A manager is able to increase operating income by deferring maintenance beyond the current

accounting period when absorption costing is used.

Answer: True Difficulty: 2 Objective: 4

22. Throughput costing considers only direct materials and direct manufacturing labor to be
truly variable costs.

Answer: False Difficulty: 1 Objective: 5

Throughput costing considers only direct materials to be truly variable costs.

23. When production quantity exceeds sales, throughput costing results in reporting greater
operating income than variable costing.

Answer: False Difficulty: 3 Objective: 5

When production quantity exceeds sales, throughput costing results in reporting lower
operating income than variable costing.

24. Throughput costing provides more incentive to produce for inventory than does absorption
costing.

Answer: False Difficulty: 1 Objective: 5

Throughput costing provides less incentive to produce for inventory than does absorption
costing.
25. A company may use absorption costing for external reports and still choose to use
throughput costing for internal reports.

Answer: True Difficulty: 2 Objective: 5

26. Throughput contribution equals revenues minus all product costs.

Answer: False Difficulty: 1 Objective: 5

Throughput contribution equals revenues minus direct materials costs.