Managerial Accounting 5th Edition Jiambalvo Test Bank 1
Managerial Accounting 5th Edition Jiambalvo Test Bank 1
Managerial Accounting 5th Edition Jiambalvo Test Bank 1
Test Bank:
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jiambalvo-8126552689-9788126552689/
Solution Manual:
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CHAPTER 5
Variable Costing
Summary of Questions by Objectives and Bloom’s Taxonomy
TRUE-FALSE
1. The cost of ending inventory using variable costing is always greater than or equal to full costing
ending inventory.
2. The cost of goods sold is always greater using variable costing than when full costing is used.
3. During periods in which inventory levels increase, sales revenue will be larger when using full
costing than if variable costing is used.
5. If a company has no fixed costs, variable costing income will equal full costing income, regardless
of any increase or decrease in inventory levels during the period.
6. Variable costing income is more useful for decision making because costs are separated by function.
7. Absorption costing is required for external reporting under generally accepted accounting principles.
8. Under full costing, all fixed costs of production are included in Finished Goods Inventory and
remain there until all inventory units are sold.
9. The total amount reported on an income statement for selling and administrative expenseis the same
amount regardless if variable of full costing is used. .
11. Income statements of manufacturing firms prepared for external purposes use variable costing
because it provides higher profits for making decisions.
12. Under full costing, ending inventory includes both fixed and variable manufacturing and
nonmanufacturing costs.
13. Under variable costing, ending inventory reported on a company’s balance sheet includes variable
production costs and variable selling and administrative costs.
15. If the number of units sold is equal to the number of units produced, then contribution margin will
equal gross margin.
16. Full costing income can be increased by decreasing production even though the additional inventory
items will not be sold during the current period.
17. When the number of units produced exceeds the number of units sold, variable costing yields a
lower net income than if full costing had been used.
18. Under variable costing, net income can be increased by increasing production without increasing
sales.
5-4 Test Bank to accompany Jiambalvo Managerial Accounting 5th Edition
19. The inventoriable cost per unit can be reduced, under variable costing, by decreasing the number of
units produced.
20. When the number of units produced is greater than the number of units sold, variable costing yields
higher income than full costing.
21. A full costing income statement will display a higher net income than variable costing as long as
inventory levels continue to increase.
22. If a company increases production levels without increasing its units sold, both its full costing
income and cash flows will be larger than if production were at a lower level.
23. Just-in-time (JIT) inventory management systems cause the difference between variable costing
income and full costing income to be much greater than if standard inventory levels had been
maintained by the company.
24. The use of variable costing encourages management of earnings by adjusting production volume.
Answers
1 F 6 F 11 F 16 F 21 T
2 F 7 T 12 F 17 T 22 F
3 F 8 F 13 F 18 F 23 F
4 F 9 T 14 F 19 F 24 F
5 T 10 T 15 F 20 F 25 T
Chapter 5 Variable Costing 5-5
MULTIPLE CHOICE
27. Which of the following is accounted for differently in full costing compared to variable costing?
A. Direct material
B. Fixed manufacturing overhead
C. Direct labor
D. Variable manufacturing overhead
28. Which of the following is accounted for as a product cost in variable costing?
A. Product delivery costs to customers
B. Variable manufacturing overhead
C. Fixed manufacturing overhead
D. Product advertising costs
31. In variable costing, when does fixed manufacturing overhead become an expense?
A. Never
B. In the period when the product is sold
C. In the period when the expense is incurred
D. At the time when units are produced
32. In full costing, when does fixed manufacturing overhead become an expense?
A. In the period when all other fixed costs are expensed
B. In the period when the product is sold
C. In the period when the expense is incurred
D. At the time units when are produced
33. In variable costing, which of the following will be included as part of inventory on a company’s
balance sheet?
A. Fixed production cost
B. Variable selling cost
C. Fixed selling costs
D. None of the answer choices will be part of inventory in variable costing.
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even upon the highest probability. From what occurs in many morbid
cases, we have every day evident proof of the insufficiency of any
discharge for producing a cure of the venereal disease. Lues venerea
often exists at the same time with diseases in which an increase of
natural evacuations takes place. None of these diseases, whether the
evacuation happens by the salivary glands, as in small-pox, by stool, as
in dysentery, or by the skin, as in intermittents, have ever been found to
break its force, much less to produce a perfect cure.
Besides what happens in natural evacuations, we have likewise proofs
of the insufficiency of artificial evacuations for the cure of this disease.
Although evacuation, at least by other means than by the use of mercury,
is never now employed as a cure for the venereal disease; yet venereal
complaints are often complicated with others, for which various
evacuations are proper. And while evacuations are, with success,
employed for the cure of these, it is found, that the venereal taint either
remains unchanged, or is even increased in force. It cannot here be
alledged, that the difference of effect depends upon the mode of
evacuation. On such occasions, every mode of evacuation has been tried
with equal want of success. Even salivation, which was long considered
as the only effectual discharge, when excited by other means than by
mercury, or even by mercury itself, when externally applied to the organs
secreting saliva, has not been found more effectual than other modes of
evacuation. In some cases, indeed, mercury received into the mouth by
steam, or otherwise, has had good effects; but these were either to be
accounted for from its application to the diseased part, or from its
introduction into the system. It is, then, sufficiently evident, that
evacuation, at least by other means than mercury, does not cure lues
venerea.
To this theory it may be urged as a third, and not less powerful
objection than any of the former, that where the evacuation arising from
the use of mercury in lues venerea is the greatest, the cure is often
retarded; and that mercury never more frequently fails than in those
cases where it begins to evacuate upon its first introduction into the
system.
That these assertions are true, at least of the obvious discharge
produced by mercury, will not be refused by any advocate for its action
as an evacuant. To this, indeed, they may think it a satisfactory answer,
that the influence of mercury as an evacuant cannot be judged of from
the apparent discharge. It may be alledged, and indeed with some
appearance of reason, that the greatest discharge produced by mercury is
by insensible perspiration; that mercury, in consequence of this, is a
more powerful evacuant than many other medicines by which a greater
obvious evacuation is produced; and that it has the effect to increase
perspiration in a more remarkable degree, when it increases no other
discharge than when it induces the greatest obvious evacuation. But
although it cannot be denied, that the use of mercury does increase
insensible perspiration; and that evacuation in this way may, on some
occasions, be greater than what would arise from salivation or any other
obvious discharge; yet these facts by no means tend to any conclusion
which will remove the difficulty formerly stated. Nor can it from thence
be supposed, that mercury always evacuates most powerfully in those
cases where it produces the most successful cure.
The degree of evacuation which takes place from the employment of
any medicine cannot indeed, in every case, be ascertained by the obvious
discharge. But, where the judgment formed from this test would be
fallacious, the marks of inanition consequent upon the use of any
medicine are always certain tests for determining the degree of
evacuation. From these it is evident, that the suppositions here advanced,
that mercury operates more powerfully as an evacuant than any other
medicine, and that it always produces a greater discharge when it acts by
the skin, than when it affects the salivary glands, or any other excretory,
are entirely without foundation.
From the marks of inanition appearing in the system, it is
demonstratively proved, that, from a variety of other means, a greater
evacuation can be produced than from mercury. In such circumstances,
however, by mercury the venereal disease is cured, by these other
evacuants it is not. And farther, where the cure of lues venerea has been
retarded by a salivation occurring early, or where no cure has taken place
after salivation has been continued for a considerable time, there is every
mark of a much higher degree of inanition than when the disease has
been removed by mercury without any sensible evacuation. There can
remain no doubt, then, that the cure of lues venerea is by no means in
proportion to the evacuation which it produces. This, however, should
necessarily be the case, were the cure effected by evacuation.
Upon the whole, then, from what has been said of this theory of the
action of mercury in the cure of the lues venerea, it appears, that the cure
can by no means be referred to the evacuation. The different arguments
adduced in favour of that theory, we have endeavoured to shew, either
proceed on wrong principles, or, although admitted in their greatest
latitude, can afford no ground for any conclusion to support it.
Evacuation, from its nature, whether supposed to operate by diminishing
the quantity of circulating fluids, or by any change it can induce in their
quality, can scarce be conceived to be a cause adequate to the cure of
lues venerea. Evacuation does not produce a cure of the venereal disease,
when it takes place in an equal, or even in a much greater degree, from
the employment of other medicines, than when the disease is effectually
removed from the use of mercury. And, lastly, the venereal disease is
never more effectually cured by mercury, than when it is evident, from
every mark by which the degree of evacuation can be determined, that
the evacuation arising from it is least considerable. It may, therefore,
with confidence be asserted, that mercury does not cure lues venerea by
evacuation.
CHAP. III.
TA B L E
OF
MERCURIAL PREPARATIONS.