Which of the following statements is true of absorption costing?
A) It considers variable selling and administrative costs as product costs.
B) It considers fixed selling and administrative costs as product costs.
C) It considers fixed manufacturing overhead cost as product costs.
D) It considers variable manufacturing overhead cost as period costs.

Question

Quizplus · Accepted Answer

Absorption costing considers fixed manufacturing overhead cost as product costs and includes them in the cost of goods sold. Variable selling and administrative costs are typically considered period costs and are not included in product costs under absorption costing. Fixed selling and administrative costs are also considered period costs and are not included in product costs under absorption costing.

Which of the Following Statements Is True of Absorption Costing