ACCT 102 EXAM 3 QUESTIONS WITH
100% CORRECT ANSWERS
Which costing method is used when considering the decision for setting short-run sales
prices?
Variable Costing
Neither of these costs
Absorption Costing
Both of these costs - Answer- Variable Costing
Which of the following is true related to absorption costing?
Direct labor costs are period costs.
Direct materials costs are a period cost.
Fixed selling and administrative costs are product costs.
Fixed manufacturing overhead costs are a product cost. - Answer- Fixed manufacturing
overhead costs are a product cost.
If a firm produces fewer units than it sells, absorption costing, relative to variable
costing, will result in
higher operating income and lower asset value.
lower operating income and lower asset value.
higher operating income and higher asset value.
lower operating income and higher asset value. - Answer- lower operating income and
lower asset value.
Bravo Corporation incurred the following costs while producing 2,000 units: direct
materials, $15 per unit; direct labor, $5 per unit; variable manufacturing overhead, $12
per unit; variable selling and administrative costs, $14 per unit; total fixed overhead
costs, $20,000; total fixed selling and administrative costs, $10,000. There are no
beginning inventories.
What is the unit product cost using absorption costing?
$52 per unit
$32 per unit
$42 per unit
$61 per unit - Answer- $42 per unit
A corporate accountant is preparing financial statements to be distributed to internal
managers. The company should prepare the income statement using
absorption costing because it is better for controlling purposes.
absorption costing because it follows GAAP.
variable costing because it is better for planning purposes.
100% CORRECT ANSWERS
Which costing method is used when considering the decision for setting short-run sales
prices?
Variable Costing
Neither of these costs
Absorption Costing
Both of these costs - Answer- Variable Costing
Which of the following is true related to absorption costing?
Direct labor costs are period costs.
Direct materials costs are a period cost.
Fixed selling and administrative costs are product costs.
Fixed manufacturing overhead costs are a product cost. - Answer- Fixed manufacturing
overhead costs are a product cost.
If a firm produces fewer units than it sells, absorption costing, relative to variable
costing, will result in
higher operating income and lower asset value.
lower operating income and lower asset value.
higher operating income and higher asset value.
lower operating income and higher asset value. - Answer- lower operating income and
lower asset value.
Bravo Corporation incurred the following costs while producing 2,000 units: direct
materials, $15 per unit; direct labor, $5 per unit; variable manufacturing overhead, $12
per unit; variable selling and administrative costs, $14 per unit; total fixed overhead
costs, $20,000; total fixed selling and administrative costs, $10,000. There are no
beginning inventories.
What is the unit product cost using absorption costing?
$52 per unit
$32 per unit
$42 per unit
$61 per unit - Answer- $42 per unit
A corporate accountant is preparing financial statements to be distributed to internal
managers. The company should prepare the income statement using
absorption costing because it is better for controlling purposes.
absorption costing because it follows GAAP.
variable costing because it is better for planning purposes.
