18. To calculate budgeted direct labor costs, multiply the number of units to be produced by the number of projected direct labor hours. Next, multiply that total by the average direct cost per hour.

True

False

22. A flexible budget summarizes revenues and costs for various levels of sales volume within a relevant range.

True

False

29. A cost variance measures the difference in quantities of actual inputs used and the standard quantity of inputs allowed for the actual number of units produced.

True

False

32. Unfavorable variances are subtracted from each other to arrive at a favorable variance.

True

False

34. A direct labor cost variance is unfavorable if the employer pays workers more per hour than budgeted.

True

False

36. In a standard cost system, the manufacturing overhead allocated to production equals the standard overhead allocation rate multiplied by the standard quantity of the allocation base allowed for expected output.

True

False

37. The direct materials cost and efficiency variances make up the total direct materials variance.

True

False

41. Which of the following statements is true of absorption costing?

A) It considers variable selling and administrative costs as product costs.

B) It considers fixed selling and administrative costs as product costs.

C) It considers fixed manufacturing overhead cost as product costs.

D) It considers variable manufacturing overhead cost as period costs.

42) Which of the following is true of the traditional format of the income statement?

A) It is prepared under the variable costing method.

B) It shows contribution margin as a line item.

C) It is not allowed under GAAP.

D) It is prepared under the absorption method.

43) Unit product cost calculations using absorption costing do not include ________.

A) fixed manufacturing overhead

B) variable manufacturing overhead

C) variable selling and administrative costs

D) direct materials