21) Net income reported under absorption costing will exceed net income reported under variable costing for a given period if: A) production equals sales for that period. B) production exceeds sales...

21) Net income reported under absorption costing will exceed net income reported under variable costing for a given period if:

A) production equals sales for that period.

B) production exceeds sales for that period.

C) sales exceed production for that period.

D) variable overhead exceeds fixed overhead for that period.

22) Under absorption costing, the income statement is organized by:

A) period costs only.

B) fixed costs only.

C) product and period costs.

D) variable costs only.

23) If fixed costs related to a product increase, while variable costs and sales price remain constant, what will happen to the contribution margin?

A) It will not change.

B) It will increase.

C) It will decrease.

D) It will decrease to zero.

24) What factor related to manufacturing costs causes the difference in operating income computed

using absorption costing and operating income computed using variable costing?

A) Absorption costing expenses all costs, whether fixed or variable.

B) Absorption costing “inventories” all direct manufacturing costs.

C) Absorption costing “inventories” all fixed manufacturing and period costs.

D) Absorption costing “inventories” all fixed manufacturing costs.

25) A manager can increase income under absorption costing by increasing:

A) variable costs.

B) production.

C) fixed costs.

D) leased assets.

26) Absorption costing is required by:

A) federal income tax reports.

B) external financial reports, but not income taxes.

C) both external financial reports and income tax reports.

D) neither external financial reports nor income tax reports.

27) The use of either absorption or variable costing will make little difference in companies:

A) with large inventories.

B) using just-in-time inventory methods.

C) with high fixed costs.

D) with high variable costs.

28) Which of the following does NOT appear on an income statement prepared using variable costing?

A) Gross margin

B) Contribution margin

C) Fixed production costs

D) Variable production costs

29) Preston Racquets manufactures tennis racquets. The following data are available for last month.

Using variable costing, what is the variable cost of goods available for sale for last month?

A) $240,000

B) $110,000

C) $12,000

D) $132,000

30) Preston Racquets manufactures tennis racquets. The following data are available for last month.

Using variable costing, what is variable cost of goods sold for last month?

A) $22,000

B) $110,000

C) $10,000

D) $132,000