Quiz #6: Variable Costing
1. A reason why absorption costing income statements are sometimes difficult to interpret is that:
a. they shift portions of fixed manufacturing overhead from period to period according to changing
levels of inventories.
2. How would the following costs be classified (product or period) under variable costing at a retail
clothing store?
a. Choice B
3. Which of the following will usually be found on an income statement prepared using absorption
costing?
a. Choice C
4. A cost that would be included in product costs under both absorption costing and variable costing is:
a. variable manufacturing costs.
5. Which of the following is true of a company that uses absorption costing?
a. Unit product costs can change as a result of changes in the number of units manufactured.
6. Assuming that direct labor is a variable cost, the primary difference between the absorption and
variable costing is that:
a. variable costing treats only direct materials, direct labor, and the variable portion of
manufacturing overhead as product costs while absorption costing treats direct materials,
direct labor, the variable portion of manufacturing overhead, and an allocated portion of fixed
manufacturing overhead as product costs.
7. The costing method that treats all fixed costs as period costs is:
a. variable costing.
8. Which of the following costs at a manufacturing company would be treated as a product cost under
variable costing?
a. direct material cost
9. When unit sales are constant, but the number of units produced fluctuates and everything else remains
the same, net operating income under variable costing will:
remain constant.
1. A reason why absorption costing income statements are sometimes difficult to interpret is that:
a. they shift portions of fixed manufacturing overhead from period to period according to changing
levels of inventories.
2. How would the following costs be classified (product or period) under variable costing at a retail
clothing store?
a. Choice B
3. Which of the following will usually be found on an income statement prepared using absorption
costing?
a. Choice C
4. A cost that would be included in product costs under both absorption costing and variable costing is:
a. variable manufacturing costs.
5. Which of the following is true of a company that uses absorption costing?
a. Unit product costs can change as a result of changes in the number of units manufactured.
6. Assuming that direct labor is a variable cost, the primary difference between the absorption and
variable costing is that:
a. variable costing treats only direct materials, direct labor, and the variable portion of
manufacturing overhead as product costs while absorption costing treats direct materials,
direct labor, the variable portion of manufacturing overhead, and an allocated portion of fixed
manufacturing overhead as product costs.
7. The costing method that treats all fixed costs as period costs is:
a. variable costing.
8. Which of the following costs at a manufacturing company would be treated as a product cost under
variable costing?
a. direct material cost
9. When unit sales are constant, but the number of units produced fluctuates and everything else remains
the same, net operating income under variable costing will:
remain constant.
