Question 2 1 pts "Absorption costing regards more categories of costs as product costs." Explain. Fixed manufacturing overhead is considered a period cost under variable costing but a product cost under absorption costing. Absorption costing includes indirect costs while variable costing does not Fixed manufacturing overhead is considered a straightforward cost in absorption costing. The actual amount of fixed manufacturing overhead is deducted on the current-period income statement. Fixed manufacturing overhead is considered a period cost under absorption costing but a product cost under variable costing. Question 3 1 pts "An increasing number of companies are using variable costing in their corporate annual reports." Do you agree? Explain. Yes. Variable costing is being used in many corporate annual reports because variable costing is required for tax purposes. Yes. Variable costing is acceptable for external reporting. In addition, an increasing number of firms are using variable costing for internal reporting. O No. Variable costing is not acceptable for external reporting, internal reporting, or for tax purposes. No. Variable costing is not acceptable for external reporting. However, an increasing number of firms are using variable costing for internal reporting. Question 4 1 pts Compare variable and absorption costing regarding the treatment of fixed manufacturing costs. Variable costing applies manufacturing overhead to inventory as a product cost until the goods are sold. Then the manufacturing overhead is expensed as cost of goods sold. Absorption costing expenses manufacturing overhead immediately. Fixed manufacturing overhead is included from the cost of products under variable costing but is excluded in the cost of products under absorption costing. Fixed manufacturing overhead is excluded from the cost of products under absorption costing but is included in the cost of products under variable costing. Variable costing expenses fixed manufacturing overhead immediately. Absorption costing applies fixed manufacturing overhead to inventory as a product cost until the goods are sold. Then fixed manufacturing overhead is expensed as cost of goods sold. Question 6 1 pts Compare the contribution margin with the gross margin. The contribution margin is revenue less variable costs which include variable selling and administrative costs. In contrast, gross margin is revenue less manufacturing costs which include fixed manufacturing costs. The contribution margin is revenue less variable costs and used to generate a variable-costing income statement. In contrast, gross margin is revenue less manufacturing costs found on an absorption-costing income statement. The contribution margin is revenue less variable costs which include only variable manufacturing costs. In contrast, gross margin is revenue less manufacturing costs which include only fixed manufacturing costs. o The contribution margin is revenue less manufacturing costs which include fixed manufacturing costs. In contrast, gross margin is revenue less variable costs which include variable selling and administrative costs. Question 5 1 pts Compare variable and absorption costing regarding the treatment of production-volume variance. The production-volume variance appears on both an absorption-costing and a variable-costing income statement. The production-volume variance appears only on an absorption-costing income statement. The production-volume variance appears only on a variable-costing income statement. A production-volume variance appears whenever the expected production deviates from the expected fixed overhead rate