Variable Costing Review

What is absorption costing?

• A product costing method that assigns only variable manufacturing costs to products

• A product costing method that assigns all manufacturing costs to products

What is variable costing?

• A product costing method that assigns only variable manufacturing costs to products

• A product costing method that assigns all manufacturing costs to products

What is the contribution margin?

• Net sales revenue minus variable costs

• Fixed manufacturing costs

• Selling and administration costs

• Direct materials, direct labor, and variable manufacturing overhead

Which costing method is more appropriate for determining product costs for long-term planning?

• Absorption costing

• Variable costing

• Both absorption costing and variable costing

• Neither absorption costing nor variable costing

Which costing method can be used in the short-term?

• Absorption costing

• Variable costing

• Both absorption costing and variable costing

• Neither absorption costing nor variable costing

What costs should managers focus on controlling?

• Fixed manufacturing costs

• Variable manufacturing costs

• Both fixed manufacturing costs and variable manufacturing costs

• Neither fixed manufacturing costs nor variable manufacturing costs

Which production decisions should be made using variable costing?

• Short-term production decisions

• Long-term production decisions

• Both short-term production decisions and long-term production decisions

• Neither short-term production decisions nor long-term production decisions