Exam $2$ Review

Itify:

Sales

Total cost

Variable Cost

Fixed Cost

Break$-$even

Profit

Loss

The primary difference between variable costing and absorption costing is $($Leamang Objective $1)$

a$.$ in varable costing, fixed manufacturing overhead is a product $co{s}^2$

b$.$ in absorption costing fxed manufactuxing ovechead is a product cost.

c$.$ in variable cosing variable selling and admiaistrative costs are product costr$.$

d$.$ in aborption costing sxed selling and administrative costs are product costs.

Winters, inc is preparing timancial statements to be distributed to investors and creditors. The company should prepare the income statement using $($Leaming Objective $1)$

a$.$ variable costing because it is better for planning purposes.

b$.$ variable costing because it follows CAAP.

c$.$ absorption costing because it is better for controlling purposes.

d$.$ absorption costing because it follows G$.$A$.$P$.$

Which is the following is the most appropriate reason that sales mix decisions should be made using variable costit

$1$ To increase profits, businesses should emphasize the products with the highest contribution margin per unit.

$2$ All costs, including fixed costs, are controllable by upper management in the long run.

$3$ Fixed costs do not affect the operating income in the long run.

$4$ Sales mix decisions primarily focus on fixed costs.

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