Answer the Following Question(s)using the Information Below

question 133

Multiple Choice

Answer the following question(s) using the information below.Heinrich Corporation budgeted fixed manufacturing costs of $6,000 during 2012.Other information for 2012 includes:
The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-Which of the following is an example of a drawback of using absorption costing?

• A)It allows management the ability to manipulate operating income via production schedules.
• B)An inventoried cost will eventually become part of cost of goods sold.
• C)The company's sales level drives the production schedules.
• D)A manager may increase maintenance activities above the budgeted level for the current period.
• E)Expensing fixed costs as period costs reducing operating income.

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Definitions:

Control Chart

A tool used in quality control processes to monitor, control, and improve process performance over time, displaying data points in time order.

Process Distribution

Refers to the statistical distribution characteristic of the outcomes of a random process or the variation in a series of processes over time.

Mean

The mean of a collection of numbers, determined by dividing their total sum by the number of elements within the collection.

Statistical Method

A mathematical approach used for analyzing statistical data, often for the purpose of making conclusions from the data.