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Question 61

Matching

Matching

Premises:
Treats fixed manufacturing cost as a period cost.
May be used in a manufacturing company.
Treats fixed selling cost as a period cost.
Generally provides the most useful report for controlling costs.
Includes gross profit on the income statement.
Operating income is impacted by changes in inventory level.
Required by generally accepted accounting principles.
Generally provides the most useful report for setting long-term prices.
Responses:
Absorption costing only
Both absorption and variable costing
Variable costing only

Correct Answer:

Treats fixed manufacturing cost as a period cost.
May be used in a manufacturing company.
Treats fixed selling cost as a period cost.
Generally provides the most useful report for controlling costs.
Includes gross profit on the income statement.
Operating income is impacted by changes in inventory level.
Required by generally accepted accounting principles.
Generally provides the most useful report for setting long-term prices.
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