1. I. Gross profit less fixed costs equals income. II. When the ending inventory is higher than the beginning inventory, absorption costing gives higher income than variable costing. And, if production is less than sales in units, then variable costing has higher income than absorption costing.

True True

False False

True False

False True

2. I. It is possible for a service department to be a final cost center in a merchandising organization. II. The last service department to allocate its costs using the step method is one that provides the smallest portion of its services to other service departments.

TT

FF

TF

FT

3. The variance resulting from obtaining an output different from the one expected on the basis of input is the:

mix variance

output variance

usage variance

yield variance