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Absorption Costing: Income Statement & Marginal Costing

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Which costing method results in a higher reported net income?

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1. Which costing system must be used for external reporting, according to accounting standards like GAAP?

2.

What is the cost of goods sold under absorption costing given the following information?

Beginning inventory = $5,000

Direct materials = $1,000

Direct labor = $2,000

Variable manufacturing overhead = $800

Fixed manufacturing overhead = $1,200

Ending inventory = $200

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About This Quiz & Worksheet

To pass the quiz and worksheet combination, you have to be familiar with the financial vocabulary discussed in the lesson. You must also know how to calculate cost in given situations.

Quiz & Worksheet Goals

Questions test your knowledge of:

  • The calculation of the cost of goods
  • Which costing system is used for external reporting per accounting standards
  • The method of costing that yields a higher reported net income

Skills Practiced

  • Knowledge application - use your knowledge to calculate the cost of goods for a given set of numbers
  • Reading comprehension - ensure that you draw the most important information from the lesson on absorption costing
  • Distinguishing differences - compare and contrast concepts from the lesson such as absorption and marginal (or variable) cost

Additional Learning

Learn more about accounting by completing the lesson titled, Absorption Costing: Income Statement & Marginal Costing. The objectives covered include:

  • Define direct materials and direct labor
  • Review the function of an income statement
  • Distinguish between variable and fixed manufacturing overhead
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