In the variable costing period's income statement, where should the period'sfixed costs be included?a) The income statement allows for the allocation of the fixed expenses intothe inventory value.b) The variable cost, as well as the fixed expenses, are included in the cost ofgoods sold.c) In variable costing, you do not include the fixed costs in the incomestatement.d) The fixed costs are expensed as period costs and not included in the valueof the inventory.

In variable costing, fixed costs are treated as period costs and are expensed in the period…

Answered: In the variable costing period's income…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 9QE

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Similar questions

As inventoriable costs expire, they become a. sales b. cost of goods sold c. operating expenses d. gross profit
Contrast the income statement effect of LIFO versus FIFO(on Cost of Goods Sold and Gross Profit) when ( a ) costsare rising and ( b ) costs are falling.
When applying lower of cost or net realizable value under the FIFO, average cost, or specific identification method, market value a.is defined as the selling price. b.should not exceed the net realizable value plus an allowance for a normal profit margin. c.should not exceed the net realizable value less an allowance for a normal profit margin. d.is defined as the net realizable value.
Effect of Cost Changes Complete the following table by indicating whether FIFO or LIFO results in the lower reported amount for each of the three accounting measures. Rising costs Falling costs Lowest Ending Inventory Lowest Cost of Goods Sold Lowest Net Income
In a CVP income statement, cost of goods sold is generally completely a variable cost. completely a fixed cost. neither a variable cost nor a fixed cost. O broken down into its variable and fixed cost components.
The table below lists financial statement items that may be affected by the use of either the FIFO or LIFO inventory costing methods. Required: Conceptual Connection: Assuming that prices are rising, identify whether the specified item is (a) higher or (b) lower under FIFO and LIFO. FIFO LIFO Ending inventory Cost of goods sold Gross margin Income before taxes Payments for income taxes Net income
If inventory is being valued at cost and the price level is steadily rising, which of the three methods of costing—FIFO, UFO, or weighted average cost—will yield the lowest an nual income tax expense? Explain.
The cost of insurance and tax is included in which of the following costs? a. Inventory carrying cost b. None of these c. Cost of ordering d. Set up cost
Selling expenses are subtracted from the sales price in computing amount realized. True or false
Which of the following statements regarding the lower of cost and net realizable value (LCNRV) rule is true? a.The LCNRV rule is an application of the cost principle. b.When the net realizable value of inventory drops below the cost of inventory, an adjustment is made to decrease inventory to its net realizable value and decrease income. c.If a company uses the LCNRV rule, there is no need to use a cost flow assumption such as FIFO, or weighted average cost. d.When the net realizable value of inventory is above the cost of inventory, an adjustment is made to increase inventory to its net realizable value and increase income.
Which of the following is NOT true regarding an income statement organized according to thecontribution margin approach? Question 6 options: The contribution margin income statement is organized by cost behavior. Operating income will always be the same as operating income in a traditional income statement regardless of changes in inventory levels. All fixed costs, including fixed MOH, are expensed below the contribution margin line. The contribution margin is equal to sales revenue minus variable expenses.
Using the information for Lighthizer Trading Company, prepare the income statement to include all costs, but separate out uncontrollable costs. Insert subtotals where appropriate (include one for operating income) before the uncontrollable costs. Income tax expense should be based on all expenses (that is, it will be the same amount as in the previous exercise). Calculate net income, profit margin, ROI, and RI excluding uncontrollable expenses. Prepare a short response to accompany the income statement that explains why uncontrollable costs are separated in the income statement.

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