13. Which of the following statements is false? Under variable costing, an increase in production increases the amount of profit reported on the income statement, even if the additional units are not sold. Under variable costing, the income statement is prepared using a contribution margin approach. a. b. c. Variable costing is not allowed for external financial reporting, but many companies find it useful for internal managerial reports. Under variable costing, fixed manufacturing costs are expensed in the period incurred d. In an income statement segmented by product line, a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be: a. allocated to the product lines on the basis of sales dollars b. allocated to the product lines on the basis of segment margin. c. classified as a common fixed expense and not allocated. d. classified as a traceable fixed expense and not allocated. 15. Pearl Products Company uses 3 gallons of milk to make 1 carton of ice cream. Pearl Products currently has 30 galions o f milk as beginning inventory and desires to maintain an ending inventory of 15 gallons of milk. If 98 carton of ice cream will be produced, how much milk must be purchased? a. 279 gallons b. 294 gallons c. 309 galilons d. None of the above 16. The following are budgeted data: Sales (units) Production (units) 15,000 16,000 13,000 Apri..12,000 May. 17,000 Jun. 15,000 Each unit requires 0.75 hours of direct labor at a cost of $6.50 per hour. What is the budgeted cost of direct labor for May? a. $73,125 b. $78,000 c. $63,375 d. $82,875 17. Which of the following comparisons best answers the question on how well a company controls its' revenues and costs? a. static planning budget and flexible budget b. flexible budget and actual results c. static planning budget and actual results d. master budget and static planning budget