Chapter 19

Which of the following costing methods charges all manufacturing costs to its products?

• Absorption costing

• 
  Period costing

• 
  ABC costing

• Direct costing

Using absorption costing, which of the following manufacturing costs are assigned to products?

• 
  Fixed overhead, direct materials, and direct labor.

• Direct labor and variable overhead.

• Variable overhead, direct materials, direct labor, and fixed overhead.

• Variable overhead, direct materials, and direct labor.

Which of the following statements is true regarding variable costing?

• 
  It is the required method for external financial reporting.

• It includes direct materials, direct labor, and variable overhead costs in product costs.

• It treats overhead in the same manner as absorption costing.

• It makes it easier to manipulate earnings with changes in production levels.

Which of the following would be reported on a variable costing income statement?

• 
  Work-in-process inventory

• Total cost of goods sold

• Contribution margin

• 
  Gross Profit

A company had income of $500,000 based on variable costing. Beginning and ending finished goods inventories were 100,000 units and 96,000 units, respectively. Assume the fixed overhead per unit was $1.50 for both the beginning and ending finished goods inventory. The income under absorption costing is:

• $350

• $506,000

• $500,000

• $494,000