on costing and variable 20. A cost that would be included in product cests under
ID: 2518960 • Letter: O
Question
on costing and variable 20. A cost that would be included in product cests under both absorpti costing would be: A. supervisory salaries. B. equipment depreciation. C. variable manufacturing costs. D. variable selling expenses. 21. Which of the following costs at a manufacturing company would be treated as a product cost under the absorption costing method? A. sales commissions B. fire insurance cost on factory building C. advertising costs D. All of these 22. What is the cause of the difference between absorption costing net operating income and variable costing net operating income? A. Absorption costing deducts all manufacturing costs from net operating income; variable costing deducts only prime costs. B. Absorption costing allocates fixed manufacturing costs between cost of goods sold and inventories; variable costing considers all fixed manufacturing costs to be period costs. C. Absorption costing includes variable manufacturing costs in product costs; variable costing considers variable manufacturing costs to be period costs. D. Absorption costing includes fixed administrative costs in product costs; variable costing considers fixed administrative costs to be period costs. 23. The gross margin for a manufacturing company is the excess of sales over: A. cost of goods sold, excluding fixed manufacturing overhead. B. all variable costs, including variable selling and administrative expenses. C. cost of goods sold, including fixed manufacturing overhead D. variable costs, excluding variable selling and administrative expenses.Explanation / Answer
20 Variable manufacturing costs is included in both costing methods. 21 Fire insurance cost on factory building would be treated as product cost 22 Absorption costing allocated fixed manufacturing overhead between cost of goods sold and inventories, varibale costing considers all fixed manufacturing costs to be period costs. 23 The gross margin is the excess of sales over cost of goods sold including fixed manufacturing overhead
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