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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.
In production firms, the variable costing approach is commonly known as _________?
direct costing
indirect costing
full costing
single factor costing
absorption costing
2.
Under super variable costing, when are all expenses except direct material costs recognized?
At the time they are incurred
When the product is sold
During the production process
Upon indirect cost allocation
3.
What is the term used to describe the reduction in product demand that occurs when prices drop but competitors' prices remain unchanged?
declining supply cycle
rising supply cycle
downward demand spiral
increasing demand cycle
none of the above
4.
In variable costing, which factor primarily influences the cost-volume-profit relationship?
Number of units sold
Number of units produced
Quantity of units in inventory
Amount of dividends per unit
5.
Which costing approach includes direct material costs as part of the inventoriable costs?
production cost method
enhanced variable costing
throughput accounting
both B and C
none of the above
6.
Given a budgeted fixed cost of $55,000 and a fixed cost rate of $55 per unit, what is the budgeted denominator level?
2,500 units
2,000 units
1,000 units
1,500 units
None of the above
7.
How is fixed manufacturing cost classified in absorption costing?
a large dividend
a small dividend
an inventoriable cost
a non-inventoriable cost
8.
Under throughput costing, how should variable manufacturing overhead and direct labor costs be classified?
Accrued expenses
Costs already incurred
Period expenses
Setup expenses
None of the above
9.
Under variable costing, how is the change in operating income determined?
By the rise in units sold
By the variation in the number of units sold
By the increase in units produced
By the decline in units produced
10.
What is the term used for measuring capacity based on normal capacity utilization?
output demanded
input required
available capacity
capacity leased
capacity reserved
11.
What term describes the maximum output achievable when operating at full efficiency?
benchmark capacity
realized capacity
average capacity
theoretical costing
practical capacity
12.
In which costing method is the direct variable manufacturing cost determined by multiplying the actual quantity of inputs used by their actual prices?
Actual costing method
Normal costing approach
Direct costing technique
Indirect costing system
Standard costing method
13.
When the budgeted variable overhead rate is applied to the actual amount of the allocation base, which costing method is used to determine the variable manufacturing overhead cost?
Direct costing approach
Indirect costing approach
Actual costing approach
Normal costing approach
14.
What term describes the assessment of capacity levels based on both practical and theoretical capacity?
capacity reduction
capacity increase
capacity supplied
capacity loaned
capacity adjustment
15.
What occurs when fixed manufacturing costs are treated as expenses under variable costing but are not expensed under absorption costing?
Production is greater than breakeven sales
Breakeven sales surpass production levels
Selling price is higher than cost
Cost is higher than selling price
None of the above
16.
How do you determine the fixed manufacturing cost per unit in a budgeted scenario?
By dividing the fixed budgeted manufacturing expenses by the planned production units
By dividing the fixed costs by the indirect production quantities
By allocating fixed costs over the units of raw materials used
By spreading fixed costs across the accumulated production units
By dividing fixed costs by the number of units sold
17.
When production is less than sales, how does operating income under variable costing compare?
a negative profit
a reduced profit
an increased profit
no dividends paid
no effect on profit
18.
Which cost is determined by subtracting the revenue and throughput contribution?
Cost of goods sold related to indirect labor
Cost of goods sold related to direct labor
Cost of goods sold associated with direct materials
Cost of goods sold linked to indirect materials
19.
What is an alternative term for super-variable costing?
throughput costing
costing per unit
costing by batch
production costing
20.
Given total sales of $355,000, a beginning inventory of $23,000, and an ending inventory of $15,000, what is the total production amount?
$363,000
$463,000
$393,000
$493,000
None of the above
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