Which of the following product-costing systems is/are required for tax purposes?
A) Absorption costing.
B) Variable costing.
C) Throughput costing.
D) Either absorption or variable costing.
E) Either absorption, variable costing, or throughput costing.

Question

Quizplus · Accepted Answer

Absorption costing is required by generally accepted accounting principles (GAAP) and for tax reporting purposes because it includes all manufacturing costs in the cost of a product, including both variable and fixed manufacturing overhead. Variable and throughput costing, while useful for internal decision-making, do not meet these requirements.

Which of the Following Product-Costing Systems Is/are Required for Tax