Which of the following statements is false?
A) Under variable costing, the income statement is prepared using a contribution margin approach.
B) Variable costing is not allowed for external financial reporting, but many companies find it useful for internal managerial reports.
C) Under variable costing, an increase in production increases the amount of profit reported on the income statement, even if the additional units are not sold.
D) Under variable costing, fixed manufacturing costs are expensed in the period incurred.

Question

Quizplus · Accepted Answer

Under variable costing, profit is not influenced by changes in production levels unless those units are sold. Profit changes only when sales occur, as fixed manufacturing costs are treated as period costs and variable costs are assigned to units sold.

Which of the Following Statements Is False