Chapter 6

1. Under absorption costing product costs consist of ______.

• A. Variable Manufacturing Costs

• B. Fixed Manufacturing Costs

• C. both variable and fixed manufacturing costs

2.Absorption and variable costing net income are usually different due to the accounting for ______.

• A. fixed manufacturing overhead

• B. common cost

• C. fixed manufacturing cost

3. Cost, profit, and investment centers are segments, but sales territories, manufacturing plants, and service departments are not segments

• False

• True

4. When inventory decreases, net operating income under absorption costing will be _________ cost of goods sold under variable costing.

• A. More Than

• B. Equals to

• C. Less Than

5. A company's operations can be divided by product lines, geographical area, manufacturing plants, service centers or sales territories, which are know as:

• A. Segments

• B. Organizations

• C. Groups

6. Allocating __________ fixed costs to a segment may cause an otherwise profitable segment to appear unprofitable.

• Tracealbe

• Untracealbe

7. One mistake companies make when preparing segmented income statements is arbitrarily assigning _________ fixed costs to segments.

• Common

• Manufacturing

8. Find the Contribution Margin Ratio:

If the Sales price per unit is $50

Variable costs per unit is $25

Fixed costs is $6,000.

• A. 0.05

• B. 0.50

• C. 5

9. Find the Contribution Margin:

If the Sales price per unit is $50

Variable costs per unit is $25

Fixed costs is $6,000.

• A. $25

• B. $ 75

• C. $50

10. Find the Break-even point:

If the Sales price per unit is $50

Variable costs per unit is $25

Fixed costs is $6,000.

• A. $2,000

• B. $12,000

• C. $120,000