Absorption costing treats all manufacturing costs as product costs.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Manufacturing Costs

The total cost related to the production of goods, including raw materials, labor, and overhead expenses.

Learn to distinguish the essential contrasts between absorption costing and variable costing methodologies.
Identify the charges that are accounted for as product costs in both variable and absorption costing systems.

Verified Answer

Valerie SanchezApr 30, 2024

Final Answer :

True

Explanation :

Absorption costing includes all manufacturing costs in the cost of a product, including direct materials, direct labor, and both variable and fixed manufacturing overhead costs. Therefore, all costs are considered product costs.

Learning Objectives

Learn to distinguish the essential contrasts between absorption costing and variable costing methodologies.
Identify the charges that are accounted for as product costs in both variable and absorption costing systems.

Absorption costing treats all manufacturing costs as product costs.

Definitions

Learning Objectives

Learning Objectives

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