Which of the following statement is correct? A In a variable costing income statement, sales revenue is typically higher than in absorption costing income statement. B When production is not equal to sales, income under absorption costing differs from income under variable costing due to the difference in treatment ( product cost and period cost) of the fixed overhead cost under the two costing methods. C In variable costing system, fixed overhead cost is included as part of the cost of inventory. D In an absorption costing system, fixed overhead cost is treated as a period cost.
Which of the following statement is correct? A In a variable costing income statement, sales revenue is typically higher than in absorption costing income statement. B When production is not equal to sales, income under absorption costing differs from income under variable costing due to the difference in treatment ( product cost and period cost) of the fixed overhead cost under the two costing methods. C In variable costing system, fixed overhead cost is included as part of the cost of inventory. D In an absorption costing system, fixed overhead cost is treated as a period cost.
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 19MC: When the number of units in ending inventory increases through the year, which of the following is...
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Question
Which of the following statement is correct?
A In a variable costing income statement, sales revenue is typically higher than in absorption costing income statement.
B When production is not equal to sales, income under absorption costing differs from income under variable costing due to the difference in treatment ( product cost and period cost) of the fixed overhead cost under the two costing methods.
C In variable costing system, fixed overhead cost is included as part of the cost of inventory.
D In an absorption costing system, fixed overhead cost is treated as a period cost.
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