A202 - Chapter 7

A202 - Chapter 7 - Chapter 7 Variable Costing: A Tool for...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 7 Variable Costing: A Tool for Management True/False Questions 1. Under variable costing, only variable production costs are treated as product costs. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 2. Under variable costing, variable selling and administrative costs are included in product costs. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 3. Absorption costing treats all manufacturing costs as product costs. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 4. In the preparation of financial statements using variable costing, fixed manufacturing overhead is treated as a period cost. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 5. Absorption costing treats fixed manufacturing overhead as a period cost. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 6. When the number of units in work in process and finished goods inventories increase, absorption costing net operating income will typically be greater than variable costing net operating income. Ans: True AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Easy 7. Net operating income computed using absorption costing will always be greater than net operating income computed using variable costing. Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 7-5 Chapter 7 Variable Costing: A Tool for Management 8. When reconciling variable costing and absorption costing net operating income, fixed manufacturing overhead costs released from inventory under absorption costing should be added to variable costing net operating income to arrive at the absorption costing net operating income. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium 9. When production exceeds sales for the period, absorption costing net operating income will exceed variable costing net operating income. Ans: True AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium 10. Under variable costing it may be possible to report a profit even if the company sells less than the break-even volume of sales. Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium 11. Absorption costing net operating income is closer to the net cash flow of a period than is variable costing net operating income....
View Full Document

This note was uploaded on 01/13/2011 for the course BUS A202 taught by Professor Tindall during the Spring '10 term at IUPUI.

Page1 / 124

A202 - Chapter 7 - Chapter 7 Variable Costing: A Tool for...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online