Which of the Following Is True Regarding the Variable Inventory

question 62

Multiple Choice

Which of the following is true regarding the variable inventory costing method?

• A) Current fixed production costs are retained in inventory at the end of the period
• B) Current fixed production costs are expensed to the income statement each period
• C) Cost of goods sold can be manipulated by the number of units produced
• D) It is the inventory costing method required by GAAP

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Definitions:

Modernization Theory

A theory which suggests that as societies undergo economic development, they will also experience cultural and social changes that lead them towards becoming more 'modern' or industrialized.

Industrialized Nations

Countries that have highly developed industries, infrastructure, and advanced technological capabilities, resulting in a high standard of living.

Capitalism

An economic system characterized by private or corporate ownership of capital goods, by investments determined by private decision, and by prices, production, and the distribution of goods determined mainly by competition in a free market.

Command Economy

An economic system where key economic decisions, such as allocation and distribution of resources, are made by the government.