Which of the following statements is true? Variable costing treats fixed overhea
ID: 2455826 • Letter: W
Question
Which of the following statements is true?
Variable costing treats fixed overhead as a period cost.
Absorption costing treats fixed overhead as a period cost.
Absorption costing treats fixed overhead as an expense in the period it is incurred.
Variable costing excludes all overhead from product costs.
Managers can manipulate earnings more easily under variable costing by varying the production level.
A.Variable costing treats fixed overhead as a period cost.
B.Absorption costing treats fixed overhead as a period cost.
C.Absorption costing treats fixed overhead as an expense in the period it is incurred.
D.Variable costing excludes all overhead from product costs.
E.Managers can manipulate earnings more easily under variable costing by varying the production level.
Explanation / Answer
Answer: (A) Variable costing treats fixed overhead as a period cost.
Note
Fixed manufacturing overhead is not treated as a product cost under Variable Costing Method However in absorption costing all production costs whether fixed or variable are treated as product cost.
Variable costing excludes all Fixed overhead from product costs.
Managers can not manipulate earnings more easily under variable costing by varying the production level.
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