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

• Normal Costing

• Absorption Costing

• Marginal Costing

• Actual Costing

Absorption Costing does complies with GAAP and MFRS.

• True

• False

Formula to calculate contribution margin

• SALES – VARIABLE COSTS

• SALES – VARIABLE COSTS - FIXED COST

• SALES – PERIOD COSTS

• SALES – COGS

Marginal costing is known as Full Costing.

• TRUE

• FALSE

Which of the following items is NOT characteristic of a process costing system?

• Once production begins, it continues until the finished product emerges

• The products produced are heterogeneous in nature

• The focus is on continually producing homogeneous products

• When the finished product emerges, all units have precisely the same amount of materials, labour and overhead

In a process cost system, the flow of cost is:

• work in process, cost of goods sold, finished goods

• finished goods, work in process, cost of goods sold

• finished goods, cost of goods sold, work in process

• work in process, finished goods, cost of goods sold

A process cost system would be used for all of the following products except

• chemicals.

• computer chips.

• motion pictures.

• soft drinks.

In a process cost system, a production cost report is prepared

• only for the first processing department.

• for all departments in the aggregate.

• for each processing department.

• only for the last processing department.

Costs that were incurred in a previous department that are brought into this department as part of a product's cost are

• Transferred-in costs

• Transferred-out costs

• Costs to account for

• Costs accounted for

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.