Which of the following statements pertain to variable costing?
A)This method must be used for external financial reporting.
B)Fixed manufacturing overhead is attached to each unit produced.
C)The income statement discloses a company's contribution margin.
D)Variable manufacturing overhead becomes part of a unit's cost.
E)Statements "C" and "D" both pertain to variable costing.

Question

Quizplus · Accepted Answer

Statements "C" and "D" both pertain to variable costing. Variable costing is a method of accounting in which only variable manufacturing costs are included in the cost of units produced. Fixed manufacturing overhead is treated as a period expense and is not included in the product cost. The income statement under variable costing shows the contribution margin, which is the amount by which revenue exceeds variable costs.

Which of the Following Statements Pertain to Variable Costing