20. Routsong Company had the following sales and production data for the past four years:
.0/msohtmlclip1/01/clip_image002.png”>
Selling price per unit, variable cost per unit, and total fixed cost are the same in each year. Which of the following statements is not correct?
A. Under variable costing, net operating income for Year 1 and Year 2 would be the same.
B. Because of the changes in production levels, under variable costing the unit product cost will change each year.
C. The total net operating income for all four years combined would be the same under variable and absorption costing.
D. Under absorption costing, net operating income in Year 4 would be less than the net operating income in Year 2.
21. Would the following costs be classified as product or period costs under variable costing at a retail clothing store?
.0/msohtmlclip1/01/clip_image004.png”>
A. Option A
B. Option B
C. Option C
D. Option D
22. Fixed manufacturing overhead is included in product costs under:
.0/msohtmlclip1/01/clip_image006.png”>
A. Option A
B. Option B
C. Option C
D. Option D
23. Which of the following are considered to be product costs under variable costing?
I. Variable manufacturing overhead.
II. Fixed manufacturing overhead.
III. Selling and administrative expenses.
A. I.
B. I and II.
C. I and III.
D. I, II, and III.
24. Which of the following are considered to be product costs under absorption costing?
I. Variable manufacturing overhead.
II. Fixed manufacturing overhead.
III. Selling and administrative expenses.
A. I, II, and III.
B. I and II.
C. I and III.
D. I.
25. Under variable costing, costs that are treated as period costs include:
A. only fixed manufacturing costs.
B. both variable and fixed manufacturing costs.
C. all fixed costs.
D. only fixed selling and administrative costs.
26. Selling and administrative expenses are considered to be:
A. a product cost under variable costing.
B. a product cost under absorption costing.
C. part of fixed manufacturing overhead under variable costing.
D. a period cost under variable costing.
27. A portion of the total fixed manufacturing overhead cost incurred during a period may:
A. be excluded from cost of goods sold under absorption costing.
B. be charged as a period cost with the remainder deferred under variable costing.
C. never be excluded from cost of goods sold under absorption costing.
D. never be excluded from cost of goods sold under variable costing.
28. A company using lean production methods likely would show approximately the same net operating income under both absorption and variable costing because:
A. ending inventory would be valued in the same manner for both methods under lean production.
B. production is geared to sales under lean production and thus there would be little or no ending inventory.
C. under lean production fixed manufacturing overhead costs are charged to the period incurred rather than to the product produced.
D. there is no distinction made under lean production between fixed and variable costs.
29. Dull Corporation has been producing and selling electric razors for the past ten years. Shown below are the actual net operating incomes for the last three years of operations at Dull:
.0/msohtmlclip1/01/clip_image008.png”>
Dull Corporation’s cost structure and selling price has not changed during its ten years of operations. Based on the information presented above, which of the following statements is true?
A. Dull Corporation operated above the breakeven point in each of the three years presented.
B. For the three years presented in total, Dull Corporation sold more units than it produced.
C. In Year 10, Dull Corporation produced fewer units than it sold.
D. In Year 9, Dull Corporation produced more units than it sold.