FINAL FLASHCARD

Question 1

(Absorption/Marginal) costing includes the variable costs and the fixed production overheads ?

Answer 1

Absorption

Question 2

A businesses inventory would project as higher value under (Absorption/Marginal) costing ?

Answer 2

Absorption

Question 3

Absorption costing includes fixed (Non-Production/Production) overheads but not fixed (Non-Production/Production) overheads ?

Answer 3

1. Production
2. Non-Production

Question 4

(Marginal/Absorption) costing values the inventory using the variable costs ?

Answer 4

Marginal

Question 5

(2 x The cost of placing an order x annual demand) / Cost of holding inventory for one year = A

A - Square rooted gives the

Answer 5

Economic order quantity

Question 6

Prime costs + Variable costs =

Answer 6

Marginal cost

Question 7

Marginal costs - Variable costs =

Answer 7

Prime costs

Question 8

Marginal costs + Fixed production overheads =

Answer 8

Absorption cost

Question 9

Direct labour + Direct materials + Direct expenses (If any) =

Answer 9

Prime costs

Question 10

Direct labour + Direct materials + Direct expenses (If any) + Variable costs =

Answer 10

Marginal costs

Question 11

Absorbtion costs do not include non-production oveheads because ?

Answer 11

We are only concerned with the production costs

Question 12

Over absorbing (Increases/Decreases) Profits ?

Answer 12

Increases

Question 13

Under absorbing (Increases/Decreases) Profits ?

Answer 13

Decreases