Question

Which of the following statements is true? Group of answer choices Under absorption costing, fixed manufacturing overhead is expensed as period expenses. Under variable costing, direct materials and direct labor are expensed as period expenses. Fixed manufacturing overhead costs are treated the same under both absorption costing and variable costing. Reported income under absorption costing is not affected by production level changes. Under variable costing, fixed manufacturing overhead is expensed as period expenses.

Answer 1

Answer:

Under variable costing, fixed manufacturing overhead is expensed as period expenses.

Explanation:

Option A is wrong because under absorption costing, fixed manufacturing overhead is expensed as product expenses.

Option B is incorrect because Under variable costing, direct materials and direct labor are expensed as product expenses.

Option C is false because Fixed manufacturing overhead costs are treated as product cost under absorption costing and period cost under variable costing.

Therefore, option E is correct as fixed manufacturing overhead is expensed as period expenses under variable costing.