A the variable and fixed components of all costs related to production B the

A the variable and fixed components of all costs

This preview shows page 72 - 75 out of 101 pages.

A. the variable and fixed components of all costs related to production B. the controllable and non-controllable components of all costs related to production C. standard production rates and times for all elements of production D. contribution margin and break-even point for all goods in production 143. Why is variable costing not in accordance with generally accepted accounting principles? A. Fixed manufacturing costs are treated as period costs under variable costing. B. Variable costing procedures are not well known in industry. C. Net earnings are always overstated when using variable costing procedures. D. Variable costing ignores the concept of lower of cost or market when valuing inventory.
144. Which of the following is an argument against the use of direct (variable) costing? A. Absorption costing overstates the balance sheet value of inventories. B. Variable factory overhead is a period cost. C. Fixed manufacturing overhead is difficult to allocate properly. D. Fixed manufacturing overhead is necessary for the production of a product. 145. Which of the following statements is true for a firm that uses variable costing? A. The cost of a unit of product changes because of changes in the number of units manufactured. B. Profits fluctuate with sales. C. An idle facility variation is calculated. D. None of the above. 146. An income statement is prepared as an internal report. Under which of the following methods would the term contribution margin appear? Absorption costing Variable costing A. no no B. no yes C. yes no D. yes yes 147. In an income statement prepared as an internal report using the variable costing method, fixed manufacturing overhead would A. not be used. B. be used in the computation of operating income but not in the computation of the contribution margin. C. be used in the computation of the contribution margin. D. be treated the same as variable manufacturing overhead. 148. Variable costing has an advantage over absorption costing for which of the following purposes? A. analysis of profitability of products, territories, and other segments of a business B. determining the CVP relationship among the major factors of selling price, sales mix, and sales volume C. minimizing the effects of inventory changes on net income D. all of the above 73 | P a g e
149. In the variable costing income statement, which line separates the variable and fixed costs? A. selling expenses B. general and administrative expense C. product contribution margin D. total contribution margin 150. A firm presently has total sales of $100,000. If its sales rise, its A. net income based on variable costing will go up more than its net income based on absorption costing. B. net income based on absorption costing will go up more than its net income based on variable costing. C. fixed costs will also rise.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture