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WorksheetsVariable Costing Quiz1 - Midterm
Total questions: 15
Worksheet time: 20mins
In absorption costing, as contrasted with direct 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 direct costing net income
less than direct costing net income
equal to direct 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 direct costing, which is classified as product costs?
only variable production costs
only direct costs
all variable costs
all variable and fixed production costs
Which of the following statements is correct?
when production is higher than sales, absorption costing net income is lower than variable costing net income
If all the products manufactured during the period are sold in that period, variable costing net income is equal to absorption costing net income
when production is lower than sales, variable costing net income is lower than absorption net income
when production and sales level are equal, variable costing net income is lower than absorption costing net income
Determine the following statements as true or false:
Statement 1: Direct costing and variable costing are different terms that mean the same thing
Statement 2: In a variable costing income statement, sales revenue is typically lower than in absorption costing income statement
False:True
False:False
True:True
True: False
The absorption costing method includes inventory: Fixed Factory Overhead and Variable Factory overhead
No; No
No; Yes
Yes; Yes
Yes; No
In an income statement prepared as internal report using the direct 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
Compute the value of inventory value under direct costing method using the data given below:
Units unsold at the end of the period, P 45,000; raw materials used, P 6 per unit; raw materials, beginning, P 5.90 per unit; variable overhead per unit, P 2 per unit; indirect labor for the month, P 33, 750. Total fixed costs, P 67,500.
P 16.90
P 11.00
P 17.45
P 19.15
Valene Company's 2017 fixed manufacturing overhead cost totaled P 100,000 and variable selling costs totaled P 80,000. Under direct costing method, how these costs be classified under period cost and product cost?
P 0; P 180,000
P 80,000; P 100,000
P 100,000; P 80,000
P 180,000; 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, repsectively. 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
During the year 2020, Irra Company manufactured 70,000 units of products A, a new product. Only 65,000 units were sold during the year. There was no beginning inventory. Manufacturing cost per unit was P 20.00 variable and P 50.00 fixed What would be the effect in net income if absorption costing is used instead of variable costing?
Net income is P 250,000 lower
Net income is P 250,000 higher
Net income is P 100,000 lower
none of the above
