ACNT 2402Chapter 06 - Study Guide

Chapter 06 -- Variable Costing and Segment Reporting: Tools for Management – Study Guide 1. Under variable costing, variable production costs are not treated as product costs. FALSE 2. Under variable costing, fixed manufacturing overhead cost is not treated as a product cost. TRUE 3. Under variable costing, product costs consist of direct materials, direct labor, and variable manufacturing overhead. TRUE 4. The costs assigned to units in inventory are typically lower under variable costing than under absorption costing. TRUE 5. Under variable costing, product cost does not contain any fixed manufacturing overhead cost. TRUE 6. Under absorption costing, fixed manufacturing overhead is treated as a product cost. TRUE 7. Under absorption costing, fixed manufacturing overhead cost is not included in product cost. FALSE 9. Under conventional absorption costing, the fixed costs associated with idle production capacity are not included as part of the product cost. FALSE 10. Under absorption costing, the profit for a period is affected by a change in the number of units of finished goods in inventory. TRUE 11. When variable costing is used, and if selling prices exceed variable expenses and if the unit contribution margins, the sales mix, and fixed costs remain the same, profits move in the same direction as sales. TRUE