Cost Accounting Test Bank
CHAPTER 9
INVENTORY COSTING AND CAPACITY ANALYSIS
TRUE/FALSE
1. Absorption costing “absorbs” only variable manufacturing costs.
Answer: False Difficulty: 1 Objective: 1 Terms to Learn: absorption costing Absorption costing “absorbs” all manufacturing costs, both fixed and variable.
2. Variable costing includes all variable costs — both manufacturing and nonmanufacturing — in inventory.
Answer: False Difficulty: 1 Objective: 1 Terms to Learn: variable costing Variable costing includes only manufacturing variable costs in inventory.
3. Under both variable and absorption costing, all variable manufacturing costs are inventoriable costs.
Answer: True Difficulty: 1 Objective: 1 Terms to Learn: variable costing, absorption costing
4. Under variable costing, fixed manufacturing costs are treated as an expense of the period.
Answer: True Difficulty: 1 Objective: 1 Terms to Learn: variable costing
5. The contribution-margin format of the income statement is used with absorption costing.
Answer: False Difficulty: 1 Objective: 2 Terms to Learn: absorption costing The contribution-margin format of the income statement is used with variable costing.
6. The contribution-margin format of the income statement distinguishes manufacturing costs from nonmanufacturing costs.
Answer: False Difficulty: 1 Objective: 2 Terms to Learn: variable costing The contribution-margin format of the income statement distinguishes variable costs from fixed costs.
7. The gross-margin format of the income statement highlights the lump sum of fixed manufacturing costs.
Answer: False Difficulty: 2 Objective: 2 Terms to Learn: absorption costing The gross-margin format of the income statement distinguishes manufacturing costs from nonmanufacturing costs, but it does not highlight the lump sum of fixed manufacturing costs.
8. In absorption costing, all
INVENTORY COSTING AND CAPACITY ANALYSIS
TRUE/FALSE
1. Absorption costing “absorbs” only variable manufacturing costs.
Answer: False Difficulty: 1 Objective: 1 Terms to Learn: absorption costing Absorption costing “absorbs” all manufacturing costs, both fixed and variable.
2. Variable costing includes all variable costs — both manufacturing and nonmanufacturing — in inventory.
Answer: False Difficulty: 1 Objective: 1 Terms to Learn: variable costing Variable costing includes only manufacturing variable costs in inventory.
3. Under both variable and absorption costing, all variable manufacturing costs are inventoriable costs.
Answer: True Difficulty: 1 Objective: 1 Terms to Learn: variable costing, absorption costing
4. Under variable costing, fixed manufacturing costs are treated as an expense of the period.
Answer: True Difficulty: 1 Objective: 1 Terms to Learn: variable costing
5. The contribution-margin format of the income statement is used with absorption costing.
Answer: False Difficulty: 1 Objective: 2 Terms to Learn: absorption costing The contribution-margin format of the income statement is used with variable costing.
6. The contribution-margin format of the income statement distinguishes manufacturing costs from nonmanufacturing costs.
Answer: False Difficulty: 1 Objective: 2 Terms to Learn: variable costing The contribution-margin format of the income statement distinguishes variable costs from fixed costs.
7. The gross-margin format of the income statement highlights the lump sum of fixed manufacturing costs.
Answer: False Difficulty: 2 Objective: 2 Terms to Learn: absorption costing The gross-margin format of the income statement distinguishes manufacturing costs from nonmanufacturing costs, but it does not highlight the lump sum of fixed manufacturing costs.
8. In absorption costing, all