Total Points: 50 Points Multiple Choice (2 Points each) 1. Under absorption costing, fixed manufacturing overhead costs: Ca Are deferred in inventory when production exceeds sales b. Are always treated as period costs C. Are released from inventory when production exceeds sales d. Are ignored 2. When sales are constant, but the number of units produced fluctuates. net operating income determined by the absorption costing method will: a Tend to fluctuate in the same direction as fluctuation in the number of units produced b. Tend to remain constant C. Tend to fluctuate in the opposite direction as fluctuations in the number of units produced d. Fluctuate without any relation to the number of units produced. 3. The variance that is most useful in assessing the performance of the purchasing department manager is: @ The materials quantity variance b. The materials price variance c. The labor rate variance d. The labor efficiency variance 4. Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is unfavorable, the variable overhead efficiency variance will be: a. favorable b unfavorable c. either favorable or unfavorable d. zero 5. A volume variance is computed for: a. both variable and fixed manufacturing overhead b. variable manufacturing overhead only c. fixed manufacturing overhead only d. direct labor costs as well as overhead costs