Answer the Following Question(s)using the Information Below

question 133

Multiple Choice

Answer the following question(s) using the information below.Heinrich Corporation budgeted fixed manufacturing costs of $6,000 during 2012.Other information for 2012 includes:
The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-Which of the following is an example of a drawback of using absorption costing?

• A)It allows management the ability to manipulate operating income via production schedules.
• B)An inventoried cost will eventually become part of cost of goods sold.
• C)The company's sales level drives the production schedules.
• D)A manager may increase maintenance activities above the budgeted level for the current period.
• E)Expensing fixed costs as period costs reducing operating income.