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Question 5
Which of the following is TRUE concerning operating income calculated under variable costing as compared to absorption costing?
Select one:

A. Operating income is lower under variable costing when production exceeds sales.

B. Operating income is higher under variable costing when production exceeds sales.

C. operating income is higher under variable costing when production exceeds sales only if there is a production-volume variance.

D. Operating income is lower under variable costing when sales exceeds production only if there is a production-volume variance.

E. The relationship between production and sales has no bearing on the differences in operating income between the two methods.

Question 6

The method of costing that excludes fixed manufacturing costs from inventoriable costs is known as

Select one:

A. full manufacturing costing.

B. manufacturing overhead costing.

C. variable costing.

D. fixed overhead costing.

E. absorption costing.

Question 7
Marie's Decorating produces and sells a mantel clock for $100 per unit. In 2012, 100,000 clocks were produced and 80,000 were sold. Other information for the year includes:

Direct materials	$30.00 per unit
Direct manufacturing labour	$2.00 per unit
Variable manufacturing costs	$3.00 per unit
Sales commissions	$5.00 per part
Fixed manufacturing costs	$25.00 per unit
Administrative expenses, all fixed	$15.00 per unit

What is the inventoriable cost per unit using variable costing?

Select one:

A. $40

B. $32

C. $35

D. $75

E. $60

Question 8

Ms. Andrea Chadwick, the company president, has heard that there are multiple break-even points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for current year is as follows:

Total fixed manufacturing overhead	$180,000
Total other fixed expenses	$200,000
Total variable manufacturing expenses	$120,000
Total other variable expenses	$120,000
Units produced	30,000 units
Budgeted production	30,000 units
Units sold	25,000 units
Selling price	$40

What are break-even sales in units using absorption costing if the production units are actually 25,000?
Select one:

A. 5,625 units

B. 6,667 units

C. 8,847 units

D. 7,667 units

E. 1,154 units

Question 9

Balloon Arrangements produces balloon bouquets. The following information has been provided by management:

Budgeted production	100,000 bouquets
Direct manufacturing costs	$2.50/bouquet
Fixed manufacturing overhead	$1.00/bouquet
Variable manufacturing overhead	$0.75/bouquet
Variable administrative costs	$1.25/bouquet

What is the cost per bouquet if throughput costing is used?

Select one:

A. $1.98

B. $5.50

C. $4.75

D. $2.50

E. $3.75

Question 10
Under variable costing, which of the following expenses is inventoriable?

Select one:

A. direct manufacturing labour and fixed manufacturing overhead

B. marketing and direct manufacturing labour

C. variable manufacturing overhead

D. variable manufacturing overhead and administrative

E. variable and fixed manufacturing overhead

Question 11
The following information pertains to Brian Stone Corporation:

Beginning fixed manufacturing overhead in inventory	$60,000
Ending fixed manufacturing overhead in inventory	45,000
Beginning variable manufacturing overhead in inventory	$30,000
Ending variable manufacturing overhead in inventory	14,250
Fixed selling and administrative costs	$724,000
Units produced	5,000 units
Units sold	4,800 units

What is the difference between operating incomes under absorption costing and variable costing?

Select one:

A. $7,500

B. $15,750

C. $750

D. $30,750

E. $15,000

Answer 1