Under variable costing, fixed manufacturing overhead is expensed immediately when incurred rather than being applied to work-in-process or finished goods inventory. Variable costing treats fixed overhead as a period cost, expensing it as incurred to better match expenses with the period's revenue and calculate a more accurate profit. In contrast, absorption costing applies both fixed and variable overhead to inventory.

1. Under variable costing, fixed manufacturing overhead is:
expensed immediately when incurred.
never expensed.
applied directly to Finished-Goods Inventory.
applied directly to Work-in-Process Inventory.
treated in the same manner as variable manufacturing overhead.
Solution
expensed immediately when incurred.
Reason - Variable costing states that all the fixed overhead incurred during period should be
charged in the same period.i.e. Fixed cost shold not be carried in the Finished good inventory.
Under absorption costing fixed overhead are being charged to WIP and Finished goods inventory
i.e. they are being included in WIP and FG.
Thus we can say that Fixed Manufacturing overhead are expensed when incurred.
Particulars Amount
Sales
less Variable cost
Contribution
Less Fixed Cost
Profit