Which of the following statements is true for a firm that uses variable costing?
A) The unit product cost changes as a result of changes in the number of units manufactured.
B) Both variable selling costs and variable production costs are included in the unit product cost.
C) Operating income moves in the same direction as sales.
D) Operating income is greatest in periods when production is highest.

Question

Quizplus · Accepted Answer

Variable costing includes only variable manufacturing costs in the unit product cost, meaning operating income will move in the same direction as sales because fixed manufacturing costs are expensed in the period they are incurred, not included in the product cost.

Which of the Following Statements Is True for a Firm