ECONOMICS

COST ACCOUNTING

VARIABLE COSTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Determine the following statements as true or false:Statement 1:Direct costing and variable costing are different terms that mean the same thingStatement 2:In a variable costing income statement, sales revenue is typically lower than in absorption costing income statement
A
False:True
B
False:False
C
True:True
D
True:False
Explanation: 

Detailed explanation-1: -Direct costs and variable costs are similar in nature and are both types of costs involved in production. Direct costs are expenses that can be directly traced to a product, while variable costs vary with the level of production output.

Detailed explanation-2: -Direct costing is also known as variable costing, contribution costing, and marginal costing.

Detailed explanation-3: -Answer and Explanation: The correct statement about absorption and variable costing methods is option C. If the units produced are above the units sold, the company will have ending inventory units at the end. Note that ending inventory is a deduction from the cost of goods sold.

Detailed explanation-4: -Option b is true In variable costing, only the variable manufacturing costs is included in product cost and the non-variable (fixed) cost goes into period costs. The variable manufacturing costs changes along with the change in units of production.

There is 1 question to complete.