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AC 2102 MANAGEMENT ACCOUNTING VARIABLE COSTING MULTIPLE CHOICE Basic Concepts 1. Under the direct costing, which is classified as product costs? A. Only variable production costs. B. Only direct costs. C. All variable costs. D. All variable and fixed production costs. (rpcpa) 1. A ? The product costs under the direct costing. Under the direct costing model, only variable production costs such as direct materials, direct labor, and variable factory overhead are included in the determination of the product costs.Fixed factory overhead is classified as a period costs, that is, automatically deducted from sales as an expense regardless of sales volume level.Hence, choice-letter “a” is correct. Choice-letter “b” is incorrect because there are direct costs that are fixed costs. Choice-letter “c” is incorrect because it refers to all variable costs and expenses. Variable expenses are always period costs either under absorption costing or variable costing model. Choice-letter “d” is incorrect because under direct costing fixed manufacturing costs are period costs. 2. In absorption costing, as contrasted with direct costing, the following are absorbed into inventory. A. All the elements of fixed and variable manufacturing overhead. B. Only the fixed manufacturing overhead. C. Only the variable manufacturing overhead. D. Neither fixed nor variable manufacturing overhead. (rpcpa) 2. A ? The elements absorbed into inventory using the absorption costing model. Choice-letter “a” is correct because all manufacturing costs, whether variable or fixed, are included in the determination of product costing using the absorption costing method. Because of such principle, choice-letters “b”, “c”. and “d” are all incorrect. 3. The absorption costing method includes in inventory Fixed factory Variable factory overhead overhead . A. No No B. No Yes C. Yes Yes D. Yes No (aicpa) 3. C ? Items included in inventory under absorption costing. The following items are included in the inventory cost using the absorption costing method: direct material, direct labor, variable overhead, and fixed overhead. Choice-letter “c” is the correct answer. 4. In an income statement prepared as an internal report using the direct (variable) costing method, fixed selling and administrative expenses would A. Not be used. B. Be used in the computation of the contribution margin. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Which of the following is true of absorption costing and variable costing?Correct answer: Option c. both variable and fixed manufacturing costs are considered product costs. Explanation: Under absorption costing, the variable manufacturing costs and the fixed manufacturing overhead are considered as product costs.
Which of the following statements is correct regarding the difference between the absorption costing and variable costing methods?Which of the following statements is correct regarding the difference between the absorption costing and variable costing methods? When production is greater than sales, absorption costing income is greater than variable costing income.
Which of the following statements are true in absorption costing?Absorption costing treats all manufacturing costs as product costs. D) It considers variable manufacturing overhead cost as period costs. Variable manufacturing overhead is treated as product cost. Therefore, the correct answer is C) It considers fixed manufacturing overhead cost as product costs.
Which of the following statements best defines absorption costing?Which of the following statements best defines absorption costing? It is a method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs.
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Which of the following statements is true with respect to absorption costing and variable costing?
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