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Chapter 7 - dssad

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James Moore
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1. Under variable costing, only variable production costs are treated as product costs.
Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Easy
2. Under variable costing, variable selling and administrative costs are included in
product costs.
Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Easy
3. Absorption costing treats all manufacturing costs as product costs.
Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Easy
4. In the preparation of financial statements using variable costing, fixed manufacturing
overhead is treated as a period cost.
Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Easy
5. Absorption costing treats fixed manufacturing overhead as a period cost.
Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Easy
6. When the number of units in work in process and finished goods inventories increase,
absorption costing net operating income will typically be greater than variable costing
net operating income.
Ans: True AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3 Level: Easy
7. Net operating income computed using absorption costing will always be greater than
net operating income computed using variable costing.
Ans: False AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Easy

 

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Chapter 7 - dssad

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