9 critics of absorption costing suggest to evaluate management on their ability to a 4309475

9) Critics of absorption costing suggest to evaluate management on their ability to:

A) exceed production quotas

B) increase operating income

C) decrease inventory costs

D) All of these answers are correct.

10) Differences between absorption costing and variable costing are much smaller when a:

A) large part of the manufacturing process is subcontracted out

B) just-in-time inventory strategy is implemented

C) significant portion of manufacturing costs are fixed

D) Both A and B are correct.

11) All of the following are examples of drawbacks of using absorption costing EXCEPT:

A) management has the ability to manipulate operating income via production schedules

B) manipulation of operating income may ultimately increase the company's costs incurred over the long run

C) operating income solely reflects income from the sale of units and excludes the effects of manipulating production schedules

D) decreasing maintenance activities and increasing production result in increased operating income

12) Which of the following inventory costing methods shown below is most likely to cause undesirable incentives for managers to build up finished goods inventory?

A) absorption costing

B) variable costing

C) throughput costing

D) direct costing

13) Under absorption costing, managers can increase operating income by holding less inventories at the end of the period.

14) Many companies use variable costing for internal reporting to reduce the undesirable incentive to build up inventories.

15) Under absorption costing, managers can increase operating income by producing more inventory at the end of the accounting period.

16) Nonfinancial measures such as comparing units in ending inventory this period to units in ending inventory last period can help reduce buildup of excess inventory.

17) One of the most common problems reported by companies using variable costing is the difficulty of classifying costs into fixed or variable categories.

18) Managers can increase operating income when absorption costing is used by producing less inventory.

19) A manager can increase operating income by deferring maintenance beyond the current accounting perio

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