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:

Commitments

Obligations that an entity has agreed to fulfill in the future, which can include financial contracts, purchase agreements, or other binding agreements.

Acquisition

The process of acquiring control of another company by purchase of its shares or assets.

Not-For-Profit Organizations

Organizations that use surplus revenues to achieve their goals rather than distributing them as profit or dividends.

Reporting Objectives

The goals intended to be achieved through the preparation and presentation of financial reports, such as fairness, clarity, and accuracy.