chapter 9 : absorption and marginal costing

Marginal costing is known as Full Costing.

• TRUE

• FALSE

Contribution margin can be derived from Absorption Costing

• TRUE

• FALSE

Absorption costing is suitable for internal reporting.

• TRUE

• FALSE

What is the key difference between Absorption Costing and Marginal Costing?

• Absorption Costing treats Manufacturing Overhead as a period cost.

• Marginal Costing treats Fixed Manufacturing Overhead as a period cost.

• Absorption Costing only considers variable costs to calculate net income.

• Marginal Costing only considers variable costs to calculate net income.

Which scenario results in the Net Income under Absorption Costing to be equal to the Net Income under Marginal Costing?

• Unit produced is larger than unit sold.

• Ending inventory unit is larger than unit produced.

• Unit produced is equal to unit sold.

• Unit produced is less than unit sold.

Under Absorption Costing, the non-production fixed costs are treated as period costs.

• True

• False

Total sales will be different under Marginal and Absorption Costing.

• TRUE

• FALSE

"A costing approach in which all manufacturing costs are product costs." This statement best describe...

• Absorption Costing

• Marginal Costing

• Normal Costing

• Actual Costing

According to absorption costing, no potion of fixed manufacturing cost is applied in finished goods ending inventory

• True

• False

"Less suitable for performance evaluation and cost analysis because fixed cost and variable cost cannot be trace." This statement is refer to the disadvantage of absorption costing.

• True

• False