Question 1

A business operated at 100% of capacity during its first month, with the following results:  What is the amount of the contribution margin that would be reported on the variable costing income statement?

Accepted Answer

A)   $34,200
B)   $20,200
C)   $29,700
D)   $26,200E) A) and B)
F) A) and C)

Question 2

On the variable costing income statement, all of the fixed costs are deducted from the contribution margin.

Accepted Answer

A) True 
 B)False

Question 3

The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available:  What would be the effect on income from operations if variable costing is used rather than absorption costing?

Accepted Answer

A)   $80,000 decrease
B)   $80,000 increase
C)   $104,000 decrease
D)   $104,000 increaseE) B) and C)
F) A) and D)

Question 4

A business operated at 100% of capacity during its first month, with the following results:  What is the amount of the income from operations that would be reported on the variable costing income statement?

Accepted Answer

A)   $18,900
B)   $18,200
C)   $18,000
D)   $21,000E) A) and D)
F) A) and C)

Question 5

The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available:  What would be the effect on income from operations if absorption costing is used rather than variable costing?

Accepted Answer

A)   $80,000 decrease
B)   $80,000 increase
C)   $104,000 increase
D)   $104,000 decreaseE) A) and B)
F) B) and D)

Question 6

Managers in service firms do not find contribution margin analysis reports useful because their firms do not sell inventory.

Accepted Answer

A) True 
 B)False

Question 7

Electricity purchased to operate factory machinery would be included as part of the cost of products manufactured under the absorption costing concept.

Accepted Answer

A) True 
 B)False

Question 8

In variable costing, fixed costs do not become part of the cost of goods manufactured, but are considered an expense of the period.

Accepted Answer

A) True 
 B)False

Question 9

On the variable costing income statement, variable costs are deducted from contribution margin to yield manufacturing margin.

Accepted Answer

A) True 
 B)False

Question 10

For a period during which the quantity of inventory at the end was larger than that at the beginning, income from operations reported under variable costing will be larger than income from operations reported under absorption costing.

Accepted Answer

A) True 
 B)False

Question 11

A business operated at 100% of capacity during its first month and incurred the following costs:  If 1,000 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet?

Accepted Answer

A)   $38,000
B)   $40,500
C)   $34,000
D)   $47,000E) B) and D)
F) C) and D)

Question 12

Management may use both absorption and variable costing methods for analyzing a particular product.

Accepted Answer

A) True 
 B)False

Question 13

A business operated at 100% of capacity during its first month and incurred the following costs:  If 75 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet?

Accepted Answer

A)   $5,625
B)   $5,250
C)   $5,760
D)   $6,210E) A) and C)
F) A) and B)

Exam 6: Variable Costing for Management Analysis

Management may use both absorption and variable costing methods for analyzing a particular product.

Correct Answer
verified

For a period during which the quantity of inventory at the end was larger than that at the beginning, income from operations reported under variable costing will be larger than income from operations reported under absorption costing.

Correct Answer
verified

Electricity purchased to operate factory machinery would be included as part of the cost of products manufactured under the absorption costing concept.

Correct Answer
verified

On the variable costing income statement, variable costs are deducted from contribution margin to yield manufacturing margin.

Correct Answer
verified

On the variable costing income statement, all of the fixed costs are deducted from the contribution margin.

Correct Answer
verified

A business operated at 100% of capacity during its first month, with the following results: What is the amount of the income from operations that would be reported on the variable costing income statement?

Correct Answer
verified

A business operated at 100% of capacity during its first month, with the following results: What is the amount of the contribution margin that would be reported on the variable costing income statement?

Correct Answer
verified

A business operated at 100% of capacity during its first month and incurred the following costs: If 75 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet?

Correct Answer
verified

In variable costing, fixed costs do not become part of the cost of goods manufactured, but are considered an expense of the period.

Correct Answer
verified

Managers in service firms do not find contribution margin analysis reports useful because their firms do not sell inventory.

Correct Answer
verified

The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available: What would be the effect on income from operations if absorption costing is used rather than variable costing?

Correct Answer
verified

The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available: What would be the effect on income from operations if variable costing is used rather than absorption costing?

Correct Answer
verified

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,000 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet?

Correct Answer
verified

Exam 6: Variable Costing for Management Analysis

Management may use both absorption and variable costing methods for analyzing a particular product.

Correct AnswerverifiedShow Answer

For a period during which the quantity of inventory at the end was larger than that at the beginning, income from operations reported under variable costing will be larger than income from operations reported under absorption costing.

Correct AnswerverifiedShow Answer

Electricity purchased to operate factory machinery would be included as part of the cost of products manufactured under the absorption costing concept.

Correct AnswerverifiedShow Answer

On the variable costing income statement, variable costs are deducted from contribution margin to yield manufacturing margin.

Correct AnswerverifiedShow Answer

On the variable costing income statement, all of the fixed costs are deducted from the contribution margin.

Correct AnswerverifiedShow Answer

A business operated at 100% of capacity during its first month, with the following results: What is the amount of the income from operations that would be reported on the variable costing income statement?

Correct AnswerverifiedShow Answer

A business operated at 100% of capacity during its first month, with the following results: What is the amount of the contribution margin that would be reported on the variable costing income statement?

Correct AnswerverifiedShow Answer

A business operated at 100% of capacity during its first month and incurred the following costs: If 75 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet?

Correct AnswerverifiedShow Answer

In variable costing, fixed costs do not become part of the cost of goods manufactured, but are considered an expense of the period.

Correct AnswerverifiedShow Answer

Managers in service firms do not find contribution margin analysis reports useful because their firms do not sell inventory.

Correct AnswerverifiedShow Answer

The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available: What would be the effect on income from operations if absorption costing is used rather than variable costing?

Correct AnswerverifiedShow Answer

The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also available: What would be the effect on income from operations if variable costing is used rather than absorption costing?

Correct AnswerverifiedShow Answer

A business operated at 100% of capacity during its first month and incurred the following costs: If 1,000 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet?

Correct AnswerverifiedShow Answer

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