Variable costing
A) is used for external reporting purposes.
B) is required under GAAP.
C) treats fixed manufacturing overhead as a period cost.
D) is also known as full costing.

Question

Quizplus · Accepted Answer

Variable costing treats fixed manufacturing overhead as a period cost, which means it is expensed in the period it is incurred rather than being allocated to the cost of goods sold. This is different from full costing, which allocates all manufacturing costs, both variable and fixed, to the cost of goods sold. Variable costing is not required under GAAP and is typically used for internal management purposes rather than external reporting.

Variable Costing