QUESTION 11

A cost that would be considered a product cost under both variable and absorption costing would be:

depreciation expense on the office building.

sales commissions.

variable selling expenses.

fixed manufacturing overhead.

variable manufacturing overhead costs.

QUESTION 12

Net income reported under absorption costing will exceed net income under variable costing for a given period if:

production and sales are equal for that period.

production exceeds sales for that period.

sales exceed production for that period.

variable manufacturing costs exceed fixed manufacturing overhead costs.

lean production and just-in-time inventory is used.

QUESTION 13

ABC Co. manufactures and sells a single product and has provided the following information:

Unit Product Costs: Direct Material..............$31 Direct Labor....................26 Variable Mfg OH............10

Variable Selling and Admin Expenses............$7/unit Fixed Selling and Admin Expenses.................$5,200 Fixed Manufacturing Overhead........................$31,500

Unit Sales Price...........................$112 No units beginning inventory 1200 units producced 1000 units sold

Prepare a Variable Income Statement for ABC to determine the Net Operating Income or Loss

NOL is $1260

NOI is $1260

NOI is $1300

NOI is $2600

NOI is $3000

QUESTION 14

ABC Co. manufactures and sells a single product and has provided the following information:

Unit Product Costs: Direct Material..............$31 Direct Labor....................26 Variable Mfg OH............10

Variable Selling and Admin Expenses............$7/unit Fixed Selling and Admin Expenses.................$5,200 Fixed Manufacturing Overhead........................$31,500

Unit Sales Price...........................$112 No units beginning inventory 1200 units producced 1000 units sold

Prepare a Absorption Income Statement for ABC to determine the Net Operating Income or Loss

NOL is $2600

NOI is $2600

NOI is $6550

NOI is $7560

NOI is $7650

QUESTION 15

When reconciling Net Operating Income or Loss between absorption and variable statements, to determine the difference,

multiply fixed manufacturing overhead cost per unit produced x units sold.

multiply the contribution margin ratio x ending inventory.

look at the variable Cost of Goods Sold; that is the difference.

subtract the Gross Margin from the Cost of Goods Sold and the absolute amount accounts for the difference.

multiply the number of units in ending inventory x the fixed Mfg OH costs for each unit produced.

QUESTION 16

If lean production is the goal and just-in-time inventory is used

absorption costing net operating income will likely exceed variable costing net operating income.

variable costing net operating income will likely exceed absorption costing net operating income.

the net operating incomes of absorption and variable costing will equal or nearly equal.

business operations will be more efficient but there is no effect on the difference in the absorption or variable income statements.

net operating incomes will be decreased, regardless of the accounting method used.

QUESTION 17

The starting point for budgeting should be

the sales budget or forecast.

the master budget.

the cash budget, which is the lifeblood of the business.

the raw materials budget.

the production budget.

QUESTION 18

DEF is just beginning operations as a new company. The sales forecast for DEF Co for the first four months of the year is shown below.

	JAN	FEB	MAR	APR
Cash Sales	$15,000	$24,000	$18,000	$14,000
Credit Sales	$100,000	$120,000	$90,000	$70,000

Half of the credit sales are paid for in the month of the sale; 30% are paid in the month following the sale and the remainder are paid two months after the month of sale. If there are no bad debts the expected cash inflow for March is:

$138,000

$122,000

$119,000

$108,000

$63,000

QUESTION 19

Budgeted production needs are determined by:

adding budgeted sales in units to the desired ending inventory in units and then deducting the beginning inventory in units.

adding budgeted sales in units to the beginning inventory in units and deducting the desired ending inventory in units from this total.

adding budgeted sales in units to the desired ending inventory in units.

deducting the beginning inventory in units from budgeted sales in units.

lucky guessing.

QUESTION 20

A continuous, rolling, or perpetual budget

	is prepared for a range of activity, not a specific set amount, so that the budget can be adjusted for changes in the level of activity.
	is a plan that is updated monthly or quarterly, dropping the period that has just ended and adding another.
	results in a flexible performance report.
	a and c
	all of the above.