Question : 51) Which of the following statements NOT CORRECT? 51) ______ A) Absorption costing : 1196289

 

51)

Which of the following statements is NOT CORRECT?  

51)

______ A)

Absorption costing allocates fixed manufacturing overhead to actual units produced during the period. B)

Absorption operating income does not exceed variable costing operating income if there is a net deferral of fixed manufacturing overhead. C)

Income under absorption costing income is higher than income under variable costing when production units exceed sales units. D)

Absorption costing may encourage managers to make decisions that are not in the best interests of the company. E)

Fixed manufacturing overhead in ending inventory is deferred to the future for absorption costing.

52)

Which of the following is TRUE concerning operating income calculated under variable costing as compared to absorption costing? 52)

______ A)

Operating income is higher under variable costing when production exceeds sales. B)

operating income is higher under variable costing when production exceeds sales if there is a production-volume variance. C)

The relationship between production and sales has no bearing on the differences in operating income between the two methods. D)

Operating income is lower under variable costing when production exceeds sales. E)

Operating income is lower under variable costing when sales exceeds production if there is a production-volume variance.

53)

Early criticism of ________ costing was concentrated on fixed manufacturing overhead as an ________. 53)

______ A)

absorption; fixed or variable cost in the long run B)

variable; period cost C)

absorption; period cost D)

absorption; asset E)

variable; asset

54)

Which of the following is TRUE concerning throughput costing? 54)

______ A)

Throughput contribution is the difference between revenues and variable direct labour. B)

Throughput contribution is the sum of revenues and direct costs. C)

Throughput contribution is the difference between revenues and (variable direct labour + variable direct materials). D)

Throughput contribution is the difference between revenues and direct costs. E)

Throughput contribution is the difference between revenues and variable direct materials costs.

55)

Which of the following is NOT TRUE concerning throughput costing? 55)

______ A)

It is also called super-variable costing. B)

It is not widely accepted as yet. C)

It treats all costs except those related to direct labour as period costs. D)

It provides less incentive to build-up inventories than does variable costing. E)

It provides less incentive to build-up inventories than does absorption costing.

56)

Survey evidence indicates that ________ costing is the most common method used in Canada, and that the most common problem with variable costing is ________. 56)

______ A)

absorption; the large amounts of inventory involved. B)

absorption; classifying costs as fixed or variable C)

variable; just-in-time inventory D)

absorption; just-in-time inventory. E)

variable; inventory

57)

“Super-variable costing” assumes that 57)

______ A)

all costs are variable in the long run. B)

all cost are fixed in the long run. C)

fixed costs are period costs in the long run. D)

only direct materials are variable in the short run. E)

all costs are variable in the short run.

58)

One of the biggest reasons variable costing is controversial INVOLVES 58)

______ A)

external financial statements. B)

corporate goals and mission statements. C)

internal management control reports. D)

foreign subsidiaries E)

internal management reports.

59)

Which of the following is not an alternative costing system? 59)

______ A)

variable-normal costing. B)

variable-actual costing C)

normal-absorption costing D)

absorption-variable costing. E)

throughput-standard costing

Use the information below to answer the following question(s).

 

Balloon Arrangements produces balloon bouquets. The following information has been provided by management:

Budgeted production:100,000 bouquets

Direct manufacturing costs:$2.50/bouquet

Fixed manufacturing overhead:$1.00/bouquet

Variable manufacturing overhead:$0.75/bouquet

Variable administrative costs:$1.25/bouquet

60)

What is the cost per bouquet if “super-absorption costing” is used? 60)

______ A)

$5.50 B)

$4.75 C)

$3.75 D)

$1.98 E)

$2.50