Absorption Costing
True or False: SG&A are always treated as product cost regardless of the costing method.
False
never treated
True or False: Because absorption costing treats fixed manufacturing overhead as a period cost, a portion of fixed manufacturing overhead is assigned to each unit as it is produced.
False
product cost
True or False: Fixed Moh are considered period costs in variable costing
True
True or False: Under variable costing, only those manufacturing costs that vary with output are treated as product costs
True
True or False: Fixed MoH are included as part of the costs of WIP inventories under variable costing.
False
under absorption costing
Absorption costing treats fixed manufacturing overhead as a ______ cost, along with direct materials, direct labor, and variable overhead.
product
Referred to as full cost method
Absorption Costing
Name one of the authors of the book, Managerial Accounting 18th edition
Ray H. Garrison
Eric W. Noreen
Peter C. Brewer
Under _________ costing, it is possible to defer a portion of the fixed manufacturing overhead cost from one period to a future period through the inventory account.
absorption
Referred to as direct costing or marginal costing
Variable costing
Under absorption costing, as inventories decrease, net operating income is lower because fixed MoH is (deferred or released)?
released
If the units produced > units sold, what is the effect on inventories? increase or decrease
increase
Under absorption costing, as inventories increase, net operating income becomes (higher or lower)?
Higher
What is the relationship between absorption and variable costing net operating income when the inventories decrease?
ABS net operating income = Var costing
ABS net operating income > Var costing
ABS net operating income < Var costing
ABS net operating income < Var costing
What is the relationship between production and sales when the relationship of net operating income is absorption costing > variable costing?
units produced = units sold
units produced > units sold
units produced < units sold
units produced > units sold
Enumerate the products costs under variable costing.
Direct Materials
Direct Labor
Var MoH
Enumerate the period costs under absorption costing.
Var SG&A
Fixed SG&A
Enumerate the period costs under variable costing.
Fixed MoH
Var SG&A
Fixed SG&A
Enumerate the names of Group 1 members
Mica
RM
Ron
Trish
Enumerate the product costs under absorption costing.
Direct Materials
Direct Labor
Var MoH
Fixed MoH