Question 1

On the variable costing income statement, deduction of the variable cost of goods sold from sales yields gross profit.

Accepted Answer

A) True 
 B)False

Question 2

For short-run production planning, information in the absorption costing format is more useful to management than is information in the variable costing format.

Accepted Answer

A) True 
 B)False

Question 3

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost?

Accepted Answer

A)   Standard costing
B)   Variable costing
C)   Absorption costing
D)   Marginal costingE) None of the above
F) A) and D)

Question 4

In contribution margin analysis, the unit price or unit cost factor is computed as the difference between the actual unit price or unit cost and the planned unit price or unit cost, multiplied by the actual quantity sold.

Accepted Answer

A) True 
 B)False  True

Question 5

The absorption costing income statement does not distinguish between variable and fixed costs.

Accepted Answer

A) True 
 B)False

Question 6

In the absorption costing income statement, deduction of the cost of goods sold from sales yields net profit.

Accepted Answer

A) True 
 B)False

Question 7

The following data are for Trendy Fashion Apparel:
  Determine the contribution margin for (a) Skirts and (b) the South Region.

Accepted Answer

(a) $108,000 [4,000 units ´ ($...

Question 8

The contribution margin ratio is computed as:

Accepted Answer

A)   sales divided by contribution margin
B)   contribution margin divided by sales
C)   contribution margin divided by cost of sales
D)   contribution margin divided by variable cost of salesE) C) and D)
F) All of the above

Question 9

The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured:

Accepted Answer

A)   exceed units sold
B)   equal units sold
C)   are less than units sold
D)   are equal to or greater than units soldE) C) and D)
F) B) and C)

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

In contribution margin analysis, the quantity factor is computed as:

Accepted Answer

A)   the increase or decrease in the number of units sold multiplied by the planned unit sales price or unit cost
B)   the increase or decrease in unit sales price or unit cost multiplied by the planned number of units to be sold
C)   the increase or decrease in the number of units sold multiplied by the actual unit sales price or unit cost
D)   the increase or decrease in the unit sales price or unit cost multiplied by the actual number of units soldE) A) and B)
F) A) and C)

Question 12

On the variable costing income statement, variable selling and administrative expenses are deducted from manufacturing margin to yield contribution margin.

Accepted Answer

A) True 
 B)False

Question 13

In contribution margin analysis, the increase or decrease in unit sales price or unit cost on the number of units sold is referred to as the:

Accepted Answer

A)   sales factor
B)   cost of goods sold factor
C)   quantity factor
D)   unit price or unit cost factorE) All of the above
F) C) and D) D

Question 14

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 levelsE) A) and D)
F) A) and C)

Question 15

Which of the following causes he difference between the planned and actual contribution margin?

Accepted Answer

A)   an increase or decrease in the amount of sales
B)   an increase in the amount of variable costs and expenses
C)   a decrease in the amount of variable costs and expenses
D)   all of the aboveE) C) and D)
F) All of the above D

Question 16

On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is the:

Accepted Answer

A)   fixed manufacturing costs
B)   variable cost of goods sold
C)   fixed selling and administrative expenses
D)   variable selling and administrative expensesE) B) and C)
F) All of the above

Question 17

A business operated at 100% of capacity during its first month and incurred the following costs:  
If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, what would be the amount of income from operations reported on the variable costing income statement?

Accepted Answer

A)   $100,800
B)   $100,000
C)   $114,800
D)   $140,000E) B) and D)
F) C) and D)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Another name for variable costing is:

Accepted Answer

A)   indirect costing
B)   process costing
C)   direct costing
D)   differential costingE) A) and B)
F) All of the above

Question 20

The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured:

Accepted Answer

A)   exceed units sold
B)   equal units sold
C)   are less than units sold
D)   are equal to or greater than units soldE) A) and B)
F) B) and C)

Exam 20: Variable Costing for Management Analysis

On the variable costing income statement, deduction of the variable cost of goods sold from sales yields gross profit.

Correct AnswerverifiedShow Answer

For short-run production planning, information in the absorption costing format is more useful to management than is information in the variable costing format.

Correct AnswerverifiedShow Answer

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost?

Correct AnswerverifiedShow Answer

In contribution margin analysis, the unit price or unit cost factor is computed as the difference between the actual unit price or unit cost and the planned unit price or unit cost, multiplied by the actual quantity sold.

Correct AnswerverifiedTrue

The absorption costing income statement does not distinguish between variable and fixed costs.

Correct AnswerverifiedShow Answer

In the absorption costing income statement, deduction of the cost of goods sold from sales yields net profit.

Correct AnswerverifiedShow Answer

The following data are for Trendy Fashion Apparel: Determine the contribution margin for (a) Skirts and (b) the South Region.

Correct Answerverified(a) $108,000 [4,000 units ´ ($...View AnswerShow Answer

The contribution margin ratio is computed as:

Correct AnswerverifiedShow Answer

The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

In contribution margin analysis, the quantity factor is computed as:

Correct AnswerverifiedShow Answer

On the variable costing income statement, variable selling and administrative expenses are deducted from manufacturing margin to yield contribution margin.

Correct AnswerverifiedShow Answer

In contribution margin analysis, the increase or decrease in unit sales price or unit cost on the number of units sold is referred to as the:

Correct AnswerverifiedD

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

Correct AnswerverifiedShow Answer

Which of the following causes he difference between the planned and actual contribution margin?

Correct AnswerverifiedD

On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is the:

Correct AnswerverifiedShow Answer

A business operated at 100% of capacity during its first month and incurred the following costs: If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, what would be the amount of income from operations reported on the variable costing income statement?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Another name for variable costing is:

Correct AnswerverifiedShow Answer

The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured:

Correct AnswerverifiedShow Answer

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(a) $108,000 [4,000 units ´ ($...
View Answer

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D

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D

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