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Multiple Choice Quiz
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1
Which of the following would not be considered an inventoriable product cost under a variable costing approach to product costing?
A)Direct Materials
B)Direct Labor
C)Indirect Materials
D)Factory Rent
E)All of the above would be considered an inventoriable product cost.
2
Which of the following would not be considered an inventoriable product cost under an absorption costing approach to product costing?
A)Factory Supervisor Salary
B)Direct Labor
C)Indirect Materials
D)Direct Materials
E)All of the above would be considered an inventoriable product cost.
3
Which product-costing system treats fixed manufacturing costs as period costs?
A)Absorption-costing
B)Variable-costing
C)Production-costing
D)Activity-based costing
E)Throughput-costing
4
Jax Corporation started the year with $20,000 in its Work-in-Process inventory account. During the year the following manufacturing costs were incurred:
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During the year the overall Work-in-Process inventory balance increased by $10,000. What is the cost of goods manufactured, under an absorption costing approach to product costing?
A)$250,000
B)$180,000
C)$170,000
D)$240,000
E)None of the above
5
Production costs for 20,000 units sold at $12 each:
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Assuming no variable selling and administrative expenses, what is the contribution margin, under a variable costing income statement?
A)$160,000
B)$240,000
C)($10,000)
D)$140,000
E)$80,000
6
Production costs for 10,000 units:
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There are 2,000 units in ending finished goods inventory. What is the difference in value of ending finished goods between an absorption-costing basis and a variable-costing basis?
A)$18,000
B)$ 9,000
C)$ 6,000
D)$7,000
E)No difference
7
Production costs for 10,000 units sold at $45 per unit:
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What is the difference in income between absorption-costing and variable-costing income statements, assuming there is no ending or beginning inventory?
A)$80,000
B)$170,000
C)$90,000
D)$250,000
E)No difference
8
Consider the following:
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Last period, 15,000 units were produced, 13,000 units were sold. In the current period, 15,000 units were produced and 17,000 units were sold. What is the difference in reported income under absorption and variable costing for the current period?
A)The variable-costing income exceeded absorption-costing income by $4,000.
B)The absorption-costing income exceeded variable-costing income by $8,000.
C)The variable-costing income exceeded absorption-costing income by $8,000.
D)The absorption-costing income exceeded variable-costing income by $12,000.
E)There is no difference.
9
Consider the following:
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Use the 'shortcut' method of reconciling the difference in reported income under absorption costing and variable costing to determine the variable costing income.
A)$14,000
B)$46,000
C)$30,000
D)$24,000
E)$38,000
10
Consider the following:
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Assuming no variable selling and administrative expenses, what is the break-even point in units?
A)4,000
B)2,250
C)6,250
D)15,000
E)22,500
11
Which of the following statements is false?
A)Variable-costing highlights the separation of fixed and variable costs.
B)Variable and absorption costing income statements show fixed selling expenses as a lump sum.
C)Absorption costing is consistent with CVP analysis.
D)Under absorption costing, fixed manufacturing overhead is applied to products on a per unit basis.
E)Most managers prefer to use the absorption-costing data for cost-based pricing decisions.
12
Which of the following is an analysis of the components of variable and fixed costs that can be used to determine the break-even point in units or dollars?
A)Comparative statement analysis.
B)Variance analysis.
C)Cost-volume-profit analysis.
D)Horizontal analysis.
E)None of the above
13
Under which of the following will the differences between reported operating income on an absorption-costing income statement and on a variable-costing income statement be insignificant (or minimal) when unit production exceeds unit sales?
A)FIFO (first-in, first-out) inventory
B)LIFO (last-in, first-out) inventory
C)Average inventory
D)Just-in-time (JIT) inventory management
E)Both (B) and (D)
14
When using throughput costing, which of the following is assigned for direct costs as the cost of products or services?
A)Only unit-level spending
B)Only facility-level spending
C)Both unit-level and facility-level spending
D)Only product-sustaining-level spending
E)Only batch-level spending
15
Production costs for 10,000 units sold at $40 each:
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What is the gross margin under throughput costing, if direct material is the only cost that qualifies as a throughput cost?
A)$200,000
B)$300,000
C)$320,000
D)$100,000
E)$380,000





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