Asked by Patricia Christian on Jul 14, 2024
Verified
Which of the following statements is correct using the direct costing concept?
A) All manufacturing costs are included in the calculation of cost of goods manufactured.
B) Only fixed costs are included in the calculation of cost of goods manufactured, while variable costs are considered period costs.
C) Only variable manufacturing costs are included in the calculation of cost of goods manufactured, while fixed costs are considered period costs.
D) All manufacturing costs are considered period costs.
Direct Costing
A cost accounting method where only variable costs (direct materials, direct labor, variable manufacturing overhead) are included in product costs, fixed overhead costs are expensed in the period they are incurred.
Cost Of Goods Manufactured
The total cost of making and finishing a product.
Variable Manufacturing Costs
Expenses that vary proportionally with production volume, such as materials and labor.
- Understand the differences between absorption costing and variable costing.
- Recognize the costs that are included and excluded in the pair of costing strategies.
Verified Answer
Learning Objectives
- Understand the differences between absorption costing and variable costing.
- Recognize the costs that are included and excluded in the pair of costing strategies.
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