All of the Following Are Typically Costs That Fail the Future

question 34

Multiple Choice

All of the following are typically costs that fail the future benefits test of long-lived operating assets except:

• A) costs related to research and development
• B) costs related to marketing
• C) costs related to brand-building activities
• D) costs of equipment used in production

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Definitions:

Variable Production Costs

Expenses that change in direct proportion to the level of production output.

Cost-Volume-Profit Analysis

An accounting method used to determine how changes in costs and volume affect a company's operating income and net income.

Contribution Format

An income statement format that separates fixed and variable costs, showing the contribution margin which covers fixed costs and profits.

Absorption Costing

A bookkeeping strategy that encompasses all production expenses, including direct materials, direct labor, and variable plus fixed overhead, into the pricing of a product.