Total production overhead is treated as a product cost when using
A) Absorption costing
B) Throughput costing
C) Variable costing
D) Throughput costing and absorption costing

Question

Quizplus · Accepted Answer

Absorption costing is a method of costing that assigns all manufacturing costs to the product, including direct materials, direct labor, and both variable and fixed manufacturing overhead. Therefore, total production overhead is treated as a product cost under absorption costing.

B) Throughput costing only considers direct materials and direct labor as product costs and treats all other manufacturing costs as period costs.

C) Variable costing also treats only variable manufacturing costs as product costs and treats fixed manufacturing overhead as a period cost.

D) This statement is incorrect as it includes both A and B as the answer, which is not possible.

Total Production Overhead Is Treated as a Product Cost When