ch 7 quiz

If an income statement is prepared as an internal report, under which of the following methods would the term gross margin most likely appear?   Question 10 options:   a)  Both absorption costing and variable costing.   b)  Absorption costing but not variable costing.   c)  Variable costing but not absorption costing.   d)  Neither variable costing nor absorption costing

Match each phrase that follows with the term it describes.

1. Multiple-Choice Question - FIFO When using FIFO, A) Identical costs go to the balance sheet and the income statement. B) Management uses average costs to assign to the balance sheet and the income statement. C) Older costs go to the income statement; newer costs go to the balance sheet. D) Older costs go to the balance sheet; newer costs go to the income statement. Explain for the answer chosen please.

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2. Consider the following statements about absorption costing and variable costing: Variable costing is consistent with contribution reporting and cost-volume-profit analysis. Absorption costing must be used for external financial reporting. A number of companies use both absorption costing and variable costing. Which of the above statements is (are) True? Group of answer choices a. I, II and III. b. II only c. I and II d. III only e. I only.

В. Explain the following: Product costs and Period costs and one example of each. Distinguish clearly between Financial Accounting and Management Accounting under 3 (THREE) different factors, which are: i. Stakeholders, ii. Time frame and iii. Regulations. С. Before calculating costs we need to understand how different costs behave. In cost accounting we typically classify costs by three types of behaviour: Fixed costs - costs which don't change as the activity level changes Variable costs - costs which change in direct proportion to changes in the activity level Semi-variable costs- costs which have both fixed and variable elements. Explain the purpose classifying costs into the behavior patterns. D.

19) For internal decision-making purposes, many companies use the income statement using the approach. For extemal reporting, most companies use the income statement using the approach. A) full costing: variable costing C) absorption; contribution B) contribution; absorption D) absorption; absorption

1 To decide on an appropriate selling price for a special-order product” is an example of which cost allocation. Select one: a.To motivate managers and other employees b. To provide information for economic decisions c. To justify costs or compute reimbursement amounts   d. To measure income and assets for reports to external parties

Which method is required by GAAP for external financial statements?     ANSWER       Absorption costing   Variable costing   Neither absorption or variable costing   Both absorption and variable costing   I DON'T KNOW YET

Listed below are nine technical accounting terms introduced in this chapter:Variable costs Relevant range Contribution marginBreak-even point Fixed costs Semivariable costsEconomies of scale Sales mix Unit contribution marginEach of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer “None” if the statement does not cor-rectly describe any of the terms. a. The level of sales at which revenue exactly equals costs and expenses.b. Costs that remain unchanged despite changes in sales volume.c. The span over which output is likely to vary and assumptions about cost behavior generallyremain valid.d. Sales revenue less variable costs and expenses.e. Unit sales price minus variable cost per unit.f. The reduction in unit cost achieved from a higher level of output.g. Costs that respond to changes in sales volume by less than a proportionate amount.h. Operating income less variable costs.

Which statement is TRUE? An absorption costing income statement calculates gross profit; a variable costing income statement calculates contribution margin.   Both variable costing and absorption costing income statements calculate contribution margin.   A variable costing income statement calculates gross profit; an absorption costing income statement calculates contribution margin.   Both variable costing and absorption costing income statements calculate gross profit.   I DON'T KNOW YET

Following GAAP, the income statement issued to investors and creditors must OA. be prepared in the contribution margin format OB. be prepared using variable costing OC. show the value of contribution margin OD. be prepared in the traditional format

1. Activity based costing is likely a more advantageous costing methold versus traditonal costing, to facilliate which of the following type of analysis?  a) analysis of service organization cost b) analysis of channel profitablity c) analysis of long term profitablity d) analysis for reduction selling price of all products?  2. A ___ is any factor that causes a change in the cost of an activity.  a) activity based cost  b) cost pool  c) cost driver  d) standard   3. Which of the following is no a basic cost category for indirect cost?  a) inventory financing cost  b) Volume related cost  c) Product batch cost  d) activity based cost

1. What is a segment of an organization? Give a few examples of segments of Walmart Corporation. 2. What costs are assigned to a segment under the contribution approach? 3. Distinguish between a traceable fixed cost and a common fixed cost. 4. Explain how the contribution margin is different from the segment margin. 5. Why aren't common fixed costs allocated to segments under the contribution approach?

company You are a management accountant of EON and Brothers Ltd., a manufacturing that produces two products simultaneously in one of their production plants. You are asked to produce a management report on costing techniques. This company follows a traditional approach to costing and absorbs production overhead using machine hours. The company's policy is to add a 50% markup on the unit cost to obtain the selling price. The relevant information is given below: EON and Brothers Ltd. produces two similar products called Alfa and Beta. Total Overheads = £155,000 Machine Hours = 58980 hrs Product Alfa Beta Production Units 2,580 5,100 Material Cost per unit £31 £51 Labour Cost per unit £21 £17 Machine Hours per unit 11 16 After discussing with all the important people of the production plant you have allocated the overhead costs as mentioned below: % Overheads Set up Costs 30 Inspections 40 Materials Handling 30 Cost Pools are as mentioned below: Alfa Beta Total Setups 400 65 465…

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7.    Which of the following statement is false?         Multiple Choice   a)The contribution margin income statement format separates costs according to cost behaviour.   b)Fixed manufacturing overhead is treated as a period cost under absorption costing method.   c)Fixed manufacturing overhead is treated as a product cost under absorption costing method.   d)Variable costing method is more useful than absorption costing approach in internal and managerial decision-making.   e)The absorption costing approach is used in external financial reporting.

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Required: a) Use activity-based costing to estimate the cost of preparing: i A wage and salary tax return. ii A business tax return. b) n the light of your answers to requirement 1, evaluate the firm's pricing policy.

Which of the following is/ are considered as the uses of standard costing?   Statement 1: Establishing standards that reflect efficient operating conditions Statement 2: Helping managers understand what needs to be done to improve current and future performance. Statement 3: Achieving significant revenue reductions.   Group of choices:   Statements 1 and 2   Statements 1 and 3   Statements 1, 2 and 3   Statements 2 and 3

Accounting Question

Differential costs represent – Group of answer choices the costs which is shown in the balance sheet but not expensed in the income statement until the sale of the products. The differences in costs among different departments of an organization. the amount of increase or decrease in costs from a particular course of action when compared to its alternatives the difference between controllable costs and non-controllable costs.

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