All Free Accounting MCQs with Answers
Every Accounting question in the bank, across all chapters, each with the correct answer and a written explanation. Free and unlimited, with no account needed.
1,971 questions · page 70 of 99
- A. normal utilization
- B. standard utilization
- C. capacity utilization
- D. actual utilization
Explanation: Theoretical capacity is the ideal maximum output with no allowance for interruptions or inefficiencies, representing 100% capacity…
Correct answer: capacity utilization- A. spiral capacity
- B. supply capacity
- C. demand capacity
- D. practical capacity
Explanation: Practical capacity allows for normal unavoidable downtime, maintenance and interruptions, making it a more stable utilization benchmark…
Correct answer: practical capacity- A. production volume variance
- B. cost volume variance
- C. profit volume variance
- D. fixed cost variance
Explanation: Absorption costing assigns fixed manufacturing overhead to products, so production volume variance arises when actual output differs from…
Correct answer: production volume variance- A. direct costing
- B. indirect costing
- C. total costing
- D. One factor costing
Explanation: Variable costing is also called direct costing because only variable manufacturing costs are assigned to products, while fixed…
Correct answer: direct costing- A. of incurring
- B. of sale
- C. of manufacturing
- D. of indirect recording
Explanation: Super variable costing, also known as throughput costing, treats direct material as the only inventoriable cost.
Correct answer: of incurring- A. downward supply spiral
- B. upward supply spiral
- C. downward demand spiral
- D. upward demand spiral
Explanation: A downward demand spiral occurs when price reductions or failure to match competitors' prices cause demand to fall further.
Correct answer: downward demand spiral- A. unit level of sales
- B. unit level of production
- C. unit level of inventory
- D. unit dividends
Explanation: Under variable costing, the cost-volume-profit relationship is driven primarily by sales volume because fixed manufacturing costs are…
Correct answer: unit level of sales- A. manufacturing cost
- B. super variable costing
- C. throughput costing
- D. both B and C
Explanation: Both super variable costing and throughput costing treat direct material as the only inventoriable cost, with other manufacturing costs…
Correct answer: both B and C- A. 2500 units
- B. 2000 units
- C. 1000 units
- D. 1500 units
Explanation: The budgeted denominator level is calculated as budgeted fixed cost divided by fixed cost per unit: $55,000 ÷ $55 = 1,000 units.
Correct answer: 1000 units- A. accrual cost
- B. incurred cost
- C. period costs
- D. setup costs
Explanation: Throughput costing treats direct material as the only product cost. Variable manufacturing overhead and direct manufacturing labor are…
Correct answer: period costs- A. increase in units sold
- B. change in quantity of sold units
- C. increase in units manufactured
- D. decease in units manufactured
Explanation: Under variable costing, the change in operating income equals contribution margin per unit multiplied by the change in units sold.
Correct answer: change in quantity of sold units1392. The measuring of capacity in terms of normal capacity utilization is also termed as __________?
- A. output demanded
- B. input demanded
- C. capacity supplied
- D. capacity borrowed
Explanation: Normal capacity is based on the expected average demand for the product over a representative period, so it reflects output demanded.
Correct answer: output demanded- A. actual costing method
- B. normal costing method
- C. direct costing method
- D. indirect costing method
Explanation: Actual costing uses actual input quantities multiplied by actual input prices for direct manufacturing costs.
Correct answer: actual costing method- A. direct costing method
- B. indirect costing method
- C. actual costing method
- D. normal costing method
Explanation: Normal costing applies a budgeted variable-overhead rate to the actual quantity of the allocation base used.
Correct answer: normal costing method- A. capacity write down
- B. capacity write up
- C. capacity supplied
- D. capacity borrowed
Explanation: Theoretical and practical capacity describe the amount of production capacity supplied by available resources.
Correct answer: capacity supplied- A. production exceeds breakeven sales
- B. breakeven sales exceeds production
- C. price exceeds cost
- D. cost exceeds price
Explanation: When production exceeds sales, absorption costing carries some fixed manufacturing overhead in ending inventory, while variable costing…
Correct answer: production exceeds breakeven sales- A. budgeted production units
- B. indirect production units
- C. input material units
- D. accrued production units
Explanation: Budgeted fixed manufacturing cost per unit is computed by dividing total budgeted fixed manufacturing cost by the budgeted number of…
Correct answer: budgeted production units1398. If the production is less than sales, then operating income under variable costing is __________?
- A. negative income value
- B. lower income
- C. higher income
- D. zero dividends
Explanation: When sales exceed production, inventory decreases and absorption costing releases previously deferred fixed manufacturing overhead.
Correct answer: higher income- A. indirect labor cost of goods sold
- B. direct labor cost of goods sold
- C. direct material cost of goods sold
- D. indirect material cost of goods sold
Explanation: Throughput contribution equals revenue minus direct material cost, so direct material cost of goods sold is found by subtracting…
Correct answer: direct material cost of goods sold- A. throughput costing
- B. unit costing
- C. batch costing
- D. manufacturing costing
Explanation: Throughput costing is another name for super-variable costing because it treats direct material as the main product cost and focuses on…
Correct answer: throughput costing