Which of the following statements is true for a company that uses variable costing?
A) The manufacturing cost per unit decreases when the volume of production increases.
B) Net income is not affected by fluctuations in production.
C) Fixed manufacturing overhead is treated like a product cost.
D) Fixed manufacturing overhead costs incurred in the current period may be recognized as expense in a later period.

Question

Quizplus · Accepted Answer

Under variable costing, only variable manufacturing costs are treated as product costs, and fixed manufacturing overhead is expensed in the period it is incurred. This means that net income is directly related to sales volume rather than production volume, making statement B correct.

Which of the Following Statements Is True for a Company