315. An income statement is prepared as an external report. Under which of the following would the termgross profit appear?Full costingVariable costingа.NoNob.NoYesс.YesNod.YesYes16. Which of the following must be known about a production process to institute a direct costing system?a. The variable and fixed components of all costs related to production.b. The controllable and uncontrollable components of all costs related to production.c. Standard production rates and times for all elements of production.d. Contribution margin and break-even point for all goods in production.17. What will be the difference in net income computed using direct costing as opposed to absorptioncosting if the ending inventory increase with respect to the beginning inventories in terms of units?a. There will be no difference in net income.b. Net income computed using direct costing will be higher.c. The difference in net income cannot be determined from the information given.d. Net income computed using direct costing will be lower.18. Why is direct costing not in compliance with generally accepted accounting principles?a. Fixed manufacturing overhead are assumed to be period costs.b. Direct costing procedures are not well known in industry.c. Net incomes are always overstated when using direct costing procedures.d. Direct costing ignores the concept of LCM when valuing inventory.19. The net income reported under absorption costing will exceed the income under direct costing for aperiod ifa. Production equals sales for the period.b. Production exceeds sales for the period.c. Sales exceeds production for the period.d. The variable overhead exceeds the fixed overhead.20. Net income reported under variable costing will exceed net income reported under absorption costingfor the perioda. Production equals sales for the period.b. Production is greater than sales for the period.c. Sales is greater than production for the period.d. The variable costs exceeds the fixed costs.

Since you have asked multiple questions, we will solve the first question for you. If youwant any…

Answered: 15. An income statement is prepared as…

15. An income statement is prepared as an external report. Under which of the following would the term gross profit appear? Full costing Variable costing a. No No b. No Yes с. Yes No d. Yes Yes

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

3
15. An income statement is prepared as an external report. Under which of the following would the term
gross profit appear?
Full costing
Variable costing
а.
No
No
b.
No
Yes
с.
Yes
No
d.
Yes
Yes
16. Which of the following must be known about a production process to institute a direct costing system?
a. The variable and fixed components of all costs related to production.
b. The controllable and uncontrollable components of all costs related to production.
c. Standard production rates and times for all elements of production.
d. Contribution margin and break-even point for all goods in production.
17. What will be the difference in net income computed using direct costing as opposed to absorption
costing if the ending inventory increase with respect to the beginning inventories in terms of units?
a. There will be no difference in net income.
b. Net income computed using direct costing will be higher.
c. The difference in net income cannot be determined from the information given.
d. Net income computed using direct costing will be lower.
18. Why is direct costing not in compliance with generally accepted accounting principles?
a. Fixed manufacturing overhead are assumed to be period costs.
b. Direct costing procedures are not well known in industry.
c. Net incomes are always overstated when using direct costing procedures.
d. Direct costing ignores the concept of LCM when valuing inventory.
19. The net income reported under absorption costing will exceed the income under direct costing for a
period if
a. Production equals sales for the period.
b. Production exceeds sales for the period.
c. Sales exceeds production for the period.
d. The variable overhead exceeds the fixed overhead.
20. Net income reported under variable costing will exceed net income reported under absorption costing
for the period
a. Production equals sales for the period.
b. Production is greater than sales for the period.
c. Sales is greater than production for the period.
d. The variable costs exceeds the fixed costs.

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