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41 in absorption costing fixed manufacturing overhead is treated as a period cost 42 4300974

 

41) In absorption costing, fixed manufacturing overhead is treated as a period cost.

 

42) The basis of the difference between variable costing and absorption costing is how fixed manufacturing costs are accounted for.

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

 

44) Absorption costing enables managers to increase operating income by increasing the unit level of sales, as well as by producing more units.

 

45) As a company reduces its inventory levels, operating income differences between absorption costing and variable costing become immaterial.

 

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) Given a constant contribution margin per unit and constant fixed costs, the period-to-period change in operating income under variable costing is driven solely by changes in the quantity of units actually manufactured.

49) Absorption-costing income statements do not need to differentiate between variable and fixed costs.

 

50) The production-volume variance, which relates only to fixed manufacturing overhead, exists under absorption costing but not under variable costing.

 

 

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