A basic tenet of variable costing is that fixed overhead costs should be currently expensed. What is the basic rationale behind this procedure?
a. Fixed overhead costs will occur whether or not production occurs and so it presents a clearer picture of how changes in production volume affect costs and income.
b. Fixed overhead costs are generally immaterial in amount and the cost of assigning the amounts to specific products would outweigh the benefits.
c. Allocation of fixed overhead costs is arbitrary at best and could lead to erroneous decisions by management.
d. Fixed overhead costs are uncontrollable and should not be charged to a specific product.
a
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Tillamook Farms invests in a new kind of frozen dessert called polar cream that becomes very
popular. So many new customers come to the store that the sales of existing ice cream products are increased. The extra sales revenue A) should be included in the analysis, but not the cost of the ice cream that is sold as that is a recurring expense. B) are synergistic effects that should be counted as incremental revenues for the polar cream project. C) are cannibalized sales that should be excluded from the analysis. D) should not be counted as incremental revenue for the polar cream project because the sales come from existing products.
The success of any vehicles of the ethnic press is largely a function of the revenue they receive from advertising
Indicate whether the statement is true or false