MCQ On Standard Costing

10 Questions

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MCQ On Standard Costing

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Questions and Answers
  • 1. 
    Variable costing is also known as:
    • A. 

      Direct costing.

    • B. 

      Indirect costing.

    • C. 

      Marginal costing.

    • D. 

      Both (A) and (C).

  • 2. 
    Using absorption costing, a unit of product includes what costs?
    • A. 

      Direct materials and direct labor.

    • B. 

      Direct materials, direct labor, and fixed overhead.

    • C. 

      Direct materials, direct labor, and variable overhead.

    • D. 

      Direct materials, direct labor, variable overhead, and fixed overhead.

  • 3. 
    Using the following data, determine the unit product cost under absorption costing.
    • A. 

      $22

    • B. 

      $24

    • C. 

      $28

    • D. 

      $30

  • 4. 
    Using variable costing, a unit of product includes which costs?
    • A. 

      Only direct materials and direct labor.

    • B. 

      Direct materials, direct labor, and fixed overhead.

    • C. 

      Direct materials, direct labor, and variable overhead.

    • D. 

      Direct materials, direct labor, variable overhead, and fixed overhead

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

      $22

    • B. 

      $24

    • C. 

      $28

    • D. 

      $30

  • 6. 
    Product cost under absorption costing is characteristically:
    • A. 

      Higher than under variable costing.

    • B. 

      Lower than under variable costing.

    • C. 

      Equal to variable costing.

    • D. 

      Higher sometimes and lower sometimes than variable costing.

  • 7. 
    • A. 

      Absorption costing makes distinctions between fixed and variable product costs.

    • B. 

      Absorption costing is well suited to CVP analysis techniques.

    • C. 

      Absorption costing provides useful tools to managers for planning and control.

    • D. 

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

  • 8. 
    When production is equal to sales, which of the following is true?
    • A. 

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

    • B. 

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

    • C. 

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

    • D. 

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

  • 9. 
    Which of the following statements is (are) true?
    • A. 

      Net operating income is not affected by changes in production under absorption costing.

    • B. 

      Net operating income is not affected by changes in production under variable costing.

    • C. 

      Both of the above statements are true.

    • D. 

      Neither of the above statements is true.

  • 10. 
    A segment of a business responsible for both revenues and expenses would be referred to as:
    • A. 

      A cost center.

    • B. 

      An investment center.

    • C. 

      A profit center.

    • D. 

      Residual income.