Question 1 Variable costing is also known as:

Question 1

Variable costing is also known as:

A.Direct costing. 

B.Indirect costing. 

C.Marginal costing 

D.Both A and C

Question 2 

Using absorption costing, a unit of product includes what costs?

Answer  

A.Direct materials and direct labor. 

B.Direct materials, direct labor, and fixed overhead. 

C.Direct materials, direct labor, and variable overhead. 

D.Direct materials, direct labor, variable overhead, and fixed overhead.

Question 3 

Product cost under absorption costing is characteristically:

Answer  

A.Higher than under variable costing. 

B.Lower than under variable costing. 

C.Equal to variable costing. 

D.Higher sometimes and lower sometimes than variable costing.

Question 4  

A segment of a business responsible for both revenues and expenses would be referred to as:

Answer  

A.Cost Center 

B.Investment Center 

C.Profit Center 

D.Residual Income

Question 5 

Variable costing is attractive to managers as an alternative to absorption costing because:

Answer  

A.Absorption costing makes distinctions between fixed and variable product costs. 

B.Absorption costing is well suited to CVP analysis techniques. 

C.Absorption costing provides useful tools to managers for planning and control. 

D.To generate data for CVP analysis, considerable time would have to be invested to rework income statements constructed under absorption costing.

Question 6 

When production is equal to sales, which of the following is true?

Answer  

A.No change occurs to inventories for either absorption costing or variable costing methods. 

B.The use of absorption costing produces a higher net income than the use of variable costing. 

C.The use of absorption costing produces a lower net income than the use of variable costing. 

D.The use of absorption costing causes inventory value to increase more than they would through the use of variable costing.