Variable Costing

In absorption costing, as contrasted with variable costing, the following are absorbed into inventory.

• All the elements of fixed and variable manufacturing overhead

• only the fixed manufacturing head

• Neither fixed nor variable manufacturing overhead

• only the variable manufacturing overhead

If production is greater than sales(units), then absorption costing net income will generally be

• greater than variable costing net income

• less than variable costing net income

• equal to variable costing net income

• additional data is needed to be able to answer

When all manufacturing cost is used in production are attached to the products, whether direct, or indirect, variable or fixed, this is called:

• process costing

• absorption costing

• variable costing

• job order costing

Under variable costing, which is classified as product costs?

• only variable production costs

• only direct material cost

• all variable costs

• all variable and fixed production costs

In an income statement prepared as internal report using the variable costing method, fixed selling and administrative expenses would

• Note be used

• Be used in the computation of contribution margin

• Be used in the computation of operating income but not in the computation of contribution margin

• Be treated the same as variable selling and administrative expenses

In an income statement prepared as an internal report using the variable costing method, variable selling and administrative expense would

• not be used

• be used in the computation of contribution margin

• be used in the computation of operating income but not in the computation of contribution margin

• be treated the same as fixed selling and administrative expenses

If sales equals production, one would expect net income under variable costing method to be

• the same as net income under absorption costing

• greater that net income under absorption costing method

• differing in as much as the difference between sales and production

• less than net income under the absorption costing method

Omega Company produced 100,000 units of product Rex during the month of June. Cost incurred during June were as follows:

DM - P 100,000

DL - P 80,000

Vr. Mfg head - P 40,000

Fx Mfg head - P 50,000

Vr selling and general expenses - P 12,000

Fixed selling and general expenses - P 46,000

Total - P 327,000

what was the product Rex's unit cost under absorption costing?

• P 3.27

• P 2.70

• P 2.32

• P 1.80

Valene Company's 2017 fixed manufacturing overhead cost totaled P 100,000 and variable selling costs totaled P 80,000. Under variable costing method, how much is product cost?

• P 180,000

• P 80,000

• P 100,000

• P 0

At the end of Crystal Company's first year of operations, 1,000 units of inventory remained on hand. Variable and fixed manufacturing cost per unit were P 90 and P 20, respectively. If Crystal uses absorption costing income statement rather than direct costing, the result would be a higher pretax income of

• P 20,000

• P 70,000

• P 0

• P 90,000