Strayer ACC 350 WK 10 Quiz 8 Chapter 9

| August 14, 2017

ACC 350 WK 10 Quiz 8 Chapter 9

1) The two most common methods of costing inventories in manufacturing companies are variable costing and fixed costing. Answer:
2) Absorption costing “absorbs” only variable manufacturing costs. Answer:
3) Variable costing includes all variable costs?both manufacturing and nonmanufacturing?in inventory. Answer:
4) Under both variable and absorption costing, all variable manufacturing costs are inventoriable costs. Answer: 5) The
main difference between variable costing and absorption costing is the
way in which fixed manufacturing costs are accounted for. Answer:
6) Under variable costing, fixed manufacturing costs are treated as an expense of the period. Answer: 7) The contribution-margin format of the income statement is used with absorption costing. Answer:
8) The contribution-margin format of the income statement distinguishes manufacturing costs from nonmanufacturing costs. Answer:
9) The gross-margin format of the income statement highlights the lump sum of fixed manufacturing costs. Answer:
10) In absorption costing, all nonmanufacturing costs are subtracted from gross margin. Answer:
11) Direct costing is a perfect way to describe the variable-costing inventory method. Answer:
12) When variable costing is used, an income statement will show gross margin. Answer: 13) The income under variable costing will always be the same as the income under absorption costing. Answer:
14) Absorption costing is required by GAAP (Generally Accepted Accounting Principles) for external reporting. Answer:
15) When production deviates from the denominator level, a production-volume variance always exists under absorption costing. Answer:
16) Fixed manufacturing costs included in cost of goods
available for sale + the production-volume variance will always = total
fixed manufacturing costs under absorption costing. Answer:
17) The production-volume variance only exists under absorption costing and not under variable costing. Answer:
18) When the unit level of inventory increases during an
accounting period, operating income is greater under variable costing
than absorption costing. Answer:
19) The difference in operating income under
absorption costing and variable costing is due solely to the timing
difference of expensing fixed manufacturing costs. Answer: 20) If
managers report inventories of zero at the start and end of each
accounting period, operating incomes under absorption costing and
variable costing will be the same. Answer:
21) Under absorption costing, managers can increase operating income by holding more inventories at the end of the period. Answer:
22) Many companies use variable costing for internal reporting to reduce the undesirable incentive to build up inventories. Answer:
23) Under variable costing, managers can increase
operating income by simply producing more inventory at the end of the
accounting period even if that inventory never gets sold. Answer:
24) Nonfinancial measures such as comparing units in
ending inventory this period to units in ending inventory last period
can help reduce buildup of excess inventory. Answer:
25) One of the most common problems reported by
companies using variable costing is the difficulty of classifying costs
into fixed or variable categories. Answer:
26) Managers can increase operating income when absorption costing is used by producing more inventory. Answer: 27) A
manager can increase operating income by deferring maintenance beyond
the current accounting period when absorption costing is used. Answer:
28) Throughput costing considers only direct materials and direct manufacturing labor to be truly variable costs. Answer:
29) Throughput costing is also referred to as super-variable costing. Answer:
30) When production quantity exceeds sales, throughput costing results in reporting greater operating income than variable costing. Answer:
31) Throughput costing provides more incentive to produce for inventory than does absorption costing. Answer:
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