9 product costing the following information regarding

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9. (PRODUCT COSTING) The following information regarding fixed production costs from a manufacturing firm is available for the current year: Fixed costs in the beginning inventory P16,000 Fixed costs incurred this period 100,000 Which of the following statements is not true ? a. The maximum amount of fixed production costs that this firm could deduct using absorption costs in the current year is P116,000. b. The maximum difference between this firm's the current year income based on absorption costing and its income based on variable costing is P16,000. c. Using variable costing, this firm will deduct no more than P16,000 for fixed production costs. d. If this firm produced substantially more units than it sold in the current year, variable costing will probably yield a lower income than absorption costing.
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MANAGEMENT ADVISORY SERVICES - THEORIES Page 3 10. (PRODUCT COSTING) Absorption costing differs from variable costing in all of the following except a. treatment of fixed manufacturing overhead. b. treatment of variable production costs. c. acceptability for external reporting. d. arrangement of the income statement 11. (PRODUCT COSTING) If a firm produces more units than it sells, absorption costing, relative to variable costing, will result in A. higher income and assets B. higher income but lower assets C. lower income but higher assets D. lower income and assets 12. (PRODUCT COSTING) How will a favorable volume variance affect net income under each of the following methods? Absorption Variable A. reduce no effect B. reduce increase C. increase no effect D. increase reduce 13. (PRODUCT COSTING) Which of the following is an advantage of using variable costing? A. Variable costing complies with Generally Accepted Accounting Principles. B. Variable costing complies with the National Internal Revenue Code. C. Variable costing is most relevant to long-run pricing strategies. D. Variable costing makes cost-volume-profit relationships more easily apparent. 14. (DIFFERENTIAL COSTS ANALYSIS) Siomitos makes bite-size siomai. Which of the following could be a constraint at Siomitos? A. The siomai steamer B. The workers who mix the ingredients C. The workers who prepare the siomai for steaming D. Any of the above could be the constraint 15. (DIFFERENTIAL COSTS ANALYSIS) The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is A. the total manufacturing cost of the component. B. the total variable cost of the component. C. the fixed manufacturing cost of the component. D. zero.
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MANAGEMENT ADVISORY SERVICES - THEORIES Page 4 16. ( DIFFERENTIAL COSTS ANALYSIS) The process of choosing among competing alternatives is called A. controlling B. planning C. decision making D. performance evaluation 17. (CAPITAL BUDGETING) All other factors equal, a large number is preferred to a smaller number for all capital project evaluation measures except A. net present value B. payback period C. internal rate of return D. profitability index 18. (CAPITAL BUDGETING) The return paid for the use of borrowed capital is referred to as A.
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