Chapter 9.4

Question 1

• only direct materials costs are inventoried
• all other costs, including variable direct manufacturing labor and variable manufacturing overhead are treated as period costs and expensed in the period incurred

Answer 1

throughput costing

Question 2

• includes only variable manufacturing costs (direct materials, direct labor, and variable manufacturing overhead) in inventoriable costs

Answer 2

variable costing

Question 3

includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in inventoriable costs

Answer 3

absorption costing

Question 4

when production exceeds sales, throughput costing results in the ______ expenses in the current periods income statement

Answer 4

highest

Question 5

______ costing provides less incentive to produce for inventory compared to variable costing and especially absorption costing

Answer 5

throughput

Question 6

• _____ costing only includes variable manufacturing costs in product costs
• ______ costing icludes both variable and fixed manufacturing costs

Answer 6

• variable
• absorption

Question 7

_____ costing is debated for external reporting because it suggests fixed manufacturing costs should be expensed, not inventoried, as they realte more to production capacity than specific units

Answer 7

variable

Question 8

proponents argue both variable and fixed costs are necessary for production and should be _______ to amtch all manufacturing costs to revenues

Answer 8

inventoried

Question 9

globally, companies follow GAAP, which required all manufacturing costs, includding fixed costs to be _______, simplifying the process for firms and auditors

Answer 9

inventoried

Question 10

managers must include both _______ production costs and ________ product costs in invetoriable costs, following the full absorption method

Answer 10

• direct production costs
• fixed and variable indirect production costs

Question 11

these include rent, utilities, maintenance, repair, expenses, indirect materials, and indirect labor. other costs like depreciation, insurance taxes, officers salaries, factory administrative expenses, and strike related costs are inventoriable for tax purposes if treated as such for financial reporting

Answer 11

indirect production costs

Question 12

throughput margin equation

Answer 12

throughput margin =
revenues - all direct materials costs of the goods sold