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
2.Variable costing is unacceptable for
a.managerial accounting
b.financial accounting
c. transfer pricing
d.reporting by product lines for internal purposes
3.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
4.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
5.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
6.Calculating income under variable costing does not require knowing
a.unit sales
b.unit variable manufacturing costs
c.selling price
d.unit production
7.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
8.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
9.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
10.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
11.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
12. 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
13.Which variance cannot arise under variable costing?