Which of the following statements pertain to variable costing?
A)This method must be used for external ﬁnancial reporting.
B)Fixed manufacturing overhead is attached to each unit produced.
C)The income statement not does disclose a company's contribution margin.
D)Variable manufacturing overhead becomes part of a unit's cost.
E)None of the answers is correct.

Question

Quizplus · Accepted Answer

Variable costing considers only variable manufacturing costs, which includes direct materials, direct labor, and variable overhead, as part of a unit's cost. Fixed manufacturing overhead is considered a period cost and is not attached to each unit produced. The income statement prepared under variable costing method shows the contribution margin, which is the difference between total sales revenue and total variable costs. This method is commonly used for internal decision-making purposes.

Which of the Following Statements Pertain to Variable Costing