Question: 1. The main trouble with variable costing is that it ignores the increasing importance of fixed costs in modern business. Do you agree? Why? 2.

1. "The main trouble with variable costing is that it ignores the increasing importance of fixed costs in modern business." Do you agree? Why?

2. How are marketing and administrative costs treated under variable costing? Under full-absorption costing?

3. If fixed manufacturing overhead costs are released from inventory under absorption costing, what does this tell you about the level of production in relation to the level of sales?

4. If production exceeds sales, which method would you expect to show the higher net operating income, variable costing or absorption costing? Why?

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