Cost Allocation Techniques Paper 2

1

When comparing absorption costing with variable costing, which of the following statements is not true?






2

Which one of the following is the best reason for using variable costing?






3

If a manufacturing company uses variable costing to cost inventories, which of the following costs are considered inventoriable costs?






4

Manchester Airlines is in the process of preparing a contribution margin income statement that will allow a detailed look at its variable costs and profitability of operations. Which one of the following cost combinations should be used to evaluate the variable cost per flight of the company’s Boston-Las Vegas flights?






5

Xylon Company uses direct (variable) costing for internal reporting and absorption costing for the external financial statements. A review of the firm’s internal and external disclosures will likely find






6

When comparing absorption costing with variable costing, the difference in operating income can be explained by the difference between the






7

Dawn Company has significant fixed overhead costs in the manufacturing of its sole product, auto mufflers. For internal reporting purposes, in which one of the following situations would ending finished goods inventory be higher under direct (variable) costing rather than under absorption costing?






8

The primary difference between absorption and variable costing is that variable costing treats






9

Isaac Toy Company’s management would like to determine profitability of its Alpha Doll product line. To eliminate the possibility of profit distortion due to changes in production, the managers should primarily review






10

Osawa, Inc., planned and actually manufactured 200,000 units of its single product during its first year of operations. Variable manufacturing costs were $30 per unit of product. Planned and actual fixed manufacturing costs were $600,000, and selling and administrative costs totaled $400,000. Osawa sold 120,000 units of product at a selling price of $40 per unit. Osawa’s operating income for the year using variable costing is






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