How Are Fixed Manufacturing Costs Handled Under Variable Costing

question 12

Multiple Choice

How are fixed manufacturing costs handled under variable costing?

• A)They are subtracted from the variable cost of goods sold to determine the ending inventory value that will be recorded on the Balance Sheet.
• B)They are not recorded, which is why variable costing is not used for external reporting.
• C)They are recorded directly on the Balance Sheet.
• D)They are treated as period costs.

Grasp the concept of the circular-flow diagram and the roles of households and firms.

Comprehend the foundations and implications of trade and absolute advantage.

Recognize the function of markets and the movement of resources and goods.

Appreciate the significance of production possibility frontiers (PPFs) and opportunity cost.

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Definitions:

Increased Value

The rise in the worth or market price of an asset.

Annual Dividend

The total amount of dividends a company pays out to its shareholders over a year, often expressed as a per share amount.

Shares

Units of ownership interest in a corporation or financial asset that represent an equal proportion in the distributing of any profits, if any are declared, in the form of dividends.