Which of the Following Statements Is True for a Company

question 25

Multiple Choice

Which of the following statements is true for a company that uses variable costing?

• A) The manufacturing cost per unit decreases when the volume of production increases.
• B) Net income is not affected by fluctuations in production.
• C) Fixed manufacturing overhead is treated like a product cost.
• D) Fixed manufacturing overhead costs incurred in the current period may be recognized as expense in a later period.

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Definitions:

Depreciation Method

A systematic approach used to allocate the cost of a tangible asset over its useful life.

Units-Of-Production Depreciation

A depreciation method where the expense is based on actual usage or production levels, rather than time.

Total Depreciable Cost

The total depreciable cost is the cost of a fixed asset minus its salvage value, representing the total amount that can be depreciated over the asset's useful life.

Total Asset Turnover

A financial ratio that measures a company's efficiency in using its assets to generate revenue.