6 which of the following statements is true? multiple choice variable costing treats fixed overhead as a…

6 which of the following statements is true? multiple choice variable costing treats fixed overhead as a period cost absorption costing treats fixed overhead as a period cost absorption costing treats fixed overhead as an expense in the period it is incurred variable costing excludes all overhead from product costs managers can manipulate earnings more easily under variable costing by varying the production level

6 which of the following statements is true? multiple choice variable costing treats fixed overhead as a period cost absorption costing treats fixed overhead as a period cost absorption costing treats fixed overhead as an expense in the period it is incurred variable costing excludes all overhead from product costs managers can manipulate earnings more easily under variable costing by varying the production level

Answer

Brief Explanations:

  • Variable costing: In variable costing, fixed overhead is considered a period cost. It is expensed in the period it is incurred.
  • Absorption costing: Absorption costing includes fixed overhead as a product - cost (not a period cost). Fixed overhead is attached to the units produced and is expensed when the units are sold (not when incurred as a general statement for all cases).
  • Variable costing and overhead: Variable costing only excludes fixed overhead from product costs, not all overhead (variable overhead is included in product costs).
  • Earnings manipulation: Managers can manipulate earnings more easily under absorption costing (by producing more units to defer fixed - overhead costs in inventory) rather than under variable costing.

Answer:

Variable costing treats fixed overhead as a period cost.