Consider the Statements That Follow

question 10

Essay

Consider the statements that follow.
1. Variable selling costs are expensed when incurred.
2. The income statement discloses a company's contribution margin.
3. Fixed manufacturing overhead is attached to each unit produced.
4. Direct labor becomes part of a unit's cost.
5. Sales revenue minus cost of goods sold equals contribution margin.
6. This method must be used for external financial reporting.
7. Fixed selling and administrative expenses are treated in the same manner as fixed manufacturing overhead.
8. This method is sometimes called full costing.
9. This method requires the calculation of a fixed manufacturing cost per unit.
Required:
A. Relate only to absorption costing.
B. Relate only to variable costing.
C. Relate to both absorption costing and variable costing.
D. Relate to neither absorption costing nor variable costing.

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Definitions:

Variables

Elements, features, or factors that are likely to change or vary within the context of an experiment, study, or situation.

Titles

The names given to books, works of art, musical compositions, and other creations to identify and often to summarize them.

Captions

Textual descriptions or commentary provided for images, videos, or diagrams to explain or narrate the visual content.

Five Ws

The basic questions (Who, What, When, Where, Why) used to gather information and understand a story or situation fully.