1.2.Choose TRUE or FALSE? Give short explaination? a. In marginal costing method, factory rent is absorbed into cost of production. b. In NPV method, if the projects are not mutually exclusive, the company should accept all projects with positive NPV. The salaries of administrative staffs are not prime cost. C.

1.2.Choose TRUE or FALSE? Give short explaination? a. In marginal costing method, factory rent is absorbed into cost of production. b. In NPV method, if the projects are not mutually exclusive, the company should accept all projects with positive NPV. The salaries of administrative staffs are not prime cost. C.

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter20: Variable Costing For Management Analysis

Section: Chapter Questions

Problem 4DQ: In the variable costing income statement, how are the fixed manufacturing costs reported, and how...

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Explain why service companies use different activity bases than manufacturing companies to classify costs as fixed or variable.
In the variable costing income statement, how are the fixed manufacturing costs reported, and how are the fixed selling and administrative expenses reported?
In the variable costing income statement, how are the fixed manufacturing costs reported, and how are the fixed selling and administrative expenses reported?
Which of the following statements is true regarding average fixed costs? A. Average fixed costs per unit remain fixed regardless of level of activity. B. Average fixed costs per unit rise as the level of activity rises. C. Average fixed costs per unit fall as the level of activity rises. D. Average fixed costs per unit cannot be determined.
-Explain the meaning of (a) differential revenue, (b) differential cost, and (c) differential income. -A company accepts incremental business at a special price that exceeds the variable cost. What other issues must the company consider in deciding whether to accept the business? -Under what conditions might a company use activity-based costing to allocate factory overhead to products?
2-A company accepts incremental business at a special price that exceeds the variable cost. What other issues must the company consider in deciding whether to accept the business? 3-Under what conditions might a company use activity-based costing to allocate factory overhead to products?
1.Choose all of the following statements that are true. a. Opportunity costs and sunk costs are not reflected on a firm's financial statements. b. Direct costs are manufacturing costs; indirect costs are non-manufacturing costs. c. Variable costs are always relevant to a decision. d. Under absorption costing, when a firm increases production, but has the same amount of sales, cost of goods sold decreases. e. Job order costing systems are used only in service industries; process costing systems are used only in manufacturing industries. 2.Which of the following are true about cost behavior within a particular relevant range? (Choose all that apply.) a. Variable costs per unit increase as a company produces more units of production. b. Total fixed cost is constant over all units of production. c. Fixed costs per unit decreases as a company produces less units of production. d. The slope of total variable costs is positive over increasing levels of production.
Which of the following statements is FALSE? a. There is a cause-and-effect relationship between the cost driver and the amount of cost. b. Over the long run all costs have cost drivers. c. Volume of production is a cost driver of direct manufacturing costs. d. Fixed costs have cost drivers over the short run.
2. Which of the following statements is false? (You may select more than one answer.)a. The planning horizon for discretionary fixed costs is longer than the planninghorizon for committed fixed costs.b. Discretionary fixed costs can be cut in the short term if necessary, while committed fixed costs cannot be cut for short periods of time.c. As companies increasingly rely on knowledge workers, the labor cost associated withemploying these workers is often committed fixed as opposed to discretionary.d. A mixed cost contains both committed fixed and discretionary elements.
7. Which of the following statement is false? Multiple Choice a)The contribution margin income statement format separates costs according to cost behaviour. b)Fixed manufacturing overhead is treated as a period cost under absorption costing method. c)Fixed manufacturing overhead is treated as a product cost under absorption costing method. d)Variable costing method is more useful than absorption costing approach in internal and managerial decision-making. e)The absorption costing approach is used in external financial reporting.
1. Activity based costing is likely a more advantageous costing methold versus traditonal costing, to facilliate which of the following type of analysis? a) analysis of service organization cost b) analysis of channel profitablity c) analysis of long term profitablity d) analysis for reduction selling price of all products? 2. A ___ is any factor that causes a change in the cost of an activity. a) activity based cost b) cost pool c) cost driver d) standard 3. Which of the following is no a basic cost category for indirect cost? a) inventory financing cost b) Volume related cost c) Product batch cost d) activity based cost
Kindly answer all questions: 1.) Cost behavior is considered linear whenever a straight line is a reasonable approximation for the relation between cost and activity. A. True B. False 2.) Which of the following is an example of a cost that is variable with respect to the number of units produced? A. rent on administrative office building B. rent on factory building C. Salaries of top marketing executives D. direct labor cost, where the direct labor force is adjusted to actual production of the period 3.) Fixed costs are constant in total amount over the relevant range of operations. A. True B. False 4.) The cost function derived by the simple least squares method: A. must be tested for minimum and maximum points. B. is parabolic. C. is linear. D. is curvilinear.