Which of the Following Statements Is True of Absorption and Variable

question 226

Multiple Choice

Which of the following statements is true of absorption and variable costing methods?

• A) Both costing methods consider selling and administrative costs to be period costs.
• B) Variable costing considers variable selling and administrative costs to be product costs.
• C) Absorption costing considers fixed manufacturing overhead to be period costs.
• D) Both costing methods consider fixed manufacturing overhead to be product costs.

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Definitions:

Net Income

The net earnings of a company once all costs and taxes are subtracted from the total income.

Stockholders' Equity

Stockholders' equity represents the owners' claim after subtracting total liabilities from total assets, indicating the net worth of a company from the shareholders' perspective.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing the ownership stake of the shareholders.

Additional Paid-in Capital

The excess amount paid by investors over and above the par value of the shares during the issuance of stock.