ACC 350 WEEK 10 QUIZ 8 CHAPTER 9 STR
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ACC 350 WEEK 10 QUIZ 8 CHAPTER 9 STR
1)
The two most common methods of costing inventories in
manufacturing companies are variable costing and fixed costing.
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2)
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2)
Absorption costing “absorbs” only variable manufacturing costs.
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3)
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3)
Variable costing includes all variable costs?both manufacturing
and nonmanufacturing?in inventory.
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4)
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4)
Under both variable and absorption costing, all variable
manufacturing costs are inventoriable costs.
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5)
The main difference between variable costing and absorption
costing is the way in which fixed manufacturing costs are accounted for.
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6)
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6)
Under variable costing, fixed manufacturing costs are treated as
an expense of the period.
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7)
The contribution-margin format of the income statement is used
with absorption costing.
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8)
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8)
The contribution-margin format of the income statement
distinguishes manufacturing costs from nonmanufacturing costs.
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9)
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9)
The gross-margin format of the income statement highlights the
lump sum of fixed manufacturing costs.
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10)
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10)
In absorption costing, all nonmanufacturing costs are subtracted
from gross margin.
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11)
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11)
Direct costing is a perfect way to describe the variable-costing
inventory method.
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12)
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12)
When variable costing is used, an income statement will show
gross margin.
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13)
The income under variable costing will always be the same as the
income under absorption costing.
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14)
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14)
Absorption costing is required by GAAP (Generally Accepted
Accounting Principles) for external reporting.
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15)
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15)
When production deviates from the denominator level, a
production-volume variance always exists under absorption costing.
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16)
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16)
Fixed manufacturing costs included in cost of goods available
for sale + the production-volume variance will always = total fixed
manufacturing costs under absorption costing.
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17)
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17)
The production-volume variance only exists under absorption
costing and not under variable costing.
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18)
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18)
When the unit level of inventory increases during an accounting
period, operating income is greater under variable costing than absorption
costing.
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19)
The difference in operating income under absorption costing and
variable costing is due solely to the timing difference of expensing fixed
manufacturing costs.
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20)
If managers report inventories of zero at the start and end of
each accounting period, operating incomes under absorption costing and variable
costing will be the same.
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21)
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21)
Under absorption costing, managers can increase operating income
by holding more inventories at the end of the period.
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22)
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22)
Many companies use variable costing for internal reporting to
reduce the undesirable incentive to build up inventories.
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23)
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23)
Under variable costing, managers can increase operating income
by simply producing more inventory at the end of the accounting period even if
that inventory never gets sold.
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24)
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24)
Nonfinancial measures such as comparing units in ending
inventory this period to units in ending inventory last period can help reduce
buildup of excess inventory.
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25)
One of the most common problems reported by companies using
variable costing is the difficulty of classifying costs into fixed or variable
categories.
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26)
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26)
Managers can increase operating income when absorption costing
is used by producing more inventory.
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27)
A manager can increase operating income by deferring maintenance
beyond the current accounting period when absorption costing is used.
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28)
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28)
Throughput costing considers only direct materials and direct
manufacturing labor to be truly variable costs.
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29)
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29)
Throughput costing is also referred to as super-variable
costing.
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30)
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30)
When production quantity exceeds sales, throughput costing
results in reporting greater operating income than variable costing.
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31)
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31)
Throughput costing provides more incentive to produce for
inventory than does absorption costing.
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More Questions are Included…
Answer:
More Questions are Included…
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