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(1) When variable costing is used, fixed manufacturing overhead is recognized as an expense when the1/ A. cost is incurredB. product is completed C. product is sold D. product is inventoried(2) Variable costing can be used for1/ A. external reporting B. internal reportingC. either external reporting...

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(1) When variable costing is used, fixed manufacturing overhead is recognized as an expense when the 1/1 A. cost is incurred

B. product is completed C. product is sold D. product is inventoried

(2) Variable costing can be used for 1/1 A. external reporting B. internal reporting

C. either external reporting or internal reporting D. neither external reporting or internal reporting

(3) The level of production affects income under which of the following methods? 1/1 A. absorption costing

B. variable costing C. both absorption and variable costing D. neither absorption and variable costing

(4) Which of the following cost items is not correctly accounted for as a product cost under absoprtion and variable costing? (Product costs under Absorption & Variable Costing) 1/1 A. Shipping costs - No ; No B. Straight-line depreciation of factory equipment - Yes ; Yes

C. Factory supplies - Yes ; Yes D. Direct materials - Yes ; Yes

(5) If a firm uses variable costing, 1/1 A. its product cost per unit changes because of changes in the number in units produced. B. its product costs include variable selling and administrative costs. C. it calculates an idle facility variation. D. its profits flactuate with sales.

(6) Which of the following statements is true? 1/1 A. Depreciation expense is always a period cost. B. Depreciation expense is always a product cost. C. Selling and administrative costs, whether variable or fixed, is always treated as period costs under both the absorption and variable costing systems.

D. Income under absorption costing is always greater than income under variable costing.

(7) On the variable costing income statement, the difference between the “manufacturing margin” and “contribution margin” is equal to 0/1 A. the total fixed costs B. the total variable costs C. the total operating expenses D. fixed selling and administrative expenses

Correct answer B. the total variable costs

(8) A company prepares income statements using both the absorption and variable costing methods. During the year, the income amounts under the two methods are not equal. The difference in income figures could have been due to the following, except: 1/1 A. a change in the finished goods inventory. B. a change in the selling price of the products.

C. the excess of production volume over sales volume. D. the excess of sales volume over production volume.

For numbers 9 - 11. Vicencio Corporation began its operations on January 1, 200A. It produces a single product that sells for P 13.50 per unit. The company uses an actual (historical) cost system. During 200A, 150,000 units were produced and 135,000 units were sold. There was no work-in-process inventory at December 31, 200A. Manufacturing costs and selling and administrative expenses for 200A were as follows: Fixed Costs Variable Costs Raw Materials ---------- P 3.50 per unit produced Direct Labor ---------- P 2.50 per unit produced Factory Overhead 195,000 P 1.00 per unit produced

Selling and Administrative 140,000 P 1.20 per unit produced Total 335,000 P 8.20

(9) What amount would Vicencio Corporation’s operating income be for 200A using the variable costing method? 1/1 A. P 702,000 B. P 715,000 C. P 380,500

D. P 400,000

(10) What would Vicencio Corporation’s operating income be for 200A using the absorption costing method? 1/1 A. P 702,000 B. P 715,500 C. P 380,500 D. P 400,000

(11) The costs of ending inventory under the two costing methods (absorption costing; variable costing) were 1/1 A. P 124,500 ; P 105,000

B. P 105,000 ; P 124,500 C. P 142,500 ; P 123,000 D. P 123,000 ; P 142,500

(12) Roz Corporation planned and actually produced 100,000 units of its only product in 2020, its first year of operations. Variable production costs was P60 per unit of product. Planned and actual fixed costs was P800,000 and marketing and administrative costs totaled P500,000 in 2020. Roz Corporation sold 80,000 units of the product in 2020 at a selling price of P80 per unit. What is the cost of the ending inventory assuming variable costing is used. 1/1 A. P 1,360,000 B. P 1,460,000 C. P 1,200,000

D. P 6,000,000

For number 13. Consider the following: Sales price, per unit P 18 per unit Standard absorption cost rate P 12 per unit Standard variable cost rate P 8 per unit Variable selling expense rate P 2 per unit Fixed selling and administrative expenses P 40,000 Fixed manufacturing overhead P 60,000 Last period, 13,000 units were produced, In the current period, 15,000 units were produced. In each period, 13,000 units were sold.

(13) What is the difference in reported income under absorption and variable costing for the current period? 0/1 A. The variable costing income exceeded absorption costing income by P 4,000. B. The absorption costing income exceeded variable costing income by P 8,000. C. The variable costing income exceeded absorption costing income by P 6,000.

D. Net income will equal between the two methods.

Correct answer B. The absorption costing income exceeded variable costing income by P 8,000.

(14) At its present level of operations, a small manufacturing firm has total variable costs equal to 75% of sales and total fixed costs equal to 15% of sales. Based on variable costing, if sales change by P 1.00, income will change by 1/1 A. P 0.25

B. P 0.12 C. P 0.75 D. P 0.10

For numbers 15 - 18. The following annual flexible budget has been prepared for use in making decisions relating to Product X. Budgeted units 100,000 150,000 200,000 Sales volume P 800,000 P 1,200,000 P 1,600,000 Manufacturing Costs: Variable P 300,000 P 450,000 P 600,000 Fixed P 200,000 P 200,000 P 200,000 P 500,000 P 650,000 P 800,000 Selling Expenses: Variable P 200,000 P 300,000 P 400,000 Fixed P 160,000 P 160,000 P 160,000 P 360,000 P 460,000 P 560,000 Income (Loss) P 60,000 P 90,000 P 240,000 The 200,000-unit budget has been adopted and will be used for allocating fixed manufacturing costs to units of Product X. At the end of the first six months the following information is available: Units Production completed 120,000 Sales 60,000 All fixed costs are budgeted and incurred uniformly throughout the year and all costs incurred coincide with the budget.

Over- and underapplied fixed manufacturing costs are deferred until year-end. Annual sales have the following seasonal pattern: Portion of Annual Sales First Quarter 10% Second Quarter 20% Third Quarter 30% Fourth Quarter 40% 100%

(15) The amount of fixed factory costs applied to product during the first six months under absorption costing would be 1/1 A. overapplied by P 20,000.

B. equal to the fixed costs incurred. C. underapplied by P 40,000. D. underapplied by P 80,000.

(16) Reported net income (or loss) for the first six months under absorption costing would be 1/1 A. P 160,000 B. P 40,000

C. P 80,000 D. P 120,000

(17) Reported net income (or loss) for the first six months under variable costing would be 1/1 A. P 144,000

B. P 72,000 C. P 80,000 D. P 0

(18) Assuming that 90,000 units of Product X were sold during the first six months and that this is to be used as a basis, the revised budget estimate for the total number of units to be sold during this year would be 1/1 A. 360,000 B. 200,000 C. 240,000 D. 300,000

(19) ABC Company produces a single product. Last year, the company’s net operating income computed by the variable costing method was P 30,000. The company’s unit product cost was P 18 under variable costing and P 20 under absorption costing. During the period, inventory decreased by 8,000 units. The company’s income under variable costing must have been 1/1 A. P 30,000 B. P 46,000 C. P 14,000

D. P 16,000

(20) Ward Company has two segments: Audio and Video. Sales for the Audio Segment were P 500,000, and variable costs were 40% of sales. The Video

Segment also had sales of P 500,000, but the variable costs were 60% of sales. Fixed costs directly traceable to the Audio and Video Segments were P 150,000 and P 120,000, respectively. Common fixed costs of P 200,000 were arbitrarily allocated equally to each segment. What was the segment margin of the Video Segment? 0/1 A. P 200,000 B. P 80,000 C. P (20,000) D. P 150,000

Correct answer B. P 80,000...