1. Which of the following statements is characteristic of overhead?

   a.The adjusted cost of goods sold is equal to the normal cost of goods manufactured plus or minus the overhead variance.

   b.Variances in overhead are expected every other month.

   c.If the overhead variance shows overapplied overhead, then that amount would be subtracted from normal cost of goods sold.

   d.If the overhead variance shows underapplied overhead, then that amount would be subtracted from normal cost of goods sold.

2. Which accounting method is used for external reporting?

   a.absorption costing

   b.transfer price costing

   c.variable costing

   d.responsibility costing

3. Which of the following types of costs does NOT appear on a variable costing income statement?

   a.direct materials

   b.opportunity cost

   c.variable selling expense

   d.direct labour