Under variable costing, fixed manufacturing overhead is:
A) expensed immediately when incurred.
B) never expensed.
C) applied directly to Finished-Goods Inventory.
D) applied directly to Work-in-Process Inventory.
E) treated in the same manner as variable manufacturing overhead.

Question

Quizplus · Accepted Answer

Under variable costing, fixed manufacturing overhead is expensed immediately when incurred, rather than being allocated to the cost of production. This contrasts with absorption costing, where fixed manufacturing overhead is allocated to products and expensed as the products are sold.

Under Variable Costing, Fixed Manufacturing Overhead Is