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41 direct costing is a perfect way to describe the variable costing inventory method 4300207

 

41) Direct costing is a perfect way to describe the variable-costing inventory method.

 

42) When variable costing is used, an income statement will show contribution margin.

 

43) The income under variable costing will always be the same as the income under absorption costing.

44) Absorption costing is required by GAAP (Generally Accepted Accounting Principles) for external reporting.

 

45) When production deviates from the denominator level, a production-volume variance always exists under absorption costing.

 

46) Fixed manufacturing costs included in cost of goods available for sale + the production-volume variance will always = total fixed manufacturing costs under absorption costing.

 

47) The production-volume variance only exists under variable costing and not under absorption costing.

 

48) When the unit level of inventory decreases during an accounting period, operating income is lower under variable costing than absorption costing.

49) The difference in operating income under absorption costing and variable costing is due solely to the timing difference of expensing fixed manufacturing costs.

 

50) If managers report inventories of zero at the start and end of each accounting period, operating incomes under absorption costing and variable costing will be the same.

 

 

 

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