Variable Costing MCQs

1. Using absorption costing, a unit of product includes which costs?

Direct materials, direct labor, fixed overhead

Direct materials, direct labor, variable overhead

Direct materials, direct labor, variable overhead, fixed overhead

Only direct materials and direct labor

2. Using variable costing, a unit of product includes which costs?

Direct materials, direct labor, fixed overhead

Direct materials, direct labor, variable overhead

Direct materials, direct labor, variable overhead, fixed overhead

Only direct materials and direct labor

3. Variable costing is also known as:

Indirect Costing

Direct Costing

Marginal Costing

Both (B) and (C)

4. Using the following data, determine unit product cost under absorption costing.

Variable costing mcqs

$11

$12

$14

$15

5. Using the following data, determine unit product cost under variable costing.

Variable costing mcqs

$11

$12

$14

$15

6. The difference between unit product cost under absorption costing as compared to variable costing is:

Direct materials and direct labor

Fixed and variable portions of manufacturing overhead

Fixed manufacturing overhead only

Variable manufacturing overhead only

7. Variable costing is attractive to managers as an alternative to absorption costing because:

Absorption costing makes distinctions between fixed and variable product costs

Absorption costing is well suited to CVP analysis techniques

Absorption costing provides useful tools to managers for planning and control

To generate data for CVP analysis, considerable time would have to be invested to rework income statements constructed under absorption costing

8. Product cost under absorption costing is characteristically:

Higher than under variable costing

Lower than under variable costing

Equal to variable costing

Higher sometimes and lower sometimes than variable costing

9. When production is equal to sales, which of the following is true?

No change occurs to inventories for either absorption costing or variable costing methods

The use of absorption costing produces a higher net income than the use of variable costing

The use of absorption costing produces a lower net income than the user of variable costing

The use of absorption costing cause inventory value to increase more than they would through the use of variable costing

10. When production is greater than sales, which of the following is true?

No change occurs to inventories for either absorption costing or variable costing methods

The use of absorption costing produces a higher net income than the use of variable costing

The use of absorption costing produces a lower net income than the use of the variable costing

The use of absorption costing causes inventory value to increase more than they would through the use of variable costing

11. When production is less than sales, which of the following is true?

No change occurs to inventories for either absorption costing or variable costing methods

The use of absorption costing produces a higher net income than the use of variable costing

The use of absorption costing produces a lower net income than the use of variable costing

The use of absorption costing causes inventory value to increase more than they would through the use of variable costing

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