Question 1

When all units produced are sold,there is no difference in operating income between absorption costing and variable costing.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is NOT a product cost under variable costing?

Accepted Answer

A)  Direct materials
B)  Direct labor
C)  Variable manufacturing overhead
D)  Fixed manufacturing overheadE) A) and C)
F) All of the above

Question 3

Luis Perez,a production supervisor at Serum Medical,Inc. ,uses variable costing for any cost control decisions that he has to make.Which of the following is the reason for his choice?

Accepted Answer

A)  Fixed costs are not relevant in the long run.
B)  Only variable costs are controllable in the long and short run.
C)  Absorption costing is not relevant for long-run decisions.
D)  Lower management usually does not have control over most fixed costs.E) A) and B)
F) B) and C)

Question 4

Bright Castle Company provides cleaning services to commercial and residential customers.The commercial business segment provided services to 310 customers and the residential business segment provided services to 635 customers.

State which segment has the higher average variable cost per customer and provide the amount of the average variable cost per customer for that segment.(Round the answer to the nearest dollar. )

Accepted Answer

A)  Residential,$128
B)  Commercial,$88
C)  Residential,$88
D)  Commercial,$128E) All of the above
F) A) and B)

Question 5

The use of variable costing to determine managers' bonuses does not give the incentive to produce more products than needed.

Accepted Answer

A) True 
 B)False

Question 6

Gross profit is calculated by deducting ________ from sales revenue.

Accepted Answer

A)  total fixed costs
B)  cost of goods sold
C)  total variable costs
D)  selling and administrative costsE) B) and D)
F) B) and C)

Question 7

Petra,Inc.has collected the following data.(There are no beginning inventories. ) :

What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

Accepted Answer

A)  $39,400
B)  $34,600
C)  $24,600
D)  $29,400E) B) and C)
F) B) and D)

Question 8

Elegant Affairs,Inc.provides catering services.The company has three segments: Standard,Deluxe,and Premium.The company provides the following data for its three segments for the month of July:
  
The total fixed costs for the month amount to $2,500.
Requirements:
a)Calculate the contribution margin ratio for each business segment.
b)Compute the service revenue per customer,variable cost per customer,and contribution margin per customer for each business segment.

Accepted Answer

Fixed co...

Exam 21: Variable Costing

Correct Answer
verified

Fixed co...
View Answer

Correct Answer
verified

Petra,Inc.has collected the following data.(There are no beginning inventories. ) : What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

Correct Answer
verified

The use of variable costing to determine managers' bonuses does not give the incentive to produce more products than needed.

Correct Answer
verified

Luis Perez,a production supervisor at Serum Medical,Inc. ,uses variable costing for any cost control decisions that he has to make.Which of the following is the reason for his choice?

Correct Answer
verified

Gross profit is calculated by deducting ________ from sales revenue.

Correct Answer
verified

When all units produced are sold,there is no difference in operating income between absorption costing and variable costing.

Correct Answer
verified

Which of the following is NOT a product cost under variable costing?

Correct Answer
verified

Exam 21: Variable Costing

Correct Answerverified Fixed co...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Petra,Inc.has collected the following data.(There are no beginning inventories. ) : What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

Correct AnswerverifiedShow Answer

The use of variable costing to determine managers' bonuses does not give the incentive to produce more products than needed.

Correct AnswerverifiedShow Answer

Luis Perez,a production supervisor at Serum Medical,Inc. ,uses variable costing for any cost control decisions that he has to make.Which of the following is the reason for his choice?

Correct AnswerverifiedShow Answer

Gross profit is calculated by deducting ________ from sales revenue.

Correct AnswerverifiedShow Answer

When all units produced are sold,there is no difference in operating income between absorption costing and variable costing.

Correct AnswerverifiedShow Answer

Which of the following is NOT a product cost under variable costing?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Fixed co...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified