Which of the Following Statements Is True Regarding Variable Costing

question 5

Multiple Choice

Which of the following statements is true regarding variable costing?

• A)It is a traditional costing approach.
• B)Only manufacturing costs that change in total with changes in production level are included in product costs.
• C)It is not permitted to be used for managerial reporting.
• D)It treats overhead in the same manner as absorption costing.
• E)It makes it easier to manipulate earnings with changes in production levels.

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Definitions:

Profit

The financial gain received when the revenue from selling goods or services exceeds the cost of producing these goods or services.

Marginal Revenue

The additional revenue a business receives from selling one more unit of a good or service.

Average Cost

The per-unit cost obtained by dividing total production expenses by the number of produced units.

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