Answer the following questions using the information below:
Tunney Corporation incurred fixed manufacturing costs of $7,200 during 2011. Other information for 2011 includes:
The fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold.
-Under variable costing, the fixed manufacturing costs expensed on the income statement (excluding adjustments for variances)total:
A)$8,550
B)$7,200
C)$9,000

Question

Answer the following questions using the information below:
Tunney Corporation incurred fixed manufacturing costs of $7,200 during 2011. Other information for 2011 includes:
  The fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold.
-Under variable costing, the fixed manufacturing costs expensed on the income statement (excluding adjustments for variances)total:
A)$8,550 
B)$7,200 
C)$9,000

Quizplus · Accepted Answer

Under variable costing, only fixed manufacturing costs that are incurred during the period are included in the cost of goods sold. Therefore, the fixed manufacturing costs expensed on the income statement (excluding adjustments for variances) would be the same as the amount incurred, which is $7,200.

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