| 1. | Under absorption costing, the magnitude for favorable volume production variance is affected by the choice of |
| a. | unplanned level |
| b. | budgeting level |
| c. | numerator level |
| d. | denominator level |
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Answer: (d).denominator level
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| 2. | An approach used for choosing capacity level, having no beginning inventory, is classified as |
| a. | write off variance approach |
| b. | write in variance approach |
| c. | adjusted variance approach |
| d. | unadjusted variance approach |
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Answer: (a).write off variance approach
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| 3. | If the budgeted fixed cost is $26000, per unit budgeted denominator level is 1300 units, then budgeted fixed cost will be |
| a. | $50 |
| b. | $30 |
| c. | $20 |
| d. | $40 |
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Answer: (c).$20
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| 4. | If the production is less than sales so, an operating income under absorption costing will be called |
| a. | higher income |
| b. | zero dividends |
| c. | negative income value |
| d. | lower income |
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Answer: (d).lower income
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| 5. | If the inventory level decreases then operating income, under variable costing, will be reported |
| a. | more |
| b. | less |
| c. | zero |
| d. | none of above |
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Answer: (a).more
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