Chapter 9 Inventory Costing and Capacity Analysis

Chapter 9 Inventory Costing and Capacity Analysis

Objective 9.1

1) Which of the following cost(s) are inventoried when using variable costing?
A) direct manufacturing costs
B) variable marketing costs
C) fixed manufacturing costs
D) Both A and B are correct.
Answer: A
Diff: 1
Terms: variable costing
Objective: 1
AACSB: Reflective thinking

2) Which of the following cost(s) are inventoried when using absorption costing?
A) direct manufacturing costs
B) variable marketing costs
C) fixed manufacturing costs
D) Both A and C are correct.
Answer: D
Diff: 1
Terms: absorption costing
Objective: 1
AACSB: Reflective thinking

3) ________ is a method of inventory costing in which all variable manufacturing costs (direct and
indirect) are included as inventoriable costs and all fixed manufacturing costs are excluded.
A) Variable costing
B) Mixed costing
C) Absorption costing
D) Standard costing
Answer: A
Diff: 1
Terms: absorption costing
Objective: 1
AACSB: Reflective thinking

4) Absorption costing is required for all of the following except:
A) generally accepted accounting principles
B) determining a competitive selling price
C) external reporting to shareholders
D) income tax reporting
Answer: B
Diff: 2
Terms: absorption costing
Objective: 1
AACSB: Reflective thinking
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,5) Absorption costing:
A) expenses marketing costs as cost of goods sold
B) treats direct manufacturing costs as a period cost
C) includes fixed manufacturing overhead as an inventoriable cost
D) is required for internal reports to managers
Answer: C
Diff: 3
Terms: absorption costing
Objective: 1
AACSB: Reflective thinking

6) Variable costing:
A) expenses administrative costs as cost of goods sold
B) treats direct manufacturing costs as a product cost
C) includes fixed manufacturing overhead as an inventoriable cost
D) is required for external reporting to shareholders
Answer: B
Diff: 3
Terms: variable costing
Objective: 1
AACSB: Reflective thinking

7) ________ method(s) expense(s) variable marketing costs in the period incurred.
A) Variable costing
B) Absorption costing
C) Throughput costing
D) All of these answers are correct.
Answer: D
Diff: 1
Terms: variable costing, absorption costing, throughput costing
Objective: 1
AACSB: Reflective thinking

8) ________ method(s) include(s) fixed manufacturing overhead costs as inventoriable costs.
A) Variable costing
B) Absorption costing
C) Throughput costing
D) All of these answers are correct.
Answer: B
Diff: 1
Terms: absorption costing
Objective: 1
AACSB: Reflective thinking




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,9) ________ method(s) expense(s) direct material costs as cost of goods sold.
A) Variable costing
B) Absorption costing
C) Throughput costing
D) All of these answers are correct.
Answer: D
Diff: 1
Terms: variable costing, absorption costing, throughput costing
Objective: 1
AACSB: Reflective thinking

10) ________ method(s) is required for tax reporting purposes.
A) Variable costing
B) Absorption costing
C) Throughput costing
D) All of these answers are correct.
Answer: B
Diff: 1
Terms: absorption costing
Objective: 1
AACSB: Reflective thinking

11) ________ is a method of inventory costing in which only variable manufacturing costs are included
as inventoriable costs.
A) Fixed costing
B) Variable costing
C) Absorption costing
D) Mixed costing
Answer: B
Diff: 1
Terms: variable costing
Objective: 1
AACSB: Reflective thinking

12) Variable costing regards fixed manufacturing overhead as a(n):
A) administrative cost
B) inventoriable cost
C) period cost
D) product cost
Answer: C
Diff: 1
Terms: variable costing
Objective: 1
AACSB: Reflective thinking




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, 13) The only difference between variable and absorption costing is the expensing of:
A) direct manufacturing costs
B) variable marketing costs
C) fixed manufacturing costs
D) Both A and C are correct.
Answer: C
Diff: 2
Terms: variable costing, absorption costing
Objective: 1
AACSB: Reflective thinking

Answer the following questions using the information below:

Gloria's Decorating produces and sells a mantel clock for $80 per unit. In 2011, 50,000 clocks were
produced and 40,000 were sold. Other information for the year includes:

Direct materials $30.00 per unit
Direct manufacturing labor $ 2.00 per unit
Variable manufacturing costs $ 3.00 per unit
Sales commissions $ 5.00 per part
Fixed manufacturing costs $25.00 per unit
Administrative expenses, all fixed $15.00 per unit

14) What is the inventoriable cost per unit using variable costing?
A) $32
B) $35
C) $40
D) $60
Answer: B
Explanation: B) $30.00 + $2.00 + $3.00 = $35.00
Diff: 2
Terms: variable costing
Objective: 1
AACSB: Analytical skills

15) What is the inventoriable cost per unit using absorption costing?
A) $32
B) $35
C) $60
D) $80
Answer: C
Explanation: C) $30 + $2 + $3 + $25 = $60
Diff: 2
Terms: absorption costing
Objective: 1
AACSB: Analytical skills




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