Question

Which of the following statements pertain to both variable costing and absorption costing? The income statement discloses the amount of gross margin generated during the reporting period. Variable selling costs are written-off as expenses of the accounting period. Fixed selling and administrative expenses are treated in the same manner as fixed manufacturing overhead. Fixed manufacturing overhead is attached to each unit produced. Both variable and absorption costing can be used for external financial reporting.

Answer 1

Answer:

Variable selling costs are written-off as expenses of the accounting period.

Explanation:

In the variable costing, all variable costs are included i.e direct material cost, direct labor cost, all other variable cost i.e variable administrative expenses, variable selling cost, etc

On the other side, the absorption costing includes both types of fixed and the variable costs

So according to the given options, the second option is right because under both the costing method the variable selling cost are written as an expense for the given accounting period