alleryStart learning →Under variable costing, fixed overhead costs are treated in which way?
AExpensed in the period incurred
BRecorded as a long-term asset
CAdded to the closing dividend
DDeferred until the firm closes
Answer & Solution
Correct answer: A. Expensed in the period incurred
1. Variable costing keeps fixed overhead out of the product.
2. All variable costs are assigned to a product under this method.
3. Fixed overhead costs are expensed in the period incurred.
4. So they hit the income statement at once.
_Source: OpenStax Principles of Accounting Volume 2, Managerial Accounting (CC BY-NC-SA 4.0), Ch 6 'Activity-Based, Variable, and Absorption Costing', sections 6.1-6.5_
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