Managerial Accounting Ivy Software exam with
answers
As the production level increases, the cost per unit decreases for a fixed cost. -
CORRECT ANSWERS ✔✔TRUE
Lucius Smith is an assembler for a chair manufacturer. Normally, he spends one hour
(at $25/hour) for each chair he assembles. After assembling 500 chairs he notices
that the quality will be improved if he spends 10 more minutes on each chair.
Management agrees and thereafter he spends one hour and ten minutes assembling
each chair. This will change the? - CORRECT ANSWERS ✔✔Variable cost line
Fixed cost per unit remains the same over all levels of production. - CORRECT
ANSWERS ✔✔FALSE
Costs that change in total with increased production are - CORRECT ANSWERS
✔✔Variable costs
A variable cost changes in total over increasing amounts of units produced. -
CORRECT ANSWERS ✔✔TRUE
A variable cost per unit decreases as the production level increases. - CORRECT
ANSWERS ✔✔FALSE
The costs of all jobs completed, but not yet sold are in the finished good account. -
CORRECT ANSWERS ✔✔TRUE
, Direct materials are a conversion cost. - CORRECT ANSWERS ✔✔FALSE
Conversion costs are - CORRECT ANSWERS ✔✔are the total of direct labor and
factory overhead costs. They are combined because it is the labor and overhead
together that convert the raw material into the finished product.
Prime costs - CORRECT ANSWERS ✔✔the direct cost of a commodity in terms of
the materials and labor involved in its production, excluding fixed costs. Examples:
direct materials and direct cost
If the sales mix changes, the composition of the composite unit changes, but the
breakeven point does not. - CORRECT ANSWERS ✔✔FALSE
Absorption costing yields a higher net income if the units produced exceed the units
sold. - CORRECT ANSWERS ✔✔TRUE
Variable costing differs from absorption costing in that - CORRECT ANSWERS
✔✔variable costing does not include fixed factory overhead in inventory.
Absorption costing is not only useful for external reporting, it is essential for internal
reporting because it shows a clear picture of cost behavior. - CORRECT ANSWERS
✔✔FALSE - variable costing shows a clear picture of cost behavior because it
separates fixed costs from variable costs
Variable costing is used for internal reporting but absorption costing is used for
external reporting. - CORRECT ANSWERS ✔✔TRUE
answers
As the production level increases, the cost per unit decreases for a fixed cost. -
CORRECT ANSWERS ✔✔TRUE
Lucius Smith is an assembler for a chair manufacturer. Normally, he spends one hour
(at $25/hour) for each chair he assembles. After assembling 500 chairs he notices
that the quality will be improved if he spends 10 more minutes on each chair.
Management agrees and thereafter he spends one hour and ten minutes assembling
each chair. This will change the? - CORRECT ANSWERS ✔✔Variable cost line
Fixed cost per unit remains the same over all levels of production. - CORRECT
ANSWERS ✔✔FALSE
Costs that change in total with increased production are - CORRECT ANSWERS
✔✔Variable costs
A variable cost changes in total over increasing amounts of units produced. -
CORRECT ANSWERS ✔✔TRUE
A variable cost per unit decreases as the production level increases. - CORRECT
ANSWERS ✔✔FALSE
The costs of all jobs completed, but not yet sold are in the finished good account. -
CORRECT ANSWERS ✔✔TRUE
, Direct materials are a conversion cost. - CORRECT ANSWERS ✔✔FALSE
Conversion costs are - CORRECT ANSWERS ✔✔are the total of direct labor and
factory overhead costs. They are combined because it is the labor and overhead
together that convert the raw material into the finished product.
Prime costs - CORRECT ANSWERS ✔✔the direct cost of a commodity in terms of
the materials and labor involved in its production, excluding fixed costs. Examples:
direct materials and direct cost
If the sales mix changes, the composition of the composite unit changes, but the
breakeven point does not. - CORRECT ANSWERS ✔✔FALSE
Absorption costing yields a higher net income if the units produced exceed the units
sold. - CORRECT ANSWERS ✔✔TRUE
Variable costing differs from absorption costing in that - CORRECT ANSWERS
✔✔variable costing does not include fixed factory overhead in inventory.
Absorption costing is not only useful for external reporting, it is essential for internal
reporting because it shows a clear picture of cost behavior. - CORRECT ANSWERS
✔✔FALSE - variable costing shows a clear picture of cost behavior because it
separates fixed costs from variable costs
Variable costing is used for internal reporting but absorption costing is used for
external reporting. - CORRECT ANSWERS ✔✔TRUE
