161) ________ are subtracted from sales to calculate gross margin. 161)

A) Fixed manufacturing costs B) Variable marketing costs

C) Variable manufacturing costs D) Both A and C are correct.

Answer the following questions using the information below:

The SouthAus Company manufactures several different products. Unit costs associated with Product ADE108 are as follows:

Direct materials $40

Direct manufacturing labour 8

Variable manufacturing overhead 12

Fixed manufacturing overhead 23

Sales commissions (2% of sales) 6

Administrative salaries 9

Total $98

162) What are the fixed costs per unit associated with Product ADE108? 162)

A) $35 B) $32 C) $23 D) $44

163) Which of the following inventory costing methods is MOST likely to cause undesirable incentives

for managers to build up finished goods inventory?

163)

A) absorption costing B) variable costing

C) direct costing D) throughput costing

164) Which statement is TRUE? 164)

A) All direct costs are variable costs.

B) All fixed costs are indirect costs.

C) Because of a cost–benefit tradeoff, some direct costs may be treated as indirect costs.

D) All variable costs are direct costs.

165) Product costs used for pricing and product–mix decisions generally include: 165)

A) distribution costs only B) design costs plus manufacturing costs

C) manufacturing costs only D) all costs incurred along the value chain

166) Xi’an Manufacturing produces a unique terracota warrior, and has the capacity to produce 50 000

warriors annually. Currently Xi’an produces 40 000 warriors and is thinking about increasing

production to 45 000 warriors next year. What is the most likely behaviour of total manufacturing

costs and unit manufacturing costs given this change?

166)

A) Total manufacturing costs will stay the same and unit manufacturing costs will decrease.

B) Total manufacturing costs will increase and unit manufacturing costs will decrease.

C) Total manufacturing costs will increase and unit manufacturing costs will stay the same.

D) Total manufacturing costs will stay the same and unit manufacturing costs will stay the same.

167) Chapple Manufacturing provided the following information for last month:

Sales $12 000

Variable costs 4000

Fixed costs 1000

Operating profit $7000

If sales double next month, what is the projected operating profit?

167)

A) $18 000 B) $15 000 C) $19 000 D) $14 000

Answer the following questions using the information below:

Queanbeyan Company incurred fixed manufacturing costs of $7200 during 2013. Other information for 2013 includes:

The budgeted denominator level is 800 units.

Units produced total 1000 units.

Units sold total 950 units.

Beginning inventory was zero.

The fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of

goods sold.

168) Under variable costing, the fixed manufacturing costs expensed on the income statement

(excluding adjustments for variances) total:

168)

A) 0 B) $7200 C) $9000 D) $8550

169) In the cost classification system used by manufacturing firms, assembly workers’ wages would be

included in all of the following EXCEPT:

169)

A) period cost B) prime cost C) conversion cost D) product cost

170) The income statement of a service–sector firm reports: 170)

A) both period and inventoriable costs

B) period costs only

C) inventoriable costs only

D) period and inventoriable costs but at different times; the reporting varies