Asked by Carissa Gulli on Jun 16, 2024
Verified
Under variable costing, an increase in fixed manufacturing overhead will affect the unit product cost.
Fixed Manufacturing Overhead
The portion of manufacturing overhead costs that remains constant regardless of the level of production.
Variable Costing
An accounting method that considers only variable production costs (costs that change with the level of output) in the calculation of product costs.
Unit Product Cost
The total cost associated with producing one unit of a product, including both variable and fixed costs.
- Recognize the implications of costing methods on net operating income and inventory management.
Verified Answer
BP
Biviana PimentelJun 17, 2024
Final Answer :
False
Explanation :
Under variable costing, only variable costs are included in the unit product cost; fixed manufacturing overhead is treated as a period expense and does not affect the unit product cost.
Learning Objectives
- Recognize the implications of costing methods on net operating income and inventory management.