Chapter 9 Book

Question 1

fixed manufacturing costs are excluded from inventoriable costs

Answer 1

variable costing/direct costing

Question 2

fixed manufacturing costs are included in inventoriable costs

Answer 2

absorption costing

Question 3

includes all variable manufacturing costs (both direct and indirect) in inventoriable costs

Answer 3

variable costing

Question 4

are excluded from inventoriable costs and treated as period costs
(variable costing)

Answer 4

fixed manufacturing costs

Question 5

are treated as period costs and expensed
(variable costing)

Answer 5

variable nonmanufacturing costs

Question 6

direct costing is another term for variable costing, but it is imprecise because it includes _________ as inventoriable and treats _________, like marketing, as period costs

Answer 6

• variable manufacturing overhead (an indirect cost)
• fixed direct costs

Question 7

includes all manufacturing costs, both variable and fixed, as inventoriable costs

Answer 7

absorption costing

Question 8

inventory under absorption costing absorbs all

Answer 8

manufacturing costs

Question 9

whats an example of absorption costing

Answer 9

job costing system

Question 10

under both variable and absorption costing all variable manufacturing costs are inventoriable costs

Answer 10

inventoriable costs

Question 11

under both variable and absorption costing all nonmanfucturing costs in the value chain (reasearch, and development, marking), whether variable or fixed, are ?

Answer 11

period costs and recorded as expenses when incurred

Question 12

the key difference between variable and absorption costing is

Answer 12

the treatment of fixed manufacturing costs

Question 13

under _____ costing, operating income is affected by both the unit level of production and the unit level of sales

Answer 13

absorption

Question 14

under _______ costing, operating income is affected only by the unit level of sales

Answer 14

variable

Question 15

_______ format is used in absorption costing

Answer 15

gross margin format

Question 16

________ format is used in variable costing

Answer 16

contribution margin format

Question 17

over how long of a period, the difference in operating income between variable and absorption costing in influenced by the level of production and sales within that year

Answer 17

1 year period

Question 18

over how long of a period, the difference in operating income between the two costing methods can be more pronounced due to the accumulation of inventory and the timing of production and sales

Answer 18

2 year period

Question 19

comparing income statements for one year (variable or absorption)
- uses the contribution margin format
- distinguishes between variable and fixed costs
- fixed manufacturing costs are expensed in the period incurred

Answer 19

variable costing

Question 20

comparing income statements for one year (variable or absorption)
- uses the gross margin format
- distinguishes between manufacturing and nonmanufacturing costs
- fixed manufacturing costs are treated as inventoriable costs

Answer 20

absorption

Question 21

income statements differences
- under ______ costing, the entire fixed manufacturing cost is expensed in 2020

Answer 21

variable

Question 22

income statements differences
- under ______ costing, fixed manufacturing costs are allocated to units produced

Answer 22

absorption

Question 23

operating income would be higher under (variable or absorption) costing

Answer 23

absorption
- bc only a certain amount of fixed manufacturing costs are expensed, compared to all the fixed costs under variable costing

Question 24

_______ costs are accounting for the same way in both methods

Answer 24

variable manufacturing costs

Question 25

_____ costing treats fixed manufacturing costs as period expenses

Answer 25

variable costing

Question 26

_______ costing includes manufacturing costs in the cost of goods manufactured

Answer 26

absorption costing

Question 27

under ______ costing, a production volume variance occurs when actual production deviates from the budgeted level

Answer 27

absorption

Question 28

_____ costing income statemetns include a line item for production volume variance, which affects the reported operating income

Answer 28

absorption

Question 29

_____ costing treats all fixed manufacturing costs as period expenses, leading to different operating income figures

Answer 29

variable

Question 30

if inventory increases, _______ costing reports higher income

Answer 30

absorption

Question 31

if inventory decreases, _____ costing reports higher income

Answer 31

variable

Question 32

under _____ costing, fixed manufacturing costs in ending inventory are deferred to future periods

Answer 32

absorption

Question 33

cost of goods sold equation

Answer 33

cost of goods sold = beginning inventory + cost of goods manufactured = COGS + ending inventory

Question 34

reducing inventory levels ______ the differences in operating income between absorption and variable costing

Answer 34

minimizes

Question 35

contribution margin per unit equation

Answer 35

contribution margin per unit = selling price - variable manufacturing cost per unit - variable marketing cost per unit

Question 36

change in variable costing operating income equation

Answer 36

change in variable costing operating income = contribution margin per unit * change in quantity of units sold

Question 37

under ______ costing, managers cannot increase operating income by producing for inventory because only the quantity of units sold affects operating income

Answer 37

variable

Question 38

under ______ costing, managers increase operating income both the unit level of sales and the unit level of production

Answer 38

absorption