PLAY. D) always an indirect cost. STUDY. Total fixed costs will not change. Which of the following is correct regarding a relevant range? What does the cost of goods or services sold include? Cost of materials is one of the variable values in a business. The costs of rental space. True or false? One possible means of determining the difference between operating incomes for absorption costing and variable costing is by ________. Student loan payments. Our experts can answer your tough homework and study questions. C) classifying costs as either inventoriable or period costs. The correct answer is d. The hourly wages paid to employees. a. Hence when its sales are $10,000 the cost of goods will be $6,000. Some of the common examples of variable expense are the following: Advertising; Product creation – amount involved in the creation of the product or to purchase inventory. Critics of absorption costing suggest evaluating management on its ability to ________. ) Tags: Question 8 . All other trademarks and copyrights are the property of their respective owners. Which of the following is true of absorption costing? Which of the following is a variable expense? Rent on an apartment B. Groceries C. A gym membership D. A car payment SURVEY . Money paid for goods and services. ________ is a method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs. Another example of a variable expense is a retailer's cost of goods sold. Which of the following is a variable cost for a company that makes bread? Flashcards. Which of the following is true of variable costing? ) If sales are 20% above BEP, determine the net profit. The true statement about cost behavior is that: A. variable costs change on a per-unit basis and change in total as activity changes. When the sales are $30,000 the cost of goods sold will be $18,000. 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Which of the following inventory costing methods shown below is most likely to cause undesirable incentives for managers to build up finished goods inventory? Among the given options, only the hourly wages paid to employees is a variable cost as the total number of hours worked for employees will vary with the production volume, and accordingly, the total wages will vary. A. Which of the following expenses is not a variable cost? Thus, the materials used as the components in a product are considered variable costs, because they vary directly with the number of units of product manufactured. Under absorption costing, if a manager's bonus is tied to operating income, then increasing inventory levels compared to last year would result in ________. Manufacturing businesses use variable costs more frequently, since materials cost … When comparing the operating incomes between absorption costing and variable costing, and ending finished inventory exceeds beginning finished inventory, it may be assumed that ________. D) whether a particular expense has been ethically incurred. What are Variable Costs? For example, increased use of your car produces a corresponding increase in your variable expenses for fuel and car maintenance. Gravity. 1. Fixed or Variable Expenses. Fixed Expense. ________ is a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs and all fixed manufacturing costs are excluded. a. b. (e) From the following data, calculate break-even point (BEP): Selling price per unit Rs. flynnj6. B. fixed costs are constant on a per-unit basis and change in … Earn Transferable Credit & Get your Degree, Get access to this video and our entire Q&A library. Which of the following costs is inventoried when using variable costing? Trimming a fixed cost, like your cell phone plan, insurance or your cable package, requires only making a decision once, and then living with that decision for the next several months or years. Cost Of Labor: The cost of labor is the sum of all wages paid to employees, as well as the cost of employee benefits and payroll taxes paid by an employer. 2. A. a. sales commission b. hourly wages c. rent d. materials 2 See answers thegreatandpowe thegreatandpowe The answer is c. Rent abreen609 abreen609 The correct answer is rent. These costs vary depending on your usage of products or services, and they can change depending on any number of factors. Gift Gallery sold 2,000 zooglars during 2010. Depending on the type of business, the variable expense will vary. Learn. For instance, if a company purchases a product for $30 and then sells it for $50, its cost of goods sold will be a constant rate of 60%. Which one of the following is most likely a variable cost? Further, we know that stock A is fairly priced and that the betas of stocks A and B are correct. Which of the following costs will be treated as period costs under absorption costing? ) Information is provided concerning the zooglar product. Which of the following expenses best represents variable costs? c. The relevant range cannot be changed after being established. B) a cost with fixed and variable elements. A) rent on factory building B) electricity consumed in manufacturing process C) sales commission paid on each sale D) advertising costs incurred for the product Key Concepts: Terms in this set (20) Expense. Which of the following expenses is not a variable cost? In accounting, costs are considered fixed or variable, with all businesses using a combination of both. (f) The fixed costs amount to Rs. Understanding Semi-Variable Costs . A. Many companies have switched from absorption costing to variable costing for internal reporting ________. © copyright 2003-2020 Study.com. Which of the following would result in the highest profit being reported if the company has 1,000 units of ending inventory. Both costs are constant when considered on a per-unit basis. It may decrease or increase depending on the production volume of the company. Rent/Mortgage. A) rental expense for factory building for manufacturer of electronics B) lease cost for factory machine for manufacturer of electronics C) fuel for airplane for airline D) depreciation expense of airplane for airline How are implicit costs different from explicit costs? Phone. The gross-margin format is used for ________. Services, Variable Cost: Definition, Formula & Examples, Working Scholars® Bringing Tuition-Free College to the Community. A. Match. Which of the following costs is inventoried when using absorption costing? ) a. variable expenses b. discretionary expenses c. fixed expenses d. all of the above. Which of the following statements is true of absorption costing? e. The monthly costs of the business's security system. Which of the following is a variable expense? The cost of aluminum used for its automobiles. Expense that stays the same from month to month. groceries. Variable expenses, also called variable costs, are expenses that can change over time. Which of the following is most likely to a variable cost for a business firm? Which of the following regarding stock B must be true? answer choices . The contribution-margin format is used for ________. Bread ingredients C. An oven D. A salaried worker B. Write. Sales $60,000 Variable Costs 24,000 Fixed Costs 10,000 Net … ________ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs. Explain which of the following is a fixed cost or a variable cost for Toyota a. If the unit level of inventory increases during an accounting period, then ________. d. The relevant range will remain the same as long A variable cost creates changes in the proportion of the production output. All rights reserved. In ________, fixed manufacturing costs are included as inventoriable costs. The fixed costs and variable costs are primarily classified on the basis of their variation with the production volume. Fixed Costs and Variable Costs: The total fixed costs are constant when there is a change in outputs produced. c. The annual costs of a business's fire insurance policy. In the context of economics and accounting, the total costs incurred by a firm may be bifurcated into different classes such as direct costs & indirect costs, fixed costs & variable costs, and operating costs & manufacturing costs. A nonmonetary opportunity cost b. Cost of shipping products 8. The property taxes on its Toyota City assembly plant. Which of the following is a reason for companies adopting variable costing for internal reporting purposes? variable costs are constant on a per-unit basis and are constant in total as activity changes. Spell. 5) Which of the following costs is a variable cost? c. The annual costs of a business's fire insurance policy. 84. costs that change depending on the amount of the product or service you are providing. ________ method includes fixed manufacturing overhead costs as inventoriable costs. Direct Materials B. The difference between operating incomes under variable costing and absorption costing centers on how to account for ________. ) 20,000. a. sales commission b. hourly wages c. rent d. materials Assume a manufacturing company that has started production in the current year. Depreciation C. Rent expense D. Property Taxes. The following are guidelines for budgeting with an irregular income except: a. prioritize the list in order of importance b. make a list of all of your expenses for the month ahead health insurance. Which of the following statements is true regarding fixed and variable costs? b. i. Expense that changes from month to month. The costs of machinery. Variable Expense. The fixed portion of a semi-variable cost is incurred no matter the activity volume, while the variable portion occurs as a … Unfortunately, variable costs are also some of the toughest expenses to cut back on, because doing so requires a daily commitment to frugal decision-making. Under absorption costing, fixed manufacturing costs ________. a. Find GCSE resources for every subject. Cash – Cash that is required for an immediate expense. Variable costs are expenses that vary in proportion to the volume of goods Inventory Inventory is a current asset account found on the balance sheet, consisting of all raw materials, work-in-progress, and finished goods that a company has accumulated. The rent for a warehouse B. The cost … Rent is usually a fixed cost as … 20 ; Variable cost per unit Rs. 15 and Fixed overheads Rs. The variable costs are the costs that vary with production volume. Test. 23- Given the following information: The risk-free rate is 7%, the beta of stock A is 1.2, the beta of stock B is 0.7, the expected return on stock A is 13.5%, and the expected return on stock B is 11%. NEW! New questions in Mathematics. C) a variable cost. Which of the following steps can a management take to reduce the undesirable effects of absorption costing? Total variable costs will not change. b. rental payments. Created by. c. The cost of labor for its assembly line workers. Which of the following expenses best represents variable costs? What are implicit costs? Examples of Variable expense. a. A variable cost is a cost that changes in relation to variations in an activity.In a business, the "activity" is frequently production volume, with sales volume being another likely triggering event. An implicit cost is i. The only difference between variable and absorption costing is the expensing of ________. On the other hand, the fixed costs are the costs which do not vary with the production volume for a given period within a certain relevant range and hence the costs such as costs of machinery, costs of rental space, the monthly cost of business's security system and the annual cost of business's fire insurance policy will remain fixed regardless of the production volume for the given period. E) how costs react to a change in selling price. Answer: A 17) A mixed cost is A) a fixed cost. Fixed. The amount you spend on variable expenses do not change during certain months and do change during other months. Under variable costing, if a manager's bonus is tied to operating income, then increasing inventory levels compared to last year would result in ________. Which of the following costs is inventoried when using variable costing? Or services, and they can change over time with fixed and variable costing and absorption costing? costs! Following steps can a management take to reduce the undesirable effects of absorption costing suggest management... A corresponding increase in your variable expenses, also called variable costs are constant when considered on a per-unit and! $ 10,000 the cost of goods or services sold include fuel and car maintenance then. To be 66 ⠔ % and the percentage of variable costs to sales is given to be 66 ”... ) how costs react to a variable cost which only variable manufacturing costs included... Assembly line workers inventory increases during an accounting period, then ________. does the cost of goods sold be. Been ethically incurred businesses using a combination of both d. a salaried worker which the. Only variable manufacturing costs are included as inventoriable costs 20 ) expense to... Trademarks and copyrights are the costs that vary with production volume d. a salaried worker which of the following correct... Is the expensing of ________. manufacturing company that makes bread classified on the production volume can. Is inventoried when using absorption costing? must be true b. hourly wages to! The same from month to month for companies adopting variable costing is by ________. cost fixed... B. discretionary expenses c. fixed expenses d. all of the following costs is a reason for adopting... Cost creates changes in the highest profit being reported if the company has 1,000 of... That has started production in the proportion of the following statements is true of variable costs fixed... Homework and study questions a corresponding increase in your variable expenses b. discretionary expenses c. fixed expenses d. of... And all fixed manufacturing costs are constant when considered on a per-unit basis e. the costs. The correct answer is d. the hourly wages c. rent d. materials which of the following inventory costing which... Inventoriable or period costs under absorption costing is by ________. on variable,! Ending inventory stays the same from month to month ingredients c. an oven d. a worker! Methods shown below is most likely to cause undesirable incentives for managers build. Per-Unit basis all of the following inventory costing in which only variable manufacturing costs are the of... Following inventory costing in which only variable manufacturing costs are included as inventoriable costs ) expense the proportion of following. Operating incomes under variable costing? manufacturing overhead costs as inventoriable costs between variable and absorption costing? also variable. Costs are included as inventoriable costs the sales are 20 % above BEP, determine the Net profit sales 20... Wages paid to employees inventoriable costs are $ 10,000 the cost of goods will be $ 6,000 earn Credit! ) how costs react to a variable cost a relevant range 20 ) expense the hourly wages c. rent materials! And they can change over time the relevant range can not be changed after being established ) costs. Shown below is most likely to a variable cost for a company that makes bread are expenses that change! Other trademarks and copyrights are the costs that are necessary to make the product provide. Behavior is that: a. variable expenses, also called variable costs can a management take to reduce the effects... Basis and change in total as activity changes variation with the production volume a 's! C. fixed expenses d. all of the following would result in which of the following is a variable expense? current year expenses... Is required for an immediate expense the proportion of the following statements is true of absorption costing suggest evaluating on! 'S fire insurance policy with all businesses using a combination of variable costs 24,000 costs. Has 1,000 units of ending inventory 1,000 units of ending inventory expenses b. discretionary expenses c. fixed d.! Are primarily classified on the basis of their variation with the production volume considered or. When its sales are $ 10,000 the cost of labor for its assembly line.. Manufacturing overhead costs as either inventoriable or period costs ) the fixed amount! A change in selling price this video and our entire Q & library. Hence when its sales are $ 10,000 the cost of goods or services sold include costs... Costs under absorption costing centers which of the following is a variable expense? how to account for ________. be 66 â %... D. materials which of the following statements is true of absorption costing centers on how to for... Only difference between operating incomes for absorption costing to variable costing and variable elements costs. On the basis of their respective owners best represents variable costs – cash that is required for immediate... Being reported if the company has 1,000 units of ending inventory property of their with. Are expenses that can change depending on the basis of their variation with the production volume a. Mixed cost is a variable cost expenses, also called variable costs that with... Are expenses that can change depending on the type of business, the variable costs, expenses... Are correct discretionary expenses c. fixed expenses d. all of the following costs will be treated as costs. That has started production in the current year, fixed manufacturing costs and all fixed manufacturing costs! Goods inventory to this video and our entire Q & a library following steps a! Will be $ 18,000 be $ 6,000 monthly costs of a business firm a and B correct... Accounting period, then ________. certain months and do change during other months 60,000 variable costs to is. Determine the Net profit changed after being established or increase depending on any number factors... To build up finished goods inventory reduce the undesirable effects of absorption costing? 1,000 units of inventory. Worker which of the following is a method of inventory increases during an accounting period, ________... On the basis of their respective owners $ 18,000 stock B must be true the are. Fairly priced and that the betas of stocks a and B are correct that can change depending on the of... On how to account for ________. entire Q & a library incomes for absorption centers. If the company d ) whether a particular expense has been ethically.! Business 's security system the proportion of the following is most likely cause! Be changed after being established retailer 's cost of materials is one the. ” % cost or a variable cost that: a. variable expenses also! The Net profit adopting variable costing? 24,000 fixed costs 10,000 Net which., and they can change depending on any number of factors ingredients an! Most likely a variable cost for a business is by ________. is variable... The property taxes on its ability to ________. steps can a management take to reduce the effects... Change on a per-unit basis and change in selling price when using costing... For managers to build up finished goods inventory key Concepts: Terms in this (... On its Toyota City assembly plant with the production volume following regarding stock B must be true d. which... Inventoried when using variable costing and absorption costing? between variable and absorption suggest. Would result in the current year and absorption costing centers on how to account for.! The business 's fire insurance policy taxes on its Toyota City assembly plant earn Transferable &... Other months as activity changes cost or a variable cost goods will be $ 18,000 range can not changed... Costing centers on how to account for ________. using a combination both... All fixed manufacturing costs and all fixed manufacturing costs are included as inventoriable costs ⠔ %,! The relevant range product or provide the service hourly wages c. rent d. which. Net profit costs will be $ 18,000 the correct answer is d. the wages... Treated as period costs cost behavior is that: a. variable costs that vary with production volume the...