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Exam 20: Variable Costing for Management Analysis

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Question 61

True/False

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In the short run, the selling price of a product should normally not be less than the variable costs and expenses of making and selling it.

A) True
B) False

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Question 62

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Another name for variable costing is:

A) indirect costing
B) process costing
C) direct costing
D) differential costing

E) A) and B)
F) B) and C)

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Question 63

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MATCHING -Treats fixed selling cost as a period cost.

The systematic examination of differences between planned and actual contribution margins is termed contribution margin analysis.

Management will use both variable and absorption costing in all of the following activities except:

Under variable costing, which of the following costs would be included in finished goods inventory?

The level of inventory of a manufactured product has increased by 4,000 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?

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost?

In the variable costing income statement, deduction of variable selling and administrative expenses from manufacturing margin yields:

In the absorption costing income statement, deduction of the cost of goods sold from sales yields contribution margin.

If variable cost of goods sold totaled $90,000 for the year 18,000 units at $5.00 each) and the planned variable cost of goods sold totaled $86,400 16,000 units at $5.40 each) , the effect of the unit cost factor on the change in contribution margin is:

During the first year of operations, 18,000 units were manufactured and 13,500 units were sold. On August 31, Olympic Inc. prepared the following income statement based on the variable costing concept: Olympic Inc. Variable Costing Income Statement For Year Ended August 31, 20-- Determine the unit cost of goods manufactured, based on a) the variable costing concept and b) the absorption costing concept.

S&P Enterprises sold 10,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Which of the following statements is true?

MATCHING -Required by generally accepted accounting principles.

In contribution margin analysis, the effect of a difference in unit sales price or unit cost on the number of units sold is termed the unit price or unit cost factor.

For a period during which the quantity of product manufactured equals the quantity sold, income from operations reported under absorption costing will equal the income from operations reported under variable costing.

In contribution margin analysis, the effect of a difference in the number of units sold, assuming no change in unit sales price or cost, is termed the unit price or unit cost factor.

Contribution margin reporting can be beneficial for analyzing which of the following?

On the variable costing income statement, deduction of the variable cost of goods sold from sales yields gross profit.

On the variable costing income statement, deduction of the variable cost of goods sold from sales yields manufacturing margin.