The Difference Between Variable Costing and Full Absorption Costing Is

question 128

Multiple Choice

The difference between variable costing and full absorption costing is due to differences in the treatment of:

• A)direct costs.
• B)variable manufacturing overhead.
• C)fixed manufacturing overhead.
• D)period costs.

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Definitions:

Par Value

The face value of a bond or stock, assigned at the time of issuance, representing the minimum amount the security can be sold for.

Semiannual Interest

Interest that is calculated and paid twice a year, often used in the context of bonds and loans.

Present Value

The valuation in today's terms of a sum of money expected in the future or regular cash flows, using a predetermined rate of return.

Straight-line Amortization

Straight-line amortization is a method of processing the gradual reduction of the book value of an intangible asset over its useful life in equal installments.