21. Under variable costing, product costs consist of direct materials, direct la

Question

21.

Under variable costing, product costs consist of direct materials, direct labor, and variable manufacturing overhead.

True

False

22.

Under absorption costing, fixed manufacturing overhead cost is not included in product cost.

True

False

23.

Assuming the LIFO inventory flow assumption, if production is less than sales for the period, absorption costing net operating income will generally be greater than variable costing net operating income.

True

False

24.

Segment margin is a better measure of the long-run profitability of a segment than contribution margin.

True

False

25.

If a company operates at the break even point for each of its segments, it will lose money overall if common fixed expenses exist.

True

False

Explanation / Answer

Answer:21 True

Because Variable costing includes only variable production costs in product costs. Direct materials, direct labor and variable manufacturing overhead costs would ordinarily be included in product costs under variable costing.

Answer:22 False

Because Fixed manufacturing overhead is treated as a product cost under this method.

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