1)Direct materials are classified as ________________________.

Noncontrollable costs

Controllable costs

Period Costs

None of the Above

2) A company has direct materials of $5,000, direct labor of $2,500, fixed overhead costs of $1,000, variable overhead costs of $1,250, and sales of $10,000. Using the variable costing method, the manufacturing margin for this company is $250. True or False

3)Variable costing is referred to as direct costing. True or False

4)Costs that can be included by management at that level are considered to be ________________________

Noncontrollable costs

Controllable costs

Period Costs

None of the Above

5)Absorption costing is required under GAAP principles. True or False

6)Contribution margin equals the manufacturing margin plus the variable selling and administrative expenses. True or False

7)If units manufactured equal units sold, then absorption costing income from operations equals variable costing income from operations. True or False

8)Under absorption costing, cost of goods manufactured is only comprised of direct materials, direct labor, and variable factory overhead. True or False

9)Using the absorption costing method, gross profit minus selling and administrative expenses equals income from operations. True or False

10)A company has direct materials of $5,000, direct labor of $2,500, fixed overhead costs of $1,000, variable overhead costs of $1,250, and sales of $10,000. Using the absorption costing method, the gross profit for this company is $250. True or False