Question
Here are some multiple questions about absorption costing. Please help me with these. 1)The main difference between variable costing and absorption costing is ( )
Here are some multiple questions about absorption costing. Please help me with these.
1)The main difference between variable costing and absorption costing is ( )
a)the treatment of nonmanufacturing costs.
b)the accounting for variable manufacturing costs.
c)the accounting for fixed manufacturing costs.
d)their value for decision makers.
2)Operating income using variable costing as compared to absorption costing would be higher
a. when the quantity of beginning inventory equals the quantity of ending inventory.
b. when the quantity of beginning inventory is more than the quantity of ending inventory.
c. when the quantity of beginning inventory is less than the quantity of ending inventory.
d. under no circumstances.
3) Absorption costing enables managers to increase operating income in the short run by changing production schedules. Which statement is true regarding such action?
a. The reason for increased operating income is the deferral of fixed manufacturing overhead contained in unsold inventory.
b. A desirable effect of these changes in production is "cherry picking" the production line.
c. This is done through decreases in the production schedule as customer demand for product falls.
d. None of the above statements are true regarding the manager's action to increase operating income through changes in the production schedule.
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