T, F. In a make or buy short-run decision situation, the critical element to consider is whether the variable cost to produce the item is higher or lower the competitor’s selling price. T, F. In absorption costing method, gross margin is the term used to describe the difference between sales and variable costs. T, F. In Variable costing method, contribution margin is used to describe the difference between sales and variable costs. T, F. Although variable costing may provide useful information for internal controls and pricing, it is not generally accepted inventory valuation system by IRS and AICPA. T, F. One of the disadvantages of Variable Costing method is that it ignores the principle of matching revenues with related costs.

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Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 5SEQ

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T, F. In a make or buy short-run decision situation, the critical element to consider is whether the variable cost to produce the item is higher or lower the competitor’s selling price.

T, F. In absorption costing method, gross margin is the term used to describe the difference between sales and variable costs.
T, F. In Variable costing method, contribution margin is used to describe the difference between sales and variable costs.
T, F. Although variable costing may provide useful information for internal controls and pricing, it is not generally accepted inventory valuation system by IRS and AICPA.
T, F. One of the disadvantages of Variable Costing method is that it ignores the principle of matching revenues with related costs.

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