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Capacity Analysis and Inventory Costing
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Capacity Analysis and Inventory Costing – MCQs
107 questions. Click to practice.
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Correct options are highlighted when revealed.
1.
Which costing approach considers variable manufacturing expenses as part of the inventory cost?
production costing
full absorption costing
variable costing
direct labor costing
fixed costing
2.
Under absorption costing, how can managers boost operating income?
By increasing sales volume
By producing additional inventory
By reducing inventory levels
By decreasing sales volume
By cutting production costs
3.
What is used as the numerator when calculating the fixed manufacturing cost rate?
variable production expenses
planned fixed manufacturing expenses
modified manufacturing costs
non-adjusted labor expenses
standard labor cost
4.
When using the actual quantity of cost allocation, multiplying the base by the actual fixed overhead rate results in the calculation of which cost?
fixed manufacturing overhead cost
variable manufacturing overhead expense
indirect manufacturing overhead expense
direct manufacturing overhead expense
none of the above
5.
If the total fixed manufacturing cost is budgeted at $45,000 and the planned production quantity is 900 units, what is the budgeted fixed manufacturing cost allocated per unit?
$200 per unit
$150 per unit
$50 per unit
$100 per unit
None of the above
6.
How do you determine the number of units that need to be sold to achieve a specific operating income?
Unit marginal cost
Cost per unit that varies with production
Fixed cost allocated per unit
Contribution margin earned per unit
7.
In which costing method is the fixed direct manufacturing cost determined by multiplying the standard price by the standard quantity of allowed input for the actual output?
Costing based on inputs
Costing based on outputs
Standard costing
Actual costing
Variable costing
8.
Which of the following elements influence customer demand?
Cyclical influences
Seasonal changes
Trends in the market
All of the above
9.
Given a target operating income of $45,000 and a contribution margin of $500 per unit, how many units need to be sold to achieve the desired operating income?
100 units
90 units
110 units
120 units
95 units
10.
In which situation will the operating profit differ between two costing methods?
When fixed costs remain constant
When there is a change in inventory levels
When inventory levels stay the same
When fixed costs vary
11.
In normal costing, multiplying the actual amount of the cost allocation base by the predetermined fixed overhead rate results in the calculation of which cost?
indirect factory overhead expenses
direct factory overhead expenses
fixed factory overhead expenses
variable factory overhead expenses
12.
When calculating inventory costs, the cost of manufactured goods is included in beginning inventory, and the cost equivalent to goods sold is added to which of the following?
deducted from beginning inventory
subtracted from ending inventory
added to ending inventory
added to beginning inventory
deducted from cost of goods sold
13.
Given a budgeted fixed cost of $40,000 and a fixed cost of $16 per unit, what is the budgeted denominator level?
3,500 units
2,500 units
3,900 units
4,900 units
14.
If the direct material cost of goods sold amounts to $8,450 and the throughput contribution is $18,650, what is the total revenue?
$27,100
$37,100
$10,200
$12,200
15.
What term describes an average value over a specific period that offers no meaningful feedback to a marketing manager?
normal capacity utilization
abnormal capacity utilization
standard capacity utilization
infinite capacity utilization
16.
Given that the change in operating income under variable costing is $18,000 and the contribution margin per unit is $9,000, what is the change in the number of units sold?
2 units
3 units
4 units
5 units
6 units
17.
To determine the variable manufacturing overhead cost, which calculation involves multiplying the standard variable overhead rate by the standard quantity of the allocation base permitted for the actual output?
Overhead costs related to indirect manufacturing expenses
Manufacturing overhead costs that are directly traceable
Manufacturing overhead costs that remain constant regardless of output
Manufacturing overhead costs that vary with production levels
None of the above
18.
Which financial metric is determined by deducting the direct material cost of goods sold from total sales revenue?
Accrual contribution
Indirect contribution
Throughput contribution
Direct contribution
None of the above
19.
Which inventory costing approach includes both fixed and variable manufacturing costs as part of the inventoriable expenses?
Absorption costing
Variable costing
Fixed costing
Manufacturing cost
Direct costing
20.
What cost component distinguishes absorption costing from variable costing in terms of cost recognition?
Direct manufacturing overhead
Indirect overhead expenses
Fixed production overhead
Variable production expenses
None of the above
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