When Absorption Costing Is Used

question 7

Multiple Choice

When absorption costing is used

• A)for external reporting, variable costing can still be used for internal reporting purposes.
• B)management may be tempted to overproduce in a given period in order to decrease net income.
• C)it facilitates cost-volume-profit analysis.
• D)and production exceeds sales, absorption costing reports a lower net income than variable costing.

Prepare journal entries for transactions specific to the manufacturing environment, including the adjustments for overapplied or underapplied overhead.

Describe the concept and calculation of cost of goods manufactured and how it relates to the income statement and balance sheet.

Recognize the differences in financial statement presentations between manufacturing and merchandising companies.

Understand the use of a manufacturing worksheet and its components.

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Definitions:

Diploid

Refers to cells that contain two complete sets of chromosomes, one from each parent.

Haploid

Refers to cells that contain only one complete set of chromosomes, typically found in the gametes of sexually reproducing organisms.

Pragmatics

The branch of linguistics concerned with the practical aspects of human action and interaction through language in context.

Morphology

The study of the form and structure of organisms and their specific structural features.