The Accountant to a Local Bakery Would Classify the Buying

question 99

True/False

The accountant to a local bakery would classify the buying of a new oven as "Cash flows from investing" on her statement of cash flows.

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Definitions:

Manufacturing Margin

The difference between the sales revenue of manufactured products and their production costs (excluding indirect costs).

Variable Costing

A costing method that includes only variable production costs (direct labor, direct materials, and variable manufacturing overhead) in product costs.

Absorption Costing

Accounting method that includes all manufacturing costs (direct costs, variable and fixed overhead) in the cost of a product.

Variable Costing

A method of costing that includes only variable production costs in product costs, treating fixed manufacturing overhead as a period cost to be charged against revenue in the period incurred.