6- Absorption costing makes an apportionment of indirect costs so that the products absorb these costs. The main problem with this procedure can be pointed out: * a) only considers fixed costs b) the apportionment is arbitrary c) disregards variable costs d) only considers variable costs

6- Absorption costing makes an apportionment of indirect costs so that the products absorb these costs. The main problem with this procedure can be pointed out: * a) only considers fixed costs b) the apportionment is arbitrary c) disregards variable costs d) only considers variable costs

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

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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Question

6- Absorption costing makes an apportionment of indirect costs so that the products absorb these costs. The main problem with this procedure can be pointed out: *

a) only considers fixed costs
b) the apportionment is arbitrary
c) disregards variable costs
d) only considers variable costs

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Discuss the two factors affecting both sales and variable costs to which a change in contribution margin can be attributed.
Product costs under variable costing are typically: A. higher than under absorption costing B. lower than under absorption costing C. the same as with absorption costing D. higher than absorption costing when inventory increases
In the variable costing income statement, how are the fixed manufacturing costs reported, and how are the fixed selling and administrative expenses reported?
For which cost concept used in applying (he cost-plus, approach to product pricing are fixed manufacturing costs, fixed selling and administrative expenses, and desired profit allowed for in determining the markup? A. Total cost B. Product cost C. Variable cost D. Standard cost
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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.
True or False Product cost under Variable costing are DM, DL and VOH only. Under absorption costing, FOH is considered as indirect product cost. 3. Depreciation cost is always product cost 4. Depreciation cost is always period cost 5. Selling expense if always part of period cost, regardless of product costing system 6. Income under absorption is always greater than variable costing because of deferment of FOH 7. Selling cost is treated as expenses under variable costing. 8. If sales for a period exceeds production, then variable costing income will be higher than absorption costing income
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
2. Consider the following statements about absorption costing and variable costing: Variable costing is consistent with contribution reporting and cost-volume-profit analysis. Absorption costing must be used for external financial reporting. A number of companies use both absorption costing and variable costing. Which of the above statements is (are) True? Group of answer choices a. I, II and III. b. II only c. I and II d. III only e. I only.
What is the key difference between Absorption and Variable Costing? A Full Costing treats Manufacturing Overhead as a period cost B Variable Costing treats Fixed Manufacturing Overhead as a period cost C Absorption Costing only considers variable costs to calculate net income D Variable Costing only considers variable costs to calculate net income
6. Which of the following statements is correct about fixed costs? a. Fixed costs vary on per unit basis as well as in total as the level of activity changes b. Fixed costs remain the same on per unit basis but vary in total as the level of activity changes c. Fixed costs vary in total as the level of activity changes d. Fixed costs vary on per unit basis but remain the same in total as the level of activity changes
Under variable costing, all fixed costs (including fixed product costs) are expense in the period during which they are incurred (i.e. fixed product costs won't be part of the cost of goods sold). If fixed costs must be incurred during a given period, shouldn't they be expense during that period? Does variable costing violate the matching principle?