Question

Which of the following statements is true?

Answer 1

Answer:

(A) Variable costing treats fixed overhead as a period cost.

Explanation:

Variable costing is an important concept in accounting. Under this method, manufacturing overhead is incurred in the period that a product is produced. Variable costing includes only variable manufacturing costs (direct materials, direct labor, and variable manufacturing overhead) in unit product costs. Moreover, it treats fixed overhead as a period cost.