MANAGEMENT ADVISORY SERVICE
HILARIO G. TAN
THEORY
Variable costing
1. To apply direct costing method it is necessary that you know
A. Variable and fixed cost related to production
B. Controllable and uncontrollable cost of production
C. Contribution margin and break even point in production
D. Standard production rate and times of production elements
C. all product costs are variable.
D. product costs are both fixed and variable.
6. Cay Co.’s 1995 fixed manufacturing overhead costs totaled $100,000, and variable selling
costs totaled $80,000. Under variable costing, how should those costs be classified?
A.
B.
C.
D.
Period Costs
$0
$ 80,000
$100,000
$180,000
Product Costs
$180,000
$100,000
$ 80,000
$0
2. The following statements about the adoption of variable costing are true, except:
A. A direct cost may not become a product cost.
B. An indirect cost may be assigned as part of product cost.
C. It is an acceptable method for general reporting purposes.
D. All fixed manufacturing costs are recognized as period costs.
7. Under the variable-costing concept, unit product cost would most likely be increased by
A. A decrease in the number of units produced.
B. An increase in the commission paid to salesman for each unit sold.
C. A decrease in the remaining useful life of factory machinery depreciated on the
units-of-production method.
D. An increase in the remaining useful life of factory machinery depreciated on the
sum-of-the-year’s digits method.
3. Which of the following is NOT an advantage of using variable costing for internal reporting
purposes?
A. The impact of fixed costs on profits is emphasized.
B. Total costs may be overlooked when evaluating profits.
C. Profits are directly influenced by changes in sales volume.
D. Fixed costs are reported at incurred values, not absorbed values, thus improving control
over those costs.
4. A criticism of variable costing for managerial accounting purposes is that it
A. overstates inventories.
B. does not reflect cost-volume-profit relationships.
C. is not acceptable for product line segmented reporting.
D. might encourage managers to emphasize the short term at the expense of the long term.
5. Under variable costing,
A. all product costs are fixed.
B. all period costs are variable.
MSQ-2 – Variable Costing & Absorption Costing
8. Calculating income under variable costing does NOT require knowing
A. selling price.
C. unit sales.
B. unit production.
D. unit variable manufacturing costs.
9. Which of the following statements is true for a firm that uses variable costing?
A. Profits fluctuate with sales.
B. An idle facility variation is calculated.
C. Product costs include variable administrative costs.
D. The cost of a unit of product changes because of changes in number of units
manufactured.
10. The change in period-to-period operating income when using variable costing can be
explained by the change in the
A. Unit sales level multiplied by the unit sales price.
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B. Unit sales level multiplied by a constant unit contribution margin.
C. Finished goods inventory level multiplied by the unit sales price.
D. Finished goods inventory level multiplied by a constant unit contribution margin.
Absorption costing
11. All of the following are names for the product costing method in which both fixed and variable
costs are included in overhead rates, except:
A. absorption costing
C. direct costing
B. conventional costing
D. full costing
12. Which of the following is not associated with absorption costing?
A. contribution margin
C. gross margin
B. functional format
D. Period costs
13. Under absorption costing, fixed manufacturing overhead could be found in all of the following
except the
A. Cost of Goods Sold.
C. period costs.
B. finished goods inventory account.
D. work-in-process account.
14. Jansen, Inc. pays bonuses to its managers based on operating income. The company uses
absorption costing, and overhead is applied on the basis of direct labor hours. To increase
bonuses, Jansen’s managers may do all of the following except
A. Produce those products requiring the most direct labor.
B. Defer expenses such as maintenance to a future period.
C. Decrease production of those items requiring the most direct labor.
D. Increase production schedules independent of customer demands.
15. Unabsorbed fixed overhead costs in an absorption costing system are
A. costs that cannot be controlled.
B. excess variable overhead costs.
MSQ-2 – Variable Costing & Absorption Costing
HILARIO G. TAN
C. variable overhead costs not allocated to units produced.
D. fixed manufacturing costs not allocated to units produced.
16. When a firm prepares financial reports by using absorption costing
A. Profits will always increase with increases in sales.
B. Profits will always decrease with decreases in sales.
C. Decreased output and constant sales result in increased profits.
D. Profits may decrease with increased sales even if there is no change in selling prices and
costs.
17. Under absorption costing, if sales remain constant from period 1 to period 2, the company will
report a larger income in period 2 when
A. period 1 production exceeds period 2 production.
B. period 2 production exceeds period 1 production.
C. fixed production costs are larger in period 2 than period 1.
D. variable production costs are larger in period 2 than period 1.
Variable & absorption costing
18. A cost that is included as part of product costs under both absorption costing and direct
costing is:
A. insurance
D. variable marketing expenses.
B. managerial staff costs
E. variable materials handling labor
C. taxes on factory building
19. If unit costs remain unchanged and sales volume and sales price per unit both increase from
the preceding period when operating profits were earned, operating profits must
A. Increase under the variable costing method.
B. Decrease under the variable costing method.
C. Increase under the absorption costing method.
D. Decrease under the absorption costing method.
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HILARIO G. TAN
exceeds the normal or practical capacity
20. When comparing absorption costing with variable costing, which of the following statements is
not true?
A. When sales volume is more than production volume, variable costing will result in higher
operating profit.
B. Under absorption costing, operating profit is a function of both sales volume and
production volume.
C. Absorption costing enables managers to increase operating profits in the short run by
increasing inventories.
D. A manager who is evaluated based on variable costing operating profit would be tempted
to increase production at the end of a period in order to get a more favorable review.
21. A firm presently has total sales of $100,000. If its sales rise, its
A. fixed costs will also rise.
B. per unit variable costs will rise.
C. net income based on absorption costing will go up more than its net income based on
variable costing.
D. net income based on variable costing will go up more than its net income based on
absorption costing.
22. Both Company Y and Company Z produce similar products that need negligible distribution
costs. Their assets operation and accounting are very similar in all respects except that
Company Y uses direct costing and Company Z uses absorption costing.
A. Co. Z would report a higher net income than Co. Y for the years in which production
equals sales
B. Co. Y would report a higher inventory value than Co. Z for the years in which production
exceeds sales
C. Co. Z would report a higher inventory value than Co. Y for the years in which production
exceeds sales
D. Co. Y would report a higher inventory value than Co. Z for the years in which production
MSQ-2 – Variable Costing & Absorption Costing
23. Absorption costing and variable costing are two different methods of assigning costs to units
produced. Of the following five cost items listed, identify the one that is not correctly accounted
for as a product cost.
Part of Product Cost under
Absorption Cost
Variable Cost
A. Direct labor cost
Yes
Yes
B. Insurance on factory
Yes
No
C. Manufacturing supplies
Yes
Yes
D. Packaging and shipping costs
Yes
Yes
24. A company’s net income recently increased by 30% while its inventory increased to equal a full
year’s sales requirements. Which of the following accounting methods would be most likely to
produce the favorable income results?
A. Absorption costing.
C.
Standard direct costing.
B. Direct costing.
D.
Variable costing.
25. Variable costing and absorption costing will show the same incomes when there are no
A. beginning and ending inventories.
B. beginning inventories.
C. ending inventories.
D. variable costs.
26. Absorption costing differs from variable costing in that
A. absorption costing inventories are more correctly valued.
B. companies using absorption costing have lower fixed costs.
C. standards can be used with absorption costing, but not with variable costing.
D. production influences income under absorption costing, but not under variable costing.
27. In a recent period, Marvel Co. incurred $20,000 of fixed manufacturing overhead and deducted
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$30,000 of fixed manufacturing overhead. Marvel Co. must be using
A. absorption costing.
C. standard costing.
B. direct costing.
D. variable costing.
28. Other things being equal, net income computed by direct costing method would exceed net
income computed by absorption costing method if
A. Units sold were to exceed units produced.
B. Units produced were to exceed units sold.
C. Fixed manufacturing costs were to increase.
D. Variable manufacturing costs were to increase.
29. Net income is lower under variable costing than under absorption costing when
A. Production equals sales.
B. Production exceeds sales.
C. Production is less than sales.
D. Production increases from the previous period.
30. President X of WXY Corporation requested you to explain the difference of net income
between the variable costing income statements presentation and the absorption costing
method. You would say that the difference
A. Is attributable to the variable costs in the inventory.
B. Is attributable to the fixed costs in ending inventory.
C. Is equal to the fixed costs per unit times the number of units sold.
D. Is none if there is no change in the fixed costs in the beginning and ending inventories.
31. If inventory quantities increase during a period,
A. Variable costing profits will equal absorption costing profits.
B. Absorption costing profits will exceed variable costing profits.
MSQ-2 – Variable Costing & Absorption Costing
HILARIO G. TAN
C. Variable costing profits will exceed absorption costing profits.
D. Variable costing will show a higher inventory value than absorption costing.
32. A manufacturing company prepares income statements using both absorption- and
variable-costing methods. At the end of the period, actual sales revenues, total gross margin,
and total contribution margin approximated budgeted figures, whereas net income was
substantially below the budgeted amount. There were no beginning or ending inventories.
The most likely explanation of the net income shortfall is that, compared to budget, actual
A. Manufacturing fixed costs had increased.
B. Selling and administrative fixed expenses had increased.
C. Sales price and variable costs had declined proportionately.
D. Sales prices had declined proportionately more than variable costs.
33. As compared with total absorption costing profit over the entire life of a company, total variable
costing profit will
A. Be less.
B. Be equal.
C. Be greater.
D. Be substantially greater or less depending upon external factors
34. How will a favorable volume variance affect net income under each of the following methods?
A.
B.
C.
D.
Absorption
Increase
Increase
Reduce
Reduce
Variable
No effect
Reduce
Increase
No effect
35. A single-product company prepares income statements using both absorption and variable
costing methods. Manufacturing overhead cost applied per unit produced in 2001 was the
same as in 2000. The 2001 variable costing statement reported a profit whereas the 2001
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absorption costing statement reported a loss. The difference in reported income could be
explained by units produced in 2001 being
A. Less than units sold in 2001.
B. In excess of units sold in 2001.
C. Less than the activity level used for allocating overhead to the product.
D. In excess of the activity level used for allocating overhead to the product.
PROBLEMS
Variable costing
1. MNO Products, Inc. planned and actually manufactured 200,000 units of its single product in
2000, its first year of operations. Variable manufacturing costs were P30 per unit of product.
Planned and actual fixed manufacturing costs were P600,000, and marketing and
administrative costs totaled P400,000 in 2000. MNO sold 120,000 units of product in 2000 at
a selling price of P40 per unit. What is the cost of the ending inventory assuming variable
costing is used?
A. P2,250,000
C. P2,640,000
B. P2,400,000
D. P2,750,000
2. LY & Company completed its first year of operations during which time the following
information were generated:
Total units produced
100,000
Total units sold @ P100 per unit
80,000
Work in process ending inventory
20,000
Costs
Variable Cost per Unit Fixed Costs
Raw materials
P20.00
Direct labor
12.50
Factory overhead
7.50
P1.2 million
Selling and administrative
10.00
0.7 million
If the company used variable (direct) costing method, the operating income would be
A. P2,100,000
C. P3,040,000
B. P2,480,000
D. P4,000,000c.
MSQ-2 – Variable Costing & Absorption Costing
HILARIO G. TAN
3. Youthful Biscuits manufactures and sells boxed coconut cookies. The biggest market for these
cookies are as gifts that college students buy for their business teachers. There are 100
cookies per box. The following income statement shows the result of the first year of
operations. This statement was the one included in the company’s annual report to the
stockholders.
Sales (400 boxes at P12.50 a box)
P5,000.00
Less: Cost of goods sold (400 boxes at P8 per box)
3,200.00
Gross margin
1,800.00
Less: Selling and administrative expenses
800.00
Net income
1,000.00
Variable selling and administrative expenses are P0.90 per box sold. The company produced
500 boxes during the year. Variable manufacturing costs are P5.25 per box and fixed
manufacturing overhead costs total P1,375 for the year.
What is the company’s direct costing net income?
A. P 725
C. P2,265
B. P1,000
D. P2,540
Absorption costing
4. The total production cost for 20,000 units was P21,000 and the total production cost for
making 50,000 units was P34,000. Once production exceeds 25,000 units, additional fixed
costs of P4,000 were incurred. The full production cost per unit for making 30,000 units is:
A. P0.30
C. P0.84
B. P0.68
D. P0.93
5. West Co.’s 1988 manufacturing costs were as follows:
Direct materials and direct labor
Other variable manufacturing costs
Depreciation of factory building and manufacturing equipment
$700,000
100,000
80,000
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Other fixed manufacturing overhead
18,000
What amount should be considered product cost for external reporting purposes?
A. $700,000
C. $880,000
B. $800,000
D. $898,000
6. Coomber Industries manufactures a single product using standard costing. Variable
production costs are $13 and fixed production costs are $125,000. Coomber uses a normal
activity of 12,500 units to set its standard costs. Coomber began the year with 1,000 units in
inventory, produced 11,000 units, and sold 11,500 units. The standard cost of goods sold
under absorption costing would be
A. $115,000
C. $253,000
B. $149,500
D. $264,500
7. Z Corp. incurred the following costs in 2001 (its first year of operations) based on production of
10,000 units:
Direct material
$5 per unit
Direct labor
$3 per unit
Variable product costs
$2 per unit
Fixed product costs (in total)
$100,000
When Z Corp. prepared its 2001 financial statements, its Cost of Goods Sold was listed at
$100,000. Based on this information, which of the following statements must be true:
A. Z Corp. sold 5,000 units.
B. Z Corp. had a very profitable year.
C. Z Corp. sold all 10,000 units that it produced.
D. From the information given, one cannot tell whether Z Corp.'s financial statements were
prepared based on variable or absorption costing.
8. A company manufactures a single product for its customers by contracting in advance of
MSQ-2 – Variable Costing & Absorption Costing
HILARIO G. TAN
production. Thus, the company produces only units that will be sold by the end of each period.
For the last period, the following data were available:
Sales
$40,000
Direct materials
9,050
Direct labor
6,050
Rent (9/10 factory, 1/10 office)
3,000
Depreciation on factory equipment
2,000
Supervision (2/3 factory, 1/3 office)
1,500
Salespeople’s salaries
1,300
Insurance (2/3 factory, 1/3 office)
1,200
Office supplies
750
Advertising
700
Depreciation on office equipment
500
Interest on loan
300
The gross profit margin percentage (rounded) was
A. 34%
C. 44%
B. 41%
D. 46%
9. The Blue Company has failed to reach its planned activity level during its first 2 years of
operation. The following table shows the relationship among units produced, sales, and
normal activity for these years and the projected relationship for Year 3. All prices and costs
have remained the same for the last 2 years and are expected to do so in Year 3. Income has
been positive in both Year 1 and Year 2.
Units Produced
Sales
Planned Activity
Year 1
90,000
90,000
100,000
Year 2
95,000
95,000
100,000
Year 3
90,000
90,000
100,000
Because Blue Company uses an absorption-costing system, gross margin for year 3 should be
A. Equal to Year 1.
C. Greater than Year 1.
B. Equal to Year 2.
D. Greater than Year 2.
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10. Don Juan Ltd. Manufactures a single product for which the costs and selling prices are:
Variable production costs
P 50 per unit
Selling price¶
P125 per unit
Fixed production overhead
P200,000 per quarter
Fixed selling and administrative overhead
P80,000 per quarter
Normal capacity
20,000 units per quarter
Production in first quarter was 19,000 units and sales volume was 16,000 units. No opening
inventory for the quarter.
The absorption costing profit for the quarter was
A. P920,000
C. P960,000
B. P950,000
D. P970,000
Variable costing & absorption costing
11. In the ABC Company, sales are P800,000, cost of goods under absorption costing is
P600,000, and total operating expenses are P120,000. If cost of goods sold is 70% variable
and total operating expenses are 60% fixed, what is the contribution margin under variable
costing?
A. P260,000.
C. P332,000.
B. P308,000.
D. P380,000.
12. A company has the following cost data:
Fixed manufacturing costs
Fixed selling, general, and administrative costs
Variable selling costs per unit sold
Variable manufacturing costs per unit
Beginning inventory
Production
Sales
MSQ-2 – Variable Costing & Absorption Costing
$2,000
1,000
1
2
0 units
100 units
90 units at $40 per unit
Variable and absorption-cost net incomes are:
A. $320 variable, $520 absorption
C. $520 variable, $320 absorption
B. $330 variable, $530 absorption
D. $530 variable, $330 absorption
13. A company had an income of P50,000 using direct costing for a given month. Beginning and
ending inventories for the month are 13,000 units and 18,000 units, respectively. Ignoring
income tax, if the fixed overhead application rate was P2 per unit, what was the income using
absorption costing?
A. P40,000
C. P60,000
B. P50,000
D. P70,000
14. GHI Company had P100,000 income using absorption costing. GHI has no variable
manufacturing costs. Beginning inventory was P5,000 and ending inventory was P12,000.
What is the income under variable costing?
A. P88,000
C. P100,000.
B. P93,000
D. P107,000
15. Fleet, Inc. manufactured 700 units of Product A, a new product, during the year. Product A’s
variable and fixed manufacturing costs per unit were $6.00 and $2.00 respectively. The
inventory of Product A on December 31, consisted of 100 units. There was no inventory of
Product A on January 1. What would be the change in the dollar amount of inventory on
December 31 if variable costing were used instead of absorption costing?
A. $0
C. $200 increase.
B. $200 decrease.
D. $800 decrease.
16. At the end of Killo Co.’s first year of operations, 1,000 units of inventory remained on hand.
Variable and fixed manufacturing cost per unit were $90 and $20, respectively. If Killo uses
absorption costing rather than direct (variable) costing, the result would be a higher pretax
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income of
A. $0.
B. $20,000.
HILARIO G. TAN
C. $70,000.
D. $90,000.
17. A company manufactures 50,000 units of a product and sells 40,000 units. Total
manufacturing cost per unit is $50 (variable manufacturing cost, $10; fixed manufacturing cost,
$40). Assuming no beginning inventory, the effect on net income if absorption costing is used
instead of variable costing is that:
A. net income is the same
C. net income is $400,000 lower
B. net income is $200,000 higher
D. net income is $400,000 higher
18. During its first year of operations, a company produced 275,000 units and sold 250,000 units.
The following costs were incurred during the year:
Variable Cost per Unit
Fixed Costs
Direct materials
$15.00
Direct labor
10.00
Manufacturing overhead
12.50
$2,200,000
Selling and administrative
2.50
1,375,000
The difference between operating income calculated on the absorption-costing basis and on
the variable costing basis is that absorption-costing operating income is
A. $62,500 lesser.
C. $220,000 greater.
B. $200,000 greater.
D. $325,000 greater.
Questions 19 through 21 are based on the following information.
The following information is available for X Co. for its first year of operations:
Sales in units
Production in units
Manufacturing costs:
MSQ-2 – Variable Costing & Absorption Costing
5,000
8,000
Direct labor
Direct material
Variable overhead
Fixed overhead
Net income (absorption method)
Sales price per unit
$3 per unit
5 per unit
1 per unit
$100,000
$30,000
$40
19. What would X Co. have reported as its income before income taxes if it had used variable
costing?
A. ($30,000)
C. $30,000
B. ($7,500)
D. $67,500
20. What was the total amount of SG&A expense incurred by X Co.?
A. $6,000
C. $36,000
B. $30,000
D. $62,500
21. Based on variable costing, what would X Co. show as the value of its ending inventory?
A. $24,000
C. $64,500
B. $27,000
D. $120,000
Questions 22 through 25 are based on the following information.
The annual flexible budget below was prepared for use in making decisions relations to Product X.
100,000 units
150,000 units
200,000 units
Sales volume
$ 800,000
$1,200,000
$1,600,000
Manufacturing costs:
Variable
$300,000
$450,000
$600,000
Fixed
200,000
200,000
200,000
$500,000
$650,000
$800,000
Selling & other expenses
Variable
$200,000
$300,000
$400,000
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Fixed
Income (or loss)
HILARIO G. TAN
160,000
$360,000
$(60,000)
160,000
$460,000
$90000
160,000
$560,000
$240,000
The 200,000 unit budget has been adopted and will be used for allocating fixed manufacturing
costs to units of Product X. At the end of the first 6 months, the following information is available:
Units
Production completed
120,000
Sales
60,000
All fixed costs are budgeted and incurred uniformly throughout the year, and all costs incurred
coincide with the budget. Over- and under-applied fixed manufacturing costs are deferred until
year-end. Annual sales have the following seasonal pattern.
First quarter
Second quarter
Third quarter
Fourth quarter
Portion of Annual Sales
10%
20%
30%
40%
22. The amount of fixed factory costs applied to product during the first 6 months under absorption
costing is
A. Over-applied by $20,000.
C. Under-applied by $80,000.
B. Under-applied by $40,000.
D. Equal to the fixed costs incurred.
23. Reported net income (or loss) for the first 6 months under absorption costing is
A. $(40,000)
C. $40,000
B. $0
D. $160,000
24. Reported net income (or loss) for the first 6 months under variable costing is
A. $(180,000)
C. $40,000
MSQ-2 – Variable Costing & Absorption Costing
B. $0
D. $180,000
25. Assuming that 90,000 units of Product X were sold during the first 6 months and that this is to
be used as a basis, the revised budget estimate for the total number of units to be sold during
this year is
A. 200,000
C. 360,000
B. 240,000
D. None of the above
Questions 26 through 31 are based on the following information.
Valyn Corporation employs an absorption costing system for internal reporting purposes; however,
the company is considering using variable costing. Data regarding Valyn’s planned and actual
operations for the 1995 calendar year are presented below.
Planned Activity
Actual Activity
Beginning finished goods inventory in units
35,000
35,000
Sales in units
140,000
125,000
Production in units
140,000
130,000
The planned per unit cost figures shown in the next schedule were based on the estimated
production and sale of 140,000 units in 1995. Valyn uses a predetermined manufacturing
overhead rate for applying manufacturing overhead to its product. Thus, a combined
manufacturing overhead rate of $9.00 per unit was employed for absorption costing purposes
in1995. Any over- or under-applied manufacturing overhead is closed to the cost of goods sold
account at the end of the reporting year.
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Planned Cost
Per Unit
$12.00
9.00
4.00
5.00
Total
$1,680,000
1,260,000
560,000
700,000
Incurred
Costs
$1,560,000
1,170,000
520,000
715,000
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Variable selling expenses
8.00
1,120,000
1,000,0
Fixed selling expenses
7.00
980,000
980,000
Variable administrative expenses
2.00
280,000
250,000
Fixed administrative expenses
3.00
420,000
425,000
Total
$50.00
$7,000,000
$6,620,
The 1995 beginning finished goods inventory for absorption costing purposes was valued at the
1994 planned unit manufacturing cost, which was the same as the 1995 planned unit
manufacturing cost. There are no work-in-process inventories at either the beginning or the end of
the year. The planned and actual unit selling price for 1995 was $70.00 per unit.
26. The value of Valyn Corporation’s 1995 actual ending finished goods inventory on the
absorption costing bases was
A. $900,000
C. $1,220,000
B. $1,200,000
D. $1,350,000
27. The value of Valyn Corporation’s 1995 actual ending finished goods inventory on the variable
costing basis was
A. $750,000
C. $1,125,000.
B. $1,000,000.
D. $1,400,000.
HILARIO G. TAN
was
A. $4,325,000
B. $4,375,000
C. $4,500,000
D. $4,550,000
31. The difference between Valyn Corporation’s 1995 operating income calculated on the
absorption costing basis and calculated on the variable costing basis was
A. $25,000
C. $65,000
B. $40,000
D. $90,000
Questions 32 through 37 are based on the following information.
Louder Industries manufactures a single product. Variable production costs are $20 and fixed
production costs are $150,000. Louder uses a normal activity of 10,000 units to set its standard
costs. Louder began the year with no inventory, produced 11,000 units, and sold 10,500 units.
32. Ending inventory under variable costing would be
A. $10,000
C. $17,500
B. $15,000
D. $20,000
33. Ending inventory under absorption costing would be
A. $10,000
C. $17,500
D. $20,000
B. $15,000
28. Valyn Corporation’s total fixed costs expensed in 1995 on the absorption costing bases were
A. $2,030,000
C. $2,095,000
B. $2,055,000
D. $2,120,000
34. The volume variance under variable costing would be
A. $0
C. $15,000
B. $10,000
D. Some other number.
29. Valyn Corporation’s actual manufacturing contribution margin for 1995 calculated on the
variable costing basis was
A. $4,375,000
C. $4,910,000
B. $4,935,000
D. $5,625,000.
35. The volume variance under absorption costing would be
A. $0
C. $15,000
B. $10,000
D. Some other number.
30. The total variable costs expensed in 1995 by Valyn Corporation on the variable costing basis
36. The standard cost of goods sold under variable costing would be
A. $200,000
C. $367,500
MSQ-2 – Variable Costing & Absorption Costing
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MANAGEMENT ADVISORY SERVICE
B. $210,000
HILARIO G. TAN
D. Some other number.
37. The standard cost of goods sold under absorption costing would be
A. $200,000
C. $367,500
B. $210,000
D. Some other number.
When the going gets tough, the tough gets going.
MSQ-2 – Variable Costing & Absorption Costing
ANSWER KEY
Theory
1. A
2. C
3. B
4. D
5. C
6. D
7. C
8. B
9. A
10. B
11. C
12. A
13. C
14. C
15. D
16. D
17. B
18. E
19. A
20. D
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
D
C
D
A
A
D
A
A
B
D
B
B
B
A
A
Problem
1. B
2. A
3. A
4. D
5. D
6. D
7. A
8. D
9. A
10. B
11. C
12. B
13. C
14. B
15. B
16. B
17. D
18. B
19. B
20. D
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
B
A
C
B
D
B
B
C
D
B
A
A
C
A
C
B
C
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