Why do higher marketing variable costs not increase total variable costs on the

Question

Why do higher marketing variable costs not increase total variable costs on the income statement?

A.

Marketing costs are considered period costs on the income statement

B.

Promotion and Sales budget have a small effect on variable costs

C.

Marketing forecasts are not related to the proforma income statement

D.

None of the above

Why do higher marketing variable costs not increase total variable costs on the income statement?

A.

Marketing costs are considered period costs on the income statement

B.

Promotion and Sales budget have a small effect on variable costs

C.

Marketing forecasts are not related to the proforma income statement

D.

None of the above

Explanation / Answer

In both absorption and variable costing, marketing costs and advertising costs So these costs do not affect the total variable costs in income statement.

Hence, Correct option (A) Marketing costs are considered period costs on the income statement.

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