StratCost_Absoprtion vs Variable Costing

Under variable costing, fixed manufacturing overhead is:

• expensed immediately when incurred.

• never expensed.

• applied directly to Finished-Goods Inventory.

• treated in the same manner as variable manufacturing overhead.

All of the following are inventoried under variable costing except:

• direct materials.

• direct labor.

• variable manufacturing overhead.

• fixed manufacturing overhead.

All of the following costs are inventoried under absorption costing except:

• direct materials.

• direct labor.

• variable manufacturing overhead.

• fixed manufacturing overhead.

• fixed administrative salaries.

The use of absorption costing facilitates cost-volume-profit analysis.

• True

• False

When absorption costing is used, management may be tempted to overproduce in a given period in order to increase net income.

• True

• False

When absorption costing is used for external reporting, variable costing can still be used for internal reporting purposes.

• True

• False

When units sold exceed units produced, income under absorption costing is higher than income under variable costing.

• True

• False

Some fixed manufacturing costs of the current period are deferred to future periods through ending inventory under variable costing.

• True

• False

Manufacturing cost per unit will be higher under variable costing than under absorption costing.

• True

• False

Selling and administrative costs are period costs under both absorption and variable costing.

• True

• False