III.Selling and administrative expenses.

A manufacturing company has provided the following data concerning its most recent month of operations A manufacturing company has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under absorption costing

Last year, Clayton Company's variable production costs totaled £8,000 and its fixed manufacturing overhead costs totaled £4,800. The company produced 4,000 units during the year and sold 3,600 units. Assuming no units in the beginning stock

A manufacturing company has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under absorption costing?

When reconciling variable costing and absorption costing net operating income, fixed manufacturing overhead costs deferred in stock under absorption costing should be added to variable costing net operating income to arrive at the absorption costing net operating income.

What is the unit product cost for the month under variable costing

Variable costing is not permitted for external reporting, but it is fully acceptable as a costing method for income tax purposes

A manufacturing company has provided the following data concerning its most recent month of operations. The total gross margin for the month under the absorption costing approach is

If an income statement is prepared as an internal report, under which of the following methods would the term gross margin most likely appear

Describe the relative advantages and disadvantages of variable (marginal) costing and absorption costing

A manufacturing company has provided the following data concerning its most recent month of operations: The total contribution margin for the month under the variable costing approach is

Explain in your own words how Power Transformers managed to 'achieve' a higher profit on a lower turnover as set out on page 200 of chapter 6.

Under variable costing, all variable costs are treated as product costs

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Job Costing Systems

Process Costing Systems

Absorption and Variable Costing

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Filters

Exam 6: Operational Budgets

Variable selling and administrative expenses are part of product costs under the variable costing approach

The costs assigned to units in stock are typically lower under absorption costing than under variable costing

Which of the following are considered to be product costs under absorption costing: I.Variable manufacturing overhead. II.Fixed manufacturing overhead. III.Selling and administrative expenses.

A manufacturing company has provided the following data concerning its most recent month of operations A manufacturing company has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under absorption costing

Last year, Clayton Company's variable production costs totaled £8,000 and its fixed manufacturing overhead costs totaled £4,800. The company produced 4,000 units during the year and sold 3,600 units. Assuming no units in the beginning stock

A manufacturing company has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under absorption costing?

When reconciling variable costing and absorption costing net operating income, fixed manufacturing overhead costs deferred in stock under absorption costing should be added to variable costing net operating income to arrive at the absorption costing net operating income.

What is the unit product cost for the month under variable costing

Variable costing is not permitted for external reporting, but it is fully acceptable as a costing method for income tax purposes

A manufacturing company has provided the following data concerning its most recent month of operations. The total gross margin for the month under the absorption costing approach is

If an income statement is prepared as an internal report, under which of the following methods would the term gross margin most likely appear

Describe the relative advantages and disadvantages of variable (marginal) costing and absorption costing

A manufacturing company has provided the following data concerning its most recent month of operations: The total contribution margin for the month under the variable costing approach is

Explain in your own words how Power Transformers managed to 'achieve' a higher profit on a lower turnover as set out on page 200 of chapter 6.

Under variable costing, all variable costs are treated as product costs

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Job Costing Systems

Process Costing Systems

Absorption and Variable Costing

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Filters