Which of the following statements is true?
A. Under variable costing fixed manufacturing costs are expensed in the period in which they are incurred regardless of when the inventory is sold.
B. Under absorption costing some fixed manufacturing costs are deferred in ending inventory if production is lower than sales.
C. When production and sales are equal, net income will be greater under variable costing than it will be under absorption costing.
D. Under absorption costing only the fixed manufacturing costs associated with inventory produced are expensed.
Answer: A
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Answer the following statement true (T) or false (F)
A Korean factory has offered to supply Fastec with ready-made units for a price of $14 per transfer case. Assume that Fastec's fixed costs are unavoidable, but that Fastec could use the vacated production facilities to earn an additional $9500 of profit per month. If Fastec decides to outsource, monthly operating income will ________.
Fastec Automobile Company fabricates automobiles. Each vehicle includes one transfer case, which is currently made in-house. Details of the transfer case fabrication are as follows:
A) increase by $4700
B) decrease by $15,000
C) increase by $9500
D) decrease by $27,100
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Fill in the blank(s) with correct word
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