MULTIPLE CHOICE 1.Which of the following a more descriptive term of

Question : MULTIPLE CHOICE 1.Which of the following a more descriptive term of : 1416283


1.Which of the following is a more descriptive term of the type of cost accounting often called "direct costing"?

a.Prime costing

b.Out-of-pocket costing

c.Variable costing

d.Relevant costing

2.What costs are treated as product costs under direct costing?

a.Only direct costs

b.Only variable manufacturing costs

c.All variable costs

d.All variable and fixed manufacturing costs

3.The basic assumption made in a variable costing system with respect to fixed costs is that all fixed costs are:

a.Sunk costs.

b.Product costs.

c.Fixed as to the total cost.

d.Period costs.

4.Donellan Company produces a special gear used in automatic transmissions.  Each gear sells for $30, and the company sells approximately 500,000 gears each year.  Unit cost data for the year follows:


Direct material$9.00

Direct labor8.00

Other costs:VariableFixed




The unit cost of gears for variable costing inventory purposes is:





5.Mobile, Inc., manufactured 700 units of Product A, a new product, during the year.  Product A's variable and fixed manufacturing costs per unit were $5.00 and $2.00, respectively.  The inventory of Product A on December 31 of the year consisted of 100 units.  There was no inventory of Product A on January 1 of the year.  What would be the change in the dollar amount of inventory on December 31 if the variable costing method was used instead of the absorption costing method?

a.$800 decrease

b.$200 decrease

c.$500 decrease

d.$200 increase

6.Which of the following is true about absorption costing?

a.No fixed factory overhead is charged to production.

b.It is also known as direct costing.

c.The term used to designate the difference between sales and cost of goods sold is the “manufacturing margin.”

d.Over-applied factory overhead is reflected in the income statement as a reduction cost of goods sold.

7.Which of the following does not appear on an income statement prepared using variable costing?

a.Gross margin/profit.

b.Manufacturing margin

c.Fixed production costs.

d.Variable production costs.

8.What factor related to manufacturing costs causes the difference in net earnings computed using absorption costing and net earnings computed using variable costing?

a.Absorption costing considers all costs in the determination of net earnings, whereas variable costing considers only direct costs.

b.Absorption costing "inventories" all direct costs, but variable costing considers direct costs to be period costs.

c.Absorption costing "inventories" all fixed manufacturing costs for the period in ending finished goods inventory, but variable costing expenses all fixed costs.

d.Absorption costing allocates fixed manufacturing costs between cost of goods sold and inventories, and variable costing considers all fixed costs to be period costs.

9.Net income reported under absorption costing will exceed net income reported under variable costing for a given period if:

a.Production equals sales for that period.

b.Production exceeds sales for that period.

c.Sales exceed production for that period.

d.The variable overhead exceeds the fixed overhead.

10.A manager can increase income under absorption costing by

a.increasing variable costs.

b.increasing production.

c.increasing fixed costs.

d.increasing leased assets.



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Accounting 3 Years Ago 262 Views
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