Use the Information Below to Answer the Following Question(s)

question 57

Multiple Choice

Use the information below to answer the following question(s) .Urban Body Products Ltd.manufactures body wash liquid soap.The controller has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs. There were no beginning or ending inventories of materials or work-in-process.
-Which of the following is correct concerning variable vs absorption costing?

• A)Absorption costing income statement classifies fixed costs as period costs.
• B)The absorption costing income statement combines costs by cost behaviour.
• C)Absorption costing income statements need to differentiate between variable and fixed costs.
• D)The difference in operating income between the two approaches is captured by the difference between fixed manufacturing costs in ending inventory minus fixed manufacturing costs in opening inventory.
• E)The difference in operating income between the two approaches is captured by the difference between fixed manufacturing costs in ending inventory minus variable manufacturing costs in ending inventory.

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Definitions:

Variable Overhead Spending Variance

The difference between the actual variable overheads incurred and the expected costs based on standard overhead rates.

Standard Quantity

The expected or predetermined amount of materials or input required to produce a single unit of product.

Standard Price

A predetermined cost assigned to materials, labor, and overhead, used as a benchmark against which the actual costs are compared.