The key distinction between variable and absorption costing is the timing of fixed manufacturing overhead becoming an expense

Select one:

True

False

A cost pool is:

Select one:

a performance report of the lowest level manager.

a collection of costs to be assigned.

the joint result of several subunit activities.

the primary function of a responsibility accounting system.

Which of the following statements is true?

Select one:

In recent decades Direct Labour has increased as a proportion of total manufacturing costs in many manufacturing businesses.

Activity-based costing cannot significantly improve product cost accuracy where there is significant product diversity.

Activity-based costing can significantly improve product cost accuracy where overhead costs are a large proportion of total costs.

Under traditional costing, product cost distortions will be highly significant if overhead costs are a small proportion of product cost.

Consider the following statements regarding absorption costing and variable costing:

I.Profit reported under absorption costing for a year will likely differ from that reported under variable costing because production and sales differ.

II.Total profit when added together over a ten-year period will be approximately equal under absorption costing and variable costing because production and sales will be approximately the same.

III. Total profit when added together over a ten-year period will be significantly different under absorption and variable costing because fixed costs will generally increase significantly over that long.

Which statement/s is/are true?

Select one:

I

I & II

I & III

II

Which of the following costs is not included while computing unit product cost under variable costing?

Select one:

Variable manufacturing overhead cost

Direct labor cost

Direct materials cost

Fixed manufacturing overhead cost

The percentage complete of opening work in progress can be ignored for FIFO.

Select one:

True

False

The reasons for materials efficiency variances include:

Select one:

A cheaper / more expensive material resulting in more / less wastage

Less / more skilled labour being less / more efficient in their use of materials

Existing workforce being less / more productive

All of the above

Difference between budgeted amounts and actual results is classified as:

Select one:

Standard deviation

Mean average

Variances

Weighted average

Assume that the predetermined fixed overhead rate per unit remains the same from 2019 to 2020 and inventory decreases in 2020. Which of the following statements is true?

Select one:

The fixed overhead expended in 2020 under variable costing will be greater than that expended under absorption costing.

The amount of fixed overhead expended will be the same under both methods.

The fixed overhead expended in 2020 under absorption costing will be greater than that expended under variable costing.

It is impossible to determine what effect the decrease in inventory will have on net profit under absorption costing

Assume that the direct cost per smartphone is:

• Direct material $60
• Direct labour $35

Assume that the factory where the phones are made is also used to make tablets and the annual costs of the factory (rent, insurance, maintenance etc) are $8 million.

The factory is expected to make 200,000 smartphones and 100,000 tablets in the year. It takes 2 hours to make a smartphone and 4 hours to make a tablet.

How much of this $8 million cost should be allocated to each smartphone made?

Select one:

$20

$10

$15

$40