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
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 *…
Which of the following statement is correct?
A In a variable costing income statement, sales revenue is typically higher than in absorption costing income statement.
B When production is not equal to sales, income under absorption costing differs from income under variable costing due to the difference in treatment ( product cost and period cost) of the fixed overhead cost under the two costing methods.
C In variable costing system, fixed overhead cost is included as part of the cost of inventory.
D In an absorption costing system, fixed overhead cost is treated as a period cost.
Chapter 6 Solutions
Principles of Accounting Volume 2
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