11 absorption costing income statements cannot differentiate between variable and fi 4302230

 

11)

Absorption-costing income statements cannot differentiate between variable and fixed costs.
11)

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12)

The period-to-period change in operating income under variable costing is driven by unit level of sales, if the contribution margin is constant.
12)

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13)

Variable costing will generally report less operating income than absorption costing when the inventory level decreases.
13)

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14)

Absorption costing defers the fixed manufacturing costs in ending inventory to a future period, but variable costing expenses these costs in the current period.
14)

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15)

Changes in inventory levels do not affect income amounts between variable and absorption costing because the difference in accounting for fixed manufacturing overhead offsets the affect.
15)

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16)

Absorption costing prevents managers from increasing production to levels above customer demand, as a means of inflating operating income.
16)

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17)

Each unit in inventory under absorption costing absorbs fixed manufacturing costs.
17)

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18)

Absorption costing can be criticized as a method that encourages managers to make decisions that may be contrary to the long-term interest of the company.
18)

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19)

Throughput costing treats all costs as period costs.
19)

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20)

Using either the theoretical capacity or practical capacity as the denominator-level concept will result in the same production-volume variance.
20)

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