Which of the Following Statements Is True

question 28

Multiple Choice

Which of the following statements is true?

• A)Variable costing treats fixed overhead as a period cost.
• B)Absorption costing treats fixed overhead as a period cost.
• C)Absorption costing treats fixed overhead as an expense in the period it is incurred.
• D)Variable costing excludes all overhead from product costs.
• E)Managers can manipulate earnings more easily under variable costing by varying the production level.

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Definitions:

Materials Price Variance

The difference between the actual cost of raw materials used in production and the expected (or standard) cost of those materials.

Raw Materials Quantity

The amount or volume of raw materials required or used in the production process, often measured to assess inventory needs and costs.

Variance

The difference between planned or expected performance and the actual outcome.

Occupancy Expenses

Expenses associated with the use of a physical location, including lease payments, utility bills, and taxes on the property.