Which of the following statements is false?
A. Under variable costing, the income statement is prepared using a contribution margin approach.
B. 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.
C. Under variable costing, fixed manufacturing costs are expensed in the period incurred.
D. Variable costing is not allowed for external financial reporting, but many companies find it useful for internal managerial reports.
Answer: B
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