Which of the Following Is Not True of the Direct

question 12

Multiple Choice

Which of the following is not true of the direct costing procedure?

• A) Variable and fixed costs are considered as part of the cost of goods manufactured.
• B) The cost of goods sold,based solely on variable costs,is subtracted from net sales to arrive at the manufacturing margin.
• C) Variable selling expenses are deducted from the manufacturing margin.
• D) Variable administrative expenses are deducted from the manufacturing margin.

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Definitions:

Treasury Stock

Shares that were once in circulation and have been bought back by the issuing company, reducing the amount of outstanding stock.

Significant Noncash Transactions

Financial activities that do not involve cash flows but significantly affect the financial position of a company.

Treasury Stock Acquisition

The purchase of a company's own shares from the marketplace, reducing the amount of outstanding stock.

Bond Issuance

The process of selling bonds to investors in order to raise capital.