Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 6, Problem 19MC
When the number of units in ending inventory increases through the year, which of the following is true?
A. Net income is the same for variable and absorption costing.
B. Net income is higher for variable costing than for absorption costing.
C. Net income is higher for absorption costing than for variable costing.
D. There is no relationship between net Income and the costing method.
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What will be the difference in net earnings computed using variable costing as opposed toabsorption costing if the ending inventory increases with respect to the beginning inventories interms of units?a. There will be no difference in net earnings.b. Net earnings computed using variable costing will be higher.c. The difference in net earnings cannot be determined from the information given note.d. Net earnings computed using variable costing will be lower
6
If inventory increased during the year, income reported under absorption costing:
will be higher than that reported under variable costing.
will be the same as that reported under variable costing.
will be lower than that reported under variable costing.
will differ from that reported under variable costing, the direction of which cannot be determined from the
information given.
Choose the letter of the correct answer:
1.) This best accounts for the difference in profit between the absorption and variable costing *
a.) Difference in sales revenue
b.) Difference in fixed costs incurred
c.) Difference in inventory valuation
d.) Difference in variable costs incurred
2.) Variable selling expenses are *
a.) Product costs under variable costing but period costs under absorptions costing
b.) Period costs under variable costing but product cost under absorption costing
c.) Product costs under both costing methods
d.) period costs under both costing methods
3. Which of the following types of cost do not appear on a variable costing income statement? *
a.) Direct labor
b.) Direct materials
c.) Variable selling expenses
d.)Fixed factory overhead per unit per sold
4.) All of the following costs are included as product costs under absorption costing except *…
Chapter 6 Solutions
Principles of Accounting Volume 2
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Ch. 6 - Which is not a task typically associated with ABC...Ch. 6 - Which statement is correct? A. 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The company...Ch. 6 - Portable Seats makes two chairs: folding and...Ch. 6 - Grainger Company produces only one product and...Ch. 6 - Summarized data for Walrus Co. for its first year...Ch. 6 - Happy Trails has this information for its...Ch. 6 - Appliance Apps has the following costs associated...Ch. 6 - This information was collected for the first year...Ch. 6 - Bobcat uses a traditional cost system and...Ch. 6 - Five Card Draw manufactures and sells 10,000 units...Ch. 6 - A local picnic table manufacturer has budgeted the...Ch. 6 - Explain how each activity in this list can be...Ch. 6 - Wrappers Tape makes two products: Simple and...Ch. 6 - Box Springs. Inc., makes two sizes of box springs:...Ch. 6 - Please use the information from this problem for...Ch. 6 - A company has traditionally allocated its overhead...Ch. 6 - Caseys Kitchens makes two types of food smokers:...Ch. 6 - Caseys Kitchens three cost pools and overhead...Ch. 6 - Lampierre makes silver and gold candlesticks. The...Ch. 6 - Portable Seats makes two chairs: folding and...Ch. 6 - Submarine Company produces only one product and...Ch. 6 - Summarized data for Backdraft Co. for its first...Ch. 6 - Trail Outfitters has this information for its...Ch. 6 - Wifi Apps has these costs associated with its...Ch. 6 - This information was collected for the first year...Ch. 6 - What conditions are optimal for using traditional...Ch. 6 - College Cases sells cases for electronic devices...Ch. 6 - How would a service industry apply activity-based...Ch. 6 - Cape Cod Adventures makes foam noodles with sales...Ch. 6 - In designing a bonus structure to reward your...
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