Under variable costing, which of the following are cause that can be inventoried

1. Under variable costing, which of the following costs are assigned to inventory?

 Variable Selling & Administrative Costs       variable Factory Overhead Costs

             (A) Yes                                                                No

              b)No                                                                   yes

              c)Yes                                                                   Yes

1. d) No                                No

8.Which of the following would appear on both the budgeted income statement and on the schedule of expected cash disbursements for operating expenses? (A) Depreciation expense (B) Rent expense (C) Sales commission expense (D) Both B and C

9.Which of the following is not an underlying assumption of the cost-volume-profit graph? (A) Expenses are categorized into fixed and variable (B) Revenues and expenses are linear over the relevant range (C) Efficiency and productivity will be unchanged (D) Sales mix will not be constant

1. If total fixed costs decrease while the sale price per unit and the variable costs per unit remain constant, the: (A) contribution margin increases (B) contribution margin decreases (C) breakeven point increases (D) breakeven point decreases

1. A business always absorbs its overheads on labour hours. In the 8th period 18,000 hours were worked, actual overheads were $279,000 and there was$36,000 over-absorption. The overhead absorption rate per hour was: (A) $15.50 (B) $17.50 (C) $18.00 (D) $13.50

Variable Costing

1. Which of the following is not a type of absorption costing? a. direct costing b. actual costing

c. normal costing d. none of the above

1. Variable costing is unacceptable for a. managerial accounting b. financial accounting c. transfer pricing d. reporting by product lines for internal purposes

2. A criticism of variable costing for managerial accounting purposes is that it a. is not acceptable for product line segmented reporting b. does not reflect cost-volume-profit relationships c. overstates inventories d. might encourage managers to emphasize the short term at the expense of the long term

3. The use of variable costing requires knowing a. the contribution margin and break-even point for each product b. the variable and fixed components of production cost c. controllable and non-controllable components of all costs d. the number of units of each product produced during the period

4. Advocates of variable costing for internal reporting purposes do not rely on which of the following points? a. the matching concept b. price-volume relationships c. absorption costing does not include selling and administrative expenses as part of inventoriable cost. d. production influences income under absorption costing

5. Calculating income under variable costing does not require knowing a. unit sales b. unit variable manufacturing costs

c. selling price d. unit production

1. Inventoriable costs under absorption costing include a. both fixed and variable production costs b. only variable production costs c. all production costs plus variable selling and administrative costs d. all production costs plus all selling and administrative costs

2. Inventoriable costs under variable costing include a. both fixed and variable production costs b. only variable production costs c. all production costs plus variable selling and administrative costs d. all production costs plus all selling and administrative costs

3. Absorption costing and variable costing differ in that a. income is lower under variable costing b. variable costing treats selling costs as period costs c. variable costing treats all variable costs as product costs d. inventory cost is higher under absorption costing

4. Which method gives the lowest inventory cost per unit? a. Variable costing b. Absorption costing using normal capacity to set the standard fixed cost c. Absorption costing using practical capacity to set the standard fixed cost d. Actual absorption costing

5. Which costs are treated differently under absorption costing and variable costing? a. variable manufacturing costs b. fixed manufacturing costs c. variable selling and administrative expenses d. fixed selling and administrative expenses

6. ABC Company had 15,000 units in ending inventory. The total cost of those units under variable costing is a. less than it is under absorption costing b. the same as it is under absorption costing c. more than it is under absorption costing d. any of the above

7. Which variance cannot arise under variable costing?

a. Variable overhead budget variance b. Variable overhead efficiency variance c. Fixed overhead budget variance d. Fixed overhead volume variance

1. Under variable costing, there can be no a. Fixed overhead variances b. Fixed overhead budget variance

c. Fixed overhead volume variance d. No fixed overhead

1. Over the long-run, income under absorption costing will be a. Higher than the income under variable costing b. Lower than the income under variable costing c. Equal to the income under variable costing d. Incomparable to the income under variable costing

2. How will an unfavorable volume variance affect profit under a)absorption costing & b)variable costing a. a)increase b)increase b. a)increase b)no effect

c. a)decrease b)increase d. a)decrease b)no effect

1. Which one of the following considers the impact of fixed overhead costs? a. Full absorption costing b. Marginal costing

c. Direct costing d. Variable costing

1. Under variable costing, product costs include a. Variable & fixed conversion costs b. Prime costs & fixed manufacturing overhead c. Prime costs & variable manufacturing overhead d. Prime costs & variable selling & administrative overhead

2. How should the straight-line depreciation of a manufacturing facility be treated? a. Direct product cost under absorption costing b. Indirect product cost under variable costing c. Direct period cost under absorption costing d. Indirect period cost under variable costing

3. If absorption costing income shows the same amount as variable costing income, then a. Inventory level must have increased b. Production fell short of sales demand for the period c. Just-in-time system might be in use d. No conclusion can be made

4. A company practicing Just-In-Time (JIT) philosophy for the manufacture of its lone products shall expect a. Standard costing variances to be favorable b. Responsibility accounting reports to be inappropriate c. Break-even point to be higher than conventional system d. Absorption costing and variable costing income to be equal

5. The term that means all manufacturing costs (direct & indirect, fixed & variable) which can contribute to the production of the product, are traced to output and inventories is: a. job order costing b. process costing

c. absorption costing d. direct costing

1. The term that is most descriptive of the type of cost accounting often called direct costing is: a. out-of-pocket costing b. variable costing

c. relevant costing d. prime costing

1. Costs treated as product costs under direct costing are: a. prime costs only b. variable production costs only c. all variable costs d. all variable & fixed manufacturing costs

2. The basic assumption made in direct costing with respect to fixed costs is that fixed cost is: a. a controllable cost b. a product cost

c. an irrelevant cost d. a period cost

1. Operating income computed using the direct costing would generally exceed operating income computed using the absorption costing if: a. units sold exceed units produced b. units sold are less than units produced c. units sold equal units produced d. the unit fixed cost is zero

2. At the end of Lester Company’s first year of operations, 1,000 units of inventory remained on hand. Variable and fixed manufacturing costs per unit were P90 and P20 respectively. If Lester uses absorption costing, its net operating income would be higher than if it used variable costing by: a. P 0 b. P 20,

c. P 70, d. P 90,

(Items 37 – 39 are based on the following information) Last year, Zsa Zsa Company manufactured 20,000 units and sold 15,000 units. Production costs for the year were as follows:

Direct Material P 170, Direct Labor 110, Variable Manufacturing Overhead 200, Fixed Manufacturing Overhead 240,

Sales totaled P825,000 for the year, variable selling and administrative expenses totaled P108,000 and fixed selling and administrative expenses totaled P165,000. There were no beginning inventories. Assume that direct labor is a variable cost.

1. The contribution margin per unit would be: a. P 23. b. P 31.

c. P 25. d. P 19.

1. Under absorption costing, the ending inventory for the year would be valued at: a. P 0 b. P 216,

c. P 248, d. P 180,

1. Under variable costing, the company’s net operating income for the year would be: a. P 101,250 lower than under absorption costing b. P 60,000 lower than under absorption costing c. P 101,250 higher than under absorption costing d. P 60,000 higher than under absorption costing

2. The following information was taken from the first year absorption-based accounting records of Blue Co.:

Total Fixed Costs incurred P 100, Total Variable Costs incurred 50, Total Period Costs incurred 70, Total Variable Period Costs incurred 30, Units produced 20, Units sold 12, Unit sales price P

If Blue Company had used variable costing for its first year of operations, how much income (loss) before income taxes would it have reported? a. (P6,000) b. P 54,

c. P 26, d. P 2,

(Items 41 – 45 are based on the following information)

TONDO COMPANY

Income Statement For the month ended January 31, 2016

Sales (P10/unit) P 900, Variable Costs: Variable Cost of Goods Sold: Beginning Inventory P 125, Variable cost of goods manufactured 400, Total goods available for sale P 525, Ending Inventory (75,000) Variable Cost of Goods Sold P 450, Variable Selling Expense: 90,000 (540,000) Contribution Margin: P 360, Fixed Costs: Manufacturing P 240, Selling & Administrative 90,000 (330,000) Profit P 30,

During January 2016, Tondo Company manufactured a total of 80,000 units.

1. The income statement format presented is based on a. Full Costing b. Direct Costing

c. Absorption Costing d. Throughput Costing

1. What is Tondo Company’s break-even point in unit sales? a. 90,000 units b. 82,500 units

c. 49,500 units d. 41,250 units

1. Assuming a tax rate of 25%, the peso sales required to generate a pre-tax profit of P90,000 is? a. P 1,125, b. P 1,050,

c. P 750, d. P 700,

1. The peso value of the company’s inventory on January 31 under the absorption costing method would be a. P 120, b. P 90,

c. P 75, d. P 60,

1. Under absorption costing, the company would have reported a a. Nil amount b. P 30,000 profit

c. P 30,000 loss d. P 60,000 profit

What is inventoried under variable costing?

What costs are treated as Inventoriable costs under the variable costing method?

What costs are inventoried under absorption costing?

Which of the following are product costs under variable costing?