Which of the Following Is True of Variable Costing

question 207

Multiple Choice

Which of the following is true of variable costing?

• A) It expenses administrative costs as cost of goods sold.
• B) It treats direct manufacturing costs as a product cost.
• C) It includes fixed manufacturing overhead as an inventoriable cost.
• D) It is required for external reporting to shareholders.

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Definitions:

Preparation Steps

The planned actions or tasks that are performed in order to prepare for an activity or process.

Joint Costs

Costs that are incurred in the process of producing two or more products simultaneously and cannot be directly assigned to a particular product.

Allocation

The process of distributing resources, costs, or revenues among various accounts, departments, or products based on specific criteria.

Indirect Salaries

Salaries for employees who do not directly work on the production of products or services but support those who do.