COST ACCOUNTING
VARIABLE COSTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Fixed production and fixed selling costs are considered product costs
|
|
|
Variable selling expenses are included in product costs
|
|
|
Unit product costs can change as the result of changes in the number of units manufactured
|
|
|
Net operating income fluctuates directly with changes in sales volume
|
Detailed explanation-1: -Which of the following is true of a company that uses absorption costing? Unit product costs can change as a result of changes in the number of units manufactured.
Detailed explanation-2: -Which of the following statements is true regarding absorption costing? It assigns all manufacturing costs to products. Which of the following statements is true regarding variable costing? Only manufacturing costs that change in total with changes in production level are included in product costs.
Detailed explanation-3: -Which of the following statements is correct regarding the difference between the absorption costing and variable costing methods? When production is greater than sales, absorption costing income is greater than variable costing income.
Detailed explanation-4: -Absorption costing is typically used for external reporting purposes, such as calculating the cost of goods sold for financial statements. Variable costing, on the other hand, only includes direct costs in the cost of a product.
Detailed explanation-5: -Under absorption costing, product costs include all manufacturing costs: Direct materials. Direct labor. Variable manufacturing overhead.