When Comparing Absorption and Variable Costing Which of the Following

question 30

Multiple Choice

When comparing absorption and variable costing which of the following is false?

• A)The difference between absorption costing and variable costing is the treatment of fixed manufacturing overhead.
• B)Selling and administrative costs are period costs under both absorption and variable costing.
• C)Companies that use just-in-time processing techniques will have significant differences between absorption and variable-costing net income.
• D)Absorption costing will show a higher net income than variable costing whenever there are more units produced than sold.

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Definitions:

Objective and Task Budgeting

A method of budgeting where funding is allocated based on the identification of specific objectives and the tasks required to achieve them.

Competitive Parity Budgeting

Allocating funds to promotion by matching the competitor's absolute level of spending or the proportion per point of market share. Also called matching competitors or share of market.

All-You-Can-Afford Budgeting

Allocating funds to promotion only after all other budget items are covered.

All-You-Can-Afford Budgeting

All-You-Can-Afford Budgeting is a financial strategy where spending on a particular area, such as marketing, is determined by the amount of money available rather than through strategic planning or goal-based allocation.