Question

1. under ______, product cost doesnt contain any fixed manufacturing overhead cost.
2. under ______, the profit for a period is affected by a change in the number of units of finished goods in inventory.
3. when variable costing is used, if selling prices exceed ______ and if the unit contribution margins, the sales mix, and fixed costs remain the same, profits move in the same direction as sales.
4. ______ is affected by the number of units produced when absorption costing is used.
5. under absorption costing, its possible to defer a portion of the fixed manufacturing overhead costs of the current period to future periods through the ______ account.
6. ______ shouldnt be charged to individual segments when preparing a segmented income statement.
7. ______ is a better measure of the long-run profitability of a segment than contribution margin.
8. when using segmented income statements, the dollar sales for a company to break even equal the sum of the traceable fixed expenses and the common fixed expenses divided by the overall ______.
9. ______ costing is a costing method that treats direct labor and manufacturing overhead costs as period costs and includes only direct materials cost in unit product costs.
10. variable and absorption costing are alternative methods of determining

Explanation:

1. Variable costing excludes fixed manufacturing overhead from product costs.
2. Absorption costing allocates fixed overhead to inventory, so inventory changes affect profit.
3. Variable costing profit aligns with sales if selling prices exceed variable costs (since contribution margin drives profit).
4. Absorption costing’s net operating income depends on production volume (fixed overhead in inventory).
5. Fixed manufacturing overhead is deferred in the finished goods inventory account under absorption costing.
6. Common fixed expenses are not traceable to individual segments, so they’re excluded from segment income statements.
7. Segment margin (contribution margin minus traceable fixed costs) better reflects long-run segment profitability.
8. Company-wide break-even sales use the overall contribution margin ratio (fixed costs ÷ CM ratio).
9. Throughput costing only includes direct materials in product costs; labor and overhead are period costs.
10. Variable and absorption costing determine product costs (what’s included in inventory/COGS).

Answer:

1. variable costing
2. absorption costing
3. variable costs
4. Net operating income
5. finished goods inventory
6. Common fixed expenses
7. Segment margin
8. contribution margin ratio
9. Throughput
10. product costs