Which of the following is NOT true of variable costing? a. Profits may increase though sales decrease. b. Profits fluctuate with sales. c. The cost of the product consists of all variable production costs

Which of the following is NOT true of variable costing? a. Profits may increase though sales decrease. b. Profits fluctuate with sales. c. The cost of the product consists of all variable production costs

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Which of the following is NOT true of variable costing?

a. Profits may increase though sales decrease.

b. Profits fluctuate with sales.

c. The cost of the product consists of all variable production costs.

d. The income statement under variable costing does not include overhead volume variance.

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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