Which of the Following Statements Is True Regarding Variable Costing

question 42

Multiple Choice

Which of the following statements is true regarding variable costing?

• A) Variable costing is also known as full costing.
• B) Per unit contribution margin is affected by production levels in variable costing.
• C) In a variable costing income statement, fixed costs are separated from variable costs.
• D) Variable costing focuses attention on all product costs and not only relevant product costs.

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Definitions:

Selling Price

The price at which a business offers its product or service for sale to consumers, determined by various factors including cost and market demand.

Manufacturing Overhead Cost

Indirect costs associated with manufacturing, not directly tied to the product, such as factory maintenance, utilities, and salary of the supervisory staff.

Contribution Margin

The gap between sales income and variable expenses, showing the extent to which income aids in addressing fixed costs and creating profit.

Selling Price

The amount of money charged for a product or service, or the sum a customer is willing to pay.