Advocates of throughput costing argue that ________.
A) fixed manufacturing costs must be included as inventoriable costs and provide less incentive than absorption costing to build-up inventory to increase profits
B) direct manufacturing labor is relatively fixed and therefore should not be included in inventory costs
C) direct materials costs are a cost of the period and therefore should not be included in inventoriable costs
D) including only direct materials as inventoriable costs provides less incentive than absorption costing to produce a build-up of inventory merely to increase profits

Question

Quizplus · Accepted Answer

Advocates of throughput costing argue that including only direct materials as inventoriable costs provides less incentive than absorption costing to produce a build-up of inventory merely to increase profits. They believe that fixed manufacturing costs should not be included as inventoriable costs and that direct manufacturing labor is a variable cost that should be included in inventory costs. Additionally, they argue that direct materials costs are a cost of the period and should not be included in inventory costs.

Advocates of Throughput Costing Argue That ________