Under variable costing, fixed manufacturing overhead cost is not treated as a product cost.

Question

Quizplus · Accepted Answer

Under variable costing, only variable manufacturing costs are treated as product costs. Fixed manufacturing overhead costs are considered period costs and are recorded as an expense in the period incurred. This is in contrast to absorption costing, where fixed manufacturing overhead costs are included as a product cost and become part of the cost of goods sold.

Under Variable Costing, Fixed Manufacturing Overhead Cost Is Not Treated