Which of the following statements is true of absorption costing A) It considers variable selling and administrative costs as product costs B) It considers fixed selling and administrative costs as product costs C) It considers fixed manufacturing overhead cost as product costs D) It considers variable manufacturing overhead cost as period costs 42) Which of the following is true of the traditional format of the income statement A) It is prepared under the variable costing method B) It shows contribution margin as a line item C) It is not allowed under GAAP D) It is prepared under the absorption method 43) Unit product cost calculations using absorption costing do not include A) fixed manufacturing overhead B) variable manufacturing overhead C) variable selling and administrative costs D) direct materials 44 Flexlux, Inc reports the following information Units produced 520 units Units sold 520 units Sales price $110 per unit Direct materials $40 per unit Direct labor $25 per unit Variable manufacturing overhead $30 per unit Fixed manufacturing overhead $14,000 per year Variable selling and administrative costs $15 per unit Fixed selling and administrative costs $25,000 per year What is the unit product cost using variable costing A) $110 B) $92 C) $95 D) $15 46) When there is no beginning Finished Goods Inventory and all the goods that are produced are sold, the operating income A) will be higher under absorption costing than variable costing B) will be lower under absorption costing than variable costing C) will be higher than the gross profit under variable costing D) will be the same for both absorption costing and variable costing 47) When production is greater than sales, the operating income will be higher under absorption costing than variable costing Assume zero beginning and ending inventories Which of the following gives the correct reason for the above statement A) All costs incurred have been recorded as expenses B) A portion of the fixed manufacturing overhead is still in the ending Finished Goods Inventory account C) All selling and administrative expenses have been recorded as period costs D) Fixed manufacturing costs have not been considered when calculating the operating profits

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Which of the following statements is true of absorption costing? A) It considers variable selling and administrative costs as product costs. B) It considers fixed

Which of the following statements is true of absorption costing?

A) It considers variable selling and administrative costs as product costs.

B) It considers fixed selling and administrative costs as product costs.

C) It considers fixed manufacturing overhead cost as product costs.

D) It considers variable manufacturing overhead cost as period costs.

42) Which of the following is true of the traditional format of the income statement?

A) It is prepared under the variable costing method.

B) It shows contribution margin as a line item.

C) It is not allowed under GAAP.

D) It is prepared under the absorption method.

43) Unit product cost calculations using absorption costing do not include ________.

A) fixed manufacturing overhead

B) variable manufacturing overhead

C) variable selling and administrative costs

D) direct materials

44. Flexlux, Inc. reports the following information:

Units produced	520	units
Units sold	520	units
Sales price	$110	per unit
Direct materials	$40	per unit
Direct labor	$25	per unit
Variable manufacturing overhead	$30	per unit
Fixed manufacturing overhead	$14,000	per year
Variable selling and administrative costs	$15	per unit
Fixed selling and administrative costs	$25,000	per year

What is the unit product cost using variable costing?

A) $110

B) $92

C) $95

D) $15

46) When there is no beginning Finished Goods Inventory and all the goods that are produced are sold, the operating income ________.

A) will be higher under absorption costing than variable costing

B) will be lower under absorption costing than variable costing

C) will be higher than the gross profit under variable costing

D) will be the same for both absorption costing and variable costing

47) When production is greater than sales, the operating income will be higher under absorption costing than variable costing. Assume zero beginning and ending inventories. Which of the following gives the correct reason for the above statement?

A) All costs incurred have been recorded as expenses.

B) A portion of the fixed manufacturing overhead is still in the ending Finished Goods Inventory account.

C) All selling and administrative expenses have been recorded as period costs.

D) Fixed manufacturing costs have not been considered when calculating the operating profits.