Advocates of throughput costing argue that:
A)only direct materials are truly variable
B)direct manufacturing labor is relatively fixed
C)variable manufacturing costs are a cost of the period
D)All of these answers are correct.

Question

Quizplus · Accepted Answer

Advocates of throughput costing argue that direct materials are truly variable, direct manufacturing labor is relatively fixed, and variable manufacturing costs are a cost of the period. Therefore, all of these answers are correct. Throughput costing is based on the concept of throughput, which refers to the rate at which a company generates revenue through sales. It focuses on the variable costs that are directly related to production and sales, such as direct materials, and treats all other costs as period costs, such as indirect manufacturing costs. This approach emphasizes the importance of maximizing throughput to increase profitability.

Advocates of Throughput Costing Argue That