When using the absorption approach to costing,
A) all variable costs are inventoriable.
B) all indirect manufacturing costs are inventoriable.
C) all fixed costs are treated as period costs.
D) all direct manufacturing costs are treated as period costs.

Question

Quizplus · Accepted Answer

The absorption approach to costing involves allocating all indirect manufacturing costs (fixed and variable) to products, making them inventoriable costs. Direct manufacturing costs (both fixed and variable) are also inventoried under this approach. Period costs, such as selling and administrative expenses, are not inventoried and are expensed in the current period.

When Using the Absorption Approach to Costing