Question
Why does a favorable price variance not always mean better performance?
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Answer
Cheaper inputs can create an unfavorable usage variance.
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Question
When do absorption and variable costing produce different net income?
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Answer
Only when production and sales differ, changing inventory.
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Question
What does contribution margin measure?
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Answer
Sales minus variable costs.
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Question
How does variable costing treat fixed overhead?
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Answer
As a period cost, expensed immediately.
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