When units produced exceeds units sold, a. net income under absorption costing is higher than net income under variable costing. b. net income under absorption costing is lower than net income under variable blo costing c. net income under absorption costing equals net income under variable costing. d. the relationship between net income under absorption costing and net income under variable costing cannot be predicted.

When units produced exceeds units sold, a. net income under absorption costing is higher than net income under variable costing. b. net income under absorption costing is lower than net income under variable blo costing c. net income under absorption costing equals net income under variable costing. d. the relationship between net income under absorption costing and net income under variable costing cannot be predicted.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 4MCQ

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When units sold exceeds, units produced, basisa. net income under absorption costing is higher than net income under variable costing.b. net income under absorption costing is lower than net income under variable costing.c. net income under absorption costing equals net income under variable costing.d. the relationship between net income under absorption costing and net income undervariable costing cannot be predicted.
When units produced are less than units sold, income under absorption costing is higher than income under variable costing. True or False True False
Which of the followings is not correct about cost-based pricing? Select one: a. Total fixed costs change as the production amount changes. b. Total costs are the sum of total fixed and variable costs. c. Total variable costs increase due to a rise in production level. d. Variable costs per unit tend to be constant with respect to number of units produced.
When units sold exceeds units produced the relationship between net income under absorption costing and net income under variable costing cannot be predicted. net income under absorption costing equals net income under variable costing. net income under absorption costing is lower than net income under variable costing. net income under absorption costing is higher than net income under variable costing.
Which one of the following is not considered an assumption of cost-volume-profit analysis? a. Costs are linear b. Sales mix of products sold does not change c. Selling price per unit changes with volume d. Costs can be divided into variable and fixed components e. Fixed cost per unit is not constant
Which of the following statements about profit measurement under absorption and marginal costing is not true (assuming that unit variable costs and fixed costs are constant)? O A. If inventory levels increase then profits measured using absorption costing will be higher than profits measured using marginal costing. O B. If inventory levels decrease then profits measured using marginal costing will be higher than profits measured using absorption costing. OC. Profits measured using absorption costing will be either lower or higher than profits measured using marginal costing. O D. Profits measured using absorption costing may be the same as, or lower than, or higher than profits measured using marginal costing.
Which of the following is not a potential advantage of variable costing relative absorptioncosting?a. Net income computed under variable costing is unaffected by changes productionlevels.b. It is easier to understand the impact of fixed and variable costs on computation of netincome when variable costing is used.c. The use of variable costing is consistent with cost-volume-profit analysis.d. Net income computed under variable costing is not closely tied to changes in sales level.
Which of the following statements is true? a. When production is greater than sales, operating income will be equal under variable costing and absorption costing b. When production is greater than sales, operating income will be lower under absorption costing than variable costing. c. When production is equal to sales, operating income will be greater under variable costing than absorption costing. d. When production is less than sales, operating income will be lower under absorption costing than variable costing.
Which of the following is NOT true of variable costing? a. Profits may increase though sales decrease. b. Profits fluctuate with sales. c. The cost of the product consists of all variable production costs. d. The income statement under variable costing does not include overhead volume variance.
Which one of the following is not considered an assumption of cost-volume-profit analysis? a. Selling price per unit does not change with volume b. Costs can be divided into variable and fixed components C. Fixed cost per unit is not constant d. Sales mix of products sold does not change O e. Costs are nonlinear
TRUE OR FALSE When units sold exceed, units produced, income under absorption costing is higher than income under variable costing.
What are these equations? c.Under absorption costing, what is the cost of goods sold? d.Under variable costing, what is the cost of goods sold? e.Under absorption costing, what is the operating income? f.Under variable costing, what is the operating income? g.Reconcile the difference in operating income under absorption costing versus variable costing.