A company uses a process system. The number of equivalent units in ending WIP In
ID: 468348 • Letter: A
Question
A company uses a process system. The number of equivalent units in ending WIP Inventory regarding direct materials costs and conversion costs is
always lower for direct materials.
always equal.
always lower for conversion costs.
None of these.
2.
If the number of units produced equals the number of units sold for a manufacturer, both variable costing and absorption costing income statements will yield the same gross margin.
True
False
3.
On a regression analysis output generated with Excel, a regression equation's fixed cost component is represented by the
x variable 1 coefficient.
intercept coefficient.
R-square.
residual.
always lower for direct materials.
always equal.
always lower for conversion costs.
None of these.
2.
If the number of units produced equals the number of units sold for a manufacturer, both variable costing and absorption costing income statements will yield the same gross margin.
True
False
3.
On a regression analysis output generated with Excel, a regression equation's fixed cost component is represented by the
x variable 1 coefficient.
intercept coefficient.
R-square.
residual.
Explanation / Answer
1) A. None of These
Explanation:
In this situation, percentage of equivalent units in the ending work –in –progress inventory is materials-100%, conversion cost-40%.therefore the number of equivalent units in ending WIP inventory regarding direct material cost and conversion cost is always higher than direct material cost
2) A. TRUE
Explanation:
In variable costing, the fixed manufacturing overhead is directly changed to income statement for the relevant period. In a situation where number of units produced and number of units sold is equal, there is no question of allocating this additional fixed cost. Therefore, both variable costing and absorption costing yields same gross margin.
3) A.INTERCEPT COEFFICIENT
Explanation:
In regression analysis variable 1 coefficient is used to represent variable cost but fixed cost is represented by intercept coefficient.
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