Which costing approach assumes fixed overhead costs only expire when product is sold?
A)product costing
B)backflush accounting
C)absorption costing
D)cash basis accounting

Question

Quizplus · Accepted Answer

Absorption costing assumes that all fixed overhead costs are only expensed when the corresponding products are sold, which is different from variable costing or cash basis accounting. Product costing is a general term that can encompass various costing methods, while backflush accounting is a specialized method used in a JIT or lean manufacturing environment. Therefore, the most suitable answer for the given question is C, absorption costing.

Which Costing Approach Assumes Fixed Overhead Costs Only Expire When