Fixed manufacturing costs included in cost of goods available for sale + the production-volume variance will always = total fixed manufacturing costs under absorption costing.

Question

Quizplus · Accepted Answer

This statement is true. Fixed manufacturing costs are included in cost of goods available for sale under absorption costing, and the production-volume variance measures the difference between the actual fixed manufacturing costs incurred and the budgeted fixed manufacturing costs based on the level of production. Therefore, adding the production-volume variance to cost of goods available for sale will result in the total fixed manufacturing costs under absorption costing.

Fixed Manufacturing Costs Included in Cost of Goods Available for Sale