In variable costing, the change in operating income is driven only by changes in _________?
Correct answer: A. quantity of units sold
- A. quantity of units sold
- B. quantity of units manufactured
- C. increase in units sold
- D. decrease in units sold
Explanation
With variable costing, fixed manufacturing overhead is expensed in the current period, so operating income changes with units sold and their contribution margins. Changes in units manufactured do not defer fixed manufacturing cost in inventory.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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