Which of the Following Statements Is True

question 130

Multiple Choice

Which of the following statements is true?

• A)Under variable costing,direct materials and direct labor are expensed as period expenses.
• B)Under variable costing,fixed manufacturing overhead is expensed as period expenses.
• C)Fixed manufacturing overhead costs are treated the same under both absorption costing and variable costing.
• D)Reported income under absorption costing is not affected by production level changes.
• E)Under absorption costing,fixed manufacturing overhead is expensed as period expenses.

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Definitions:

Revenue Allocation

The process of dividing revenue among different parts of a business to evaluate the performance of each segment.

Generally Accepted Accounting Principles

A collection of commonly followed accounting rules and standards for financial reporting.

Earnings Manipulation

A practice where managers use judgment in financial reporting and in structuring transactions to alter financial reports to either mislead stakeholders about the underlying economic performance of a company or to influence contractual outcomes that depend on reported accounting numbers.

Managers

Individuals responsible for controlling or administering all or part of a company or similar organization, making decisions regarding its operations.