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| 1 | |
The cost of a unit under the absorption costing method includes which of the following costs? |
| | A) | Direct materials and direct labor |
| | B) | Direct materials, direct labor, and fixed overhead |
| | C) | Direct materials, direct labor, and variable overhead |
| | D) | Direct materials, direct labor, variable overhead, and fixed overhead |
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| 2 | |
Using the following data, what is the cost of a unit of product under the absorption costing method?
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| | A) | $22 |
| | B) | $24 |
| | C) | $28 |
| | D) | $30 |
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| 3 | |
What is another term for variable costing? |
| | A) | Direct costing |
| | B) | Indirect costing |
| | C) | Marginal costing |
| | D) | Both (A) and (C) |
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| 4 | |
The cost of a unit under the variable costing method includes which of the following costs? |
| | A) | Only direct materials and direct labor |
| | B) | Direct materials, direct labor, and fixed overhead |
| | C) | Direct materials, direct labor, and variable overhead |
| | D) | Direct materials, direct labor, variable overhead, and fixed overhead |
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| 5 | |
Using the following data, what is the cost of a unit of product under the variable costing method?
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| | A) | $22 |
| | B) | $24 |
| | C) | $28 |
| | D) | $30 |
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| 6 | |
How do product costs determined under the absorption costing method compare to those determined under the variable costing method? |
| | A) | Higher than under variable costing |
| | B) | Lower than under variable costing |
| | C) | Equal to variable costing |
| | D) | Higher sometimes and lower sometimes than variable costing |
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| 7 | |
Which of the following statements is correct when production equals sales? |
| | A) | No change occurs to inventories for either absorption costing or variable costing methods. |
| | B) | The use of absorption costing produces a higher net income than the use of variable costing. |
| | C) | The use of absorption costing produces a lower net income than the use of variable costing. |
| | D) | The use of absorption costing causes inventory value to increase more than they would through the use of variable costing. |
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| 8 | |
Which of the following statements is correct? |
| | A) | Net operating income is not affected by changes in production under absorption costing. |
| | B) | Net operating income is not affected by changes in production under variable costing. |
| | C) | Both of the above statements are true. |
| | D) | Neither of the above statements is true. |
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| 9 | |
What is the term used to describe a segment of a business responsible for both revenues and expenses? |
| | A) | Cost center |
| | B) | Investment center |
| | C) | Profit center |
| | D) | Residual income |
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| 10 | |
The management of Lakefront Inc. prepared the following segmented income statement for its most recent fiscal year.
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| | A) | What is the break-even point for the Midwest Region? |
| | B) | $32,000 |
| | C) | $80,000 |
| | D) | $160,000 |
| | E) | $545,454 |
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