Question

8) Opponents of variable costing argue that in the long run all costs are variable. (4pts) True O False 9) Fixed non-manufacturing costs are classified as period costs under variable costing, but not under absorption costing. True False

Answer 1

Question 9

The Statement is False.

The difference between the absorption costing and variable costing is regarding treatment of fixed manufacturing Overhead costs. Absorption costing treats fixed Manufacturing Overhead as a part of the prodduct costs whereas variable costing treats it as a part of period costs. Fixed Non Manufacturing costs is treated as period costs either in absorption costing or in the variable costing. there is no question of treating non manufacturing costs as products costs in either of the costing methods.

Question 8

The Statement is True.

The opponents of variable costing argues that in the long run all the costs are variable costs. The rationale or the reason behind the statement is that there are no fixed inputs in long-run which in true means that all the inputs are in the nature of variable part in the long run and that's why all input costs are variable costs in the long run. In simple words all the factors of the production in the long term are variable hence all costs are variable costs.Moreover in a shorter period of time it is difficult to control costs but in the longer run it becomes easy to cost control and the costs change their operating nature.