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AC 2102 MANAGEMENT ACCOUNTING VARIABLE COSTING MULTIPLE CHOICE Basic Concepts 1. Under the direct costing, which is classified as product costs? A. Only variable production costs. B. Only direct costs. C. All variable costs. D. All variable and fixed production costs. (rpcpa) 1. A ? The product costs under the direct costing. Under the direct costing model, only variable production costs such as direct materials, direct labor, and variable factory overhead are included in the determination of the product costs.Fixed factory overhead is classified as a period costs, that is, automatically deducted from sales as an expense regardless of sales volume level.Hence, choice-letter “a” is correct. Choice-letter “b” is incorrect because there are direct costs that are fixed costs. Choice-letter “c” is incorrect because it refers to all variable costs and expenses. Variable expenses are always period costs either under absorption costing or variable costing model. Choice-letter “d” is incorrect because under direct costing fixed manufacturing costs are period costs. 2. In absorption costing, as contrasted with direct costing, the following are absorbed into inventory. A. All the elements of fixed and variable manufacturing overhead. B. Only the fixed manufacturing overhead. C. Only the variable manufacturing overhead. D. Neither fixed nor variable manufacturing overhead. (rpcpa) 2. A ? The elements absorbed into inventory using the absorption costing model. Choice-letter “a” is correct because all manufacturing costs, whether variable or fixed, are included in the determination of product costing using the absorption costing method. Because of such principle, choice-letters “b”, “c”. and “d” are all incorrect. 3. The absorption costing method includes in inventory Fixed factory Variable factory overhead overhead . A. No No B. No Yes C. Yes Yes D. Yes No (aicpa) 3. C ? Items included in inventory under absorption costing. The following items are included in the inventory cost using the absorption costing method: direct material, direct labor, variable overhead, and fixed overhead. Choice-letter “c” is the correct answer. 4. In an income statement prepared as an internal report using the direct (variable) costing method, fixed selling and administrative expenses would A. Not be used. B. Be used in the computation of the contribution margin. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Which of the following is treated as a product cost in variable costing?Under the variable costing method, only the variable cost to produce is considered as a product cost. All other costs incurred will be treated as period costs.
Which of the following is to be treated as a product cost?Product costs are costs that are incurred to create a product that is intended for sale to customers. Product costs include direct material (DM), direct labor (DL), and manufacturing overhead (MOH).
What costs are included in variable costing?Variable costing is a costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.
Which of the following is not a product cost under variable costing?Which of the following is not a product cost under variable costing? Fixed manufacturing overhead.
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Under variable costing, which of the following costs are treated as product costs
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