Under Variable Costing Fixed Manufacturing Costs Are

question 55

Multiple Choice

Under variable costing fixed manufacturing costs are

• A) charged to the product.
• B) not reported in the income statement.
• C) considered to be a period cost.
• D) reported on the balance sheet as a prepayment.

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Definitions:

Variable Overhead

Costs that fluctuate with the level of production or business activity, such as utilities or raw materials.

Rate Variance

The difference between the expected standard cost and the actual cost incurred, calculated for direct labor rate, overhead rate, or material price.

Standard Direct Labor-Hours

The estimated hours required to produce a units based on standard efficiency and productivity levels.

Labor Efficiency Variance

The difference between the actual hours worked to produce a good or service and the standard hours expected, multiplied by the standard labor rate.