Which of the following statements is(are) false?
(A) All variances should be prorated to inventories and cost of goods sold at the end of the accounting period.
(B) If the number of units produced exceeds the number of units sold, the full-absorption operating profit will be lower than variable costing operating profit.
A) Only A is false.
B) Only B is false.
C) Both of these are false.
D) Neither of these is false.

Question

Quizplus · Accepted Answer

Statement A is false because not all variances need to be prorated; some may be written off directly to cost of goods sold. Statement B is false because if production exceeds sales, full-absorption costing will show higher operating profit than variable costing due to fixed overhead being spread over more units.

Which of the Following Statements Is(are) False