Which of the following statements is true regarding variable costing?
A) Variable costing is also known as full costing.
B) Per unit contribution margin is affected by production levels in variable costing.
C) In a variable costing income statement, fixed costs are separated from variable costs.
D) Variable costing focuses attention on all product costs and not only relevant product costs.

Question

Quizplus · Accepted Answer

In a variable costing income statement, fixed costs are separated from variable costs. This is a key feature of variable costing and distinguishes it from full costing, which includes fixed costs in the cost of goods sold. Option A is incorrect as variable costing is not the same as full costing. Option B is incorrect as per unit contribution margin is not affected by production levels in variable costing (it is calculated using variable costs per unit). Option D is incorrect as variable costing only focuses on relevant product costs (i.e. variable costs) and ignores fixed costs.

Which of the Following Statements Is True Regarding Variable Costing