Which of the Following Statements Is Not True Regarding the Fixed

question 47

Multiple Choice

Which of the following statements is not true regarding the fixed production cost variance?

• A) The fixed production cost variance is the difference between actual and budgeted costs.
• B) With respect to this variance, fixed costs are affected by activity levels within a relevant range.
• C) The flexible budget's fixed costs equal the master budget's fixed costs.
• D) Fixed costs are treated as period costs for purposes of this variance.

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Definitions:

Short-term Financial Management

The practice of managing a company's financial activities that are expected to be resolved within a year.

Carrying Costs

The expenses incurred by holding inventory, including storage, insurance, and taxes, over a certain period.

Cash Cycle

A business concept that describes the process of converting resources into cash flows, from purchasing inventory to collecting revenue from customers.