Which of the Following Statements Is False

question 23

Multiple Choice

Which of the following statements is false?

• A) Under variable costing, the income statement is prepared using a contribution margin approach.
• B) Variable costing is not allowed for external financial reporting, but many companies find it useful for internal managerial reports.
• C) Under variable costing, an increase in production increases the amount of profit reported on the income statement, even if the additional units are not sold.
• D) Under variable costing, fixed manufacturing costs are expensed in the period incurred.

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Definitions:

Price Change

An alteration in the cost of goods and services in the market, which can be due to various factors like inflation, supply and demand changes, or external economic conditions.

Normal Good

A type of good for which demand increases when income increases and falls when income decreases, assuming all other factors remain constant.

Park Visits

The act of visiting a park for recreational, leisure, or sports activities, reflecting an individual's preference or demand for outdoor spaces.

Substitution Effect

The economic principle describing how changes in relative prices can influence the choice between goods or services, holding the overall satisfaction level constant.