21)
The Canada Customs and Revenue Agency requires companies to use practical capacity denominator-level concepts. 21)
______
22)
Theoretical capacity is rarely used to calculate the budgeted fixed manufacturing cost per case because it departs significantly from the real capacity available to a company. 22)
______
23)
The downward demand spiral for a company is the continuing reduction in the demand for its products that occurs when prices of competitors’ products are not met and higher unit costs result in more reluctance to meet competitors’ prices. 23)
______
MULTIPLE CHOICE.
Choose the one alternative that best completes the statement or answers the question. 24)
The distinction between absorption costing and variable costing is most important for which type of industry? 24)
______ A)
manufacturing B)
retail C)
marketing D)
service E)
educational
25)
When all fixed manufacturing costs and variable manufacturing costs are included as inventorial costs the method being used is 25)
______ A)
manufacturing overhead costing. B)
job costing. C)
absorption costing. D)
fixed overhead costing. E)
variable costing.
26)
The method of costing that excludes fixed manufacturing costs from inventorial costs is known as 26)
______ A)
full manufacturing costing. B)
variable costing. C)
manufacturing overhead costing. D)
fixed overhead costing. E)
absorption costing.
27)
Honda Heaven produces and sells an auto part for $20.00 per unit. Direct materials are $8 per unit, while direct manufacturing labour averages $1.50 per unit. Variable overhead is $0.50 per unit and fixed overhead is $250,000 per year. Administrative expenses, all fixed, run $90,000 per year, with sales commissions of $2 per part. Production is 100,000 parts per year. And this year, 75,000 boxes were sold.
What is the inventory cost per box using variable costing? 27)
______ A)
$9.50 B)
$14.50 C)
$12.50 D)
$10.00 E)
$16.50
28)
Honda Heaven produces and sells an auto part for $20.00 per unit. Direct materials are $8 per unit, while direct manufacturing labour averages $1.50 per unit. Variable overhead is $0.50 per unit and fixed overhead is $250,000 per year. Administrative expenses, all fixed, run $90,000 per year, with sales commissions of $2 per part. Production is 100,000 parts per year. This year, 75,000 boxes were sold.
What is the inventorial cost per box using absorption costing? 28)
______ A)
$10.00 B)
$9.50 C)
$14.50 D)
$12.50 E)
$16.50
29)
Under variable costing, which of the following expenses are NOT inventoriable? 29)
______ A)
marketing and direct manufacturing labour. B)
variable manufacturing overhead. C)
marketing and administrative. D)
direct materials E)
direct manufacturing labour and variable manufacturing overhead.
30)
Absorption costing is also known as all of the following EXCEPT 30)
______ A)
full costing. B)
direct costing. C)
functional approach. D)
traditional approach. E)
theoretical capacity costing.
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