Question 1

Under absorption costing, the cost of finished goods includes direct materials, direct labor, and all factory overhead.

Accepted Answer

A) True 
 B)False

Question 2

The taxes on the factory superintendent's salary would be included as part of the cost of products manufactured under the variable costing concept.

Accepted Answer

A) True 
 B)False

Question 3

A business operated at 100% of capacity during its first month and incurred the following costs:  If 500 units remain unsold at the end of the month, the amount of inventory that would be reported on the variable costing balance sheet is

Accepted Answer

A) $41,500 
B) $36,000 
C) $42,800 
D) $38,500

Question 4

In evaluating the performance of salespersons, the salesperson with the highest level of sales dollars should be evaluated as the best performer.

Accepted Answer

A) True 
 B)False

Question 5

Changes in the quantity of finished goods inventory, caused by differences in the levels of sales and production, directly affect the amount of operating income reported under absorption costing.

Accepted Answer

A) True 
 B)False

Question 6

For a period during which the quantity of product manufactured exceeds the quantity sold, operating income reported under absorption costing will be larger than operating income reported under variable costing.

Accepted Answer

A) True 
 B)False

Question 7

In determining cost of goods sold, two alternate costing concepts can be used: absorption costing and variable costing.

Accepted Answer

A) True 
 B)False

Question 8

Jake Entertainment Corporation has three segments with revenue, operating income, and depreciation and amortization information (in millions) as follows:  The EBITDA for the Film segment is

Accepted Answer

A) $975 million 
B) $2,025 million 
C) $2,975 million 
D) $4,475 million

Question 9

If the ability to sell and the amount of production facilities devoted to each of two products are equal, it is profitable to increase the sales of that product with the highest contribution margin.

Accepted Answer

A) True 
 B)False

Question 10

In the short run, the selling price of a product should normally not be less than the variable costs and expenses of making and selling it.

Accepted Answer

A) True 
 B)False

Question 11

Fixed costs are $50 per unit, and variable costs are $125 per unit. Production was 130,000 units, while sales were 125,000 units. Determine (a) whether variable costing operating income is less than or greater than absorption costing operating income and (b) the difference in variable costing and absorption costing operating income.

Accepted Answer

The answer of Fixed costs are $50 per unit, and...

Question 12

Contribution margin reporting can be beneficial for analyzing which of the following?

Accepted Answer

A) sales personnel 
B) products 
C) sales territory 
D) all of these choices

Question 13

For a period during which the quantity of product manufactured exceeds the quantity sold, operating income reported under absorption costing will be smaller than operating income reported under variable costing.

Accepted Answer

A) True 
 B)False

Question 14

Jake Entertainment Corporation has three segments with revenue, operating income, and depreciation and amortization information (in millions) as follows:  The segment with the highest EBITDA as a percent of revenue is

Accepted Answer

A) Film 
B) Theme Park 
C) Video Game 
D) The Theme Park and Video Game segments have equal EBITDA as a percent of revenue.

Question 15

The level of inventory of a manufactured product has increased by 5,000 units during a period. The following data are also available:  The effect on operating income if variable costing is used rather than absorption costing would be a

Accepted Answer

A) $50,000 decrease 
B) $50,000 increase 
C) $65,000 increase 
D) $65,000 decrease

Question 16

Sales mix is generally defined as the relative distribution of sales among the various products sold.

Accepted Answer

A) True 
 B)False

Question 17

The contribution margin ratio is computed as contribution margin divided by sales.

Accepted Answer

A) True 
 B)False

Question 18

Jake Entertainment Corporation has three segments with revenue, operating income, and depreciation and amortization information (in millions) as follows:  The EBITDA as a percent of revenue for the Video Game segment is

Accepted Answer

A) 4% 
B) 24% 
C) 46% 
D) 54%

Question 19

A business operated at 100% of capacity during its first month, with the following results:  ​
-The amount of operating income that would be reported on the variable costing income statement is

Accepted Answer

A) $18,900 
B) $18,200 
C) $18,000 
D) $21,000

Question 20

Management will use both variable and absorption costing in all of the following activities except

Accepted Answer

A) controlling costs 
B) product pricing 
C) production planning 
D) controlling inventory levels

Exam 21: Variable Costing for Management Analysis

Under absorption costing, the cost of finished goods includes direct materials, direct labor, and all factory overhead.

The taxes on the factory superintendent's salary would be included as part of the cost of products manufactured under the variable costing concept.

A business operated at 100% of capacity during its first month and incurred the following costs: If 500 units remain unsold at the end of the month, the amount of inventory that would be reported on the variable costing balance sheet is

In evaluating the performance of salespersons, the salesperson with the highest level of sales dollars should be evaluated as the best performer.

Changes in the quantity of finished goods inventory, caused by differences in the levels of sales and production, directly affect the amount of operating income reported under absorption costing.

For a period during which the quantity of product manufactured exceeds the quantity sold, operating income reported under absorption costing will be larger than operating income reported under variable costing.

In determining cost of goods sold, two alternate costing concepts can be used: absorption costing and variable costing.

Jake Entertainment Corporation has three segments with revenue, operating income, and depreciation and amortization information (in millions) as follows: The EBITDA for the Film segment is

If the ability to sell and the amount of production facilities devoted to each of two products are equal, it is profitable to increase the sales of that product with the highest contribution margin.

In the short run, the selling price of a product should normally not be less than the variable costs and expenses of making and selling it.

Contribution margin reporting can be beneficial for analyzing which of the following?

For a period during which the quantity of product manufactured exceeds the quantity sold, operating income reported under absorption costing will be smaller than operating income reported under variable costing.

Jake Entertainment Corporation has three segments with revenue, operating income, and depreciation and amortization information (in millions) as follows: The segment with the highest EBITDA as a percent of revenue is

The level of inventory of a manufactured product has increased by 5,000 units during a period. The following data are also available: The effect on operating income if variable costing is used rather than absorption costing would be a

Sales mix is generally defined as the relative distribution of sales among the various products sold.

The contribution margin ratio is computed as contribution margin divided by sales.

Jake Entertainment Corporation has three segments with revenue, operating income, and depreciation and amortization information (in millions) as follows: The EBITDA as a percent of revenue for the Video Game segment is

A business operated at 100% of capacity during its first month, with the following results: -The amount of operating income that would be reported on the variable costing income statement is

Management will use both variable and absorption costing in all of the following activities except

Exam 21: Variable Costing for Management Analysis

Under absorption costing, the cost of finished goods includes direct materials, direct labor, and all factory overhead.

The taxes on the factory superintendent's salary would be included as part of the cost of products manufactured under the variable costing concept.

A business operated at 100% of capacity during its first month and incurred the following costs: If 500 units remain unsold at the end of the month, the amount of inventory that would be reported on the variable costing balance sheet is

In evaluating the performance of salespersons, the salesperson with the highest level of sales dollars should be evaluated as the best performer.

Changes in the quantity of finished goods inventory, caused by differences in the levels of sales and production, directly affect the amount of operating income reported under absorption costing.

For a period during which the quantity of product manufactured exceeds the quantity sold, operating income reported under absorption costing will be larger than operating income reported under variable costing.

In determining cost of goods sold, two alternate costing concepts can be used: absorption costing and variable costing.

Jake Entertainment Corporation has three segments with revenue, operating income, and depreciation and amortization information (in millions) as follows: The EBITDA for the Film segment is

If the ability to sell and the amount of production facilities devoted to each of two products are equal, it is profitable to increase the sales of that product with the highest contribution margin.

In the short run, the selling price of a product should normally not be less than the variable costs and expenses of making and selling it.

Contribution margin reporting can be beneficial for analyzing which of the following?

For a period during which the quantity of product manufactured exceeds the quantity sold, operating income reported under absorption costing will be smaller than operating income reported under variable costing.

Jake Entertainment Corporation has three segments with revenue, operating income, and depreciation and amortization information (in millions) as follows: The segment with the highest EBITDA as a percent of revenue is

The level of inventory of a manufactured product has increased by 5,000 units during a period. The following data are also available: The effect on operating income if variable costing is used rather than absorption costing would be a

Sales mix is generally defined as the relative distribution of sales among the various products sold.

The contribution margin ratio is computed as contribution margin divided by sales.

Jake Entertainment Corporation has three segments with revenue, operating income, and depreciation and amortization information (in millions) as follows: The EBITDA as a percent of revenue for the Video Game segment is

A business operated at 100% of capacity during its first month, with the following results: ​ -The amount of operating income that would be reported on the variable costing income statement is

Management will use both variable and absorption costing in all of the following activities except

A business operated at 100% of capacity during its first month, with the following results: -The amount of operating income that would be reported on the variable costing income statement is