Which of the following can be inferred as an argument against the use of variable costing? Multiple Choice Variable factory overhead is a period cost. Fixed factory overhead is unnecessary for the production of a product. Fixed factory overhead is difficult to allocate properly. Full costing overstates the balance sheet value of inventories.
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The question asks for an argument *against* the use of variable costing. This means we are looking for a statement that highlights a disadvantage or a reason why variable costing might not be preferred in certain situations. Show more…
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Which one of the following statements is incorrect? A. Because indirect manufacturing costs are not traceable to individual products, they are treated as period costs. B. Contribution margin does not help much a manager who is about to take a long-term decision. C. Under absorption costing, the value of a unit includes all product costs. D. GAAP recommends the use of absorption costing for inventory costing. Which of the following statements is NOT true? A. Under variable costing, a firm can report a higher income merely by increasing production quantity. B. A common criticism of absorption costing is that it provides incentives to produce more than what is necessary to satisfy demand. C. By discouraging wasteful use, cost allocations can induce efficient utilization of resources shared by multiple users. D. Under absorption costing, the finished goods inventory account will contain the fixed manufacturing costs of units produced but not sold.
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Full costing differs from variable costing in that: a. Full costing excludes selling costs from consideration. b. Full costing excludes administrative costs from consideration. c. Full costing includes variable manufacturing overhead in inventory. d. Full costing includes fixed manufacturing overhead in inventory.
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