Advocates of throughput costing maintain that ________.
A) both variable and fixed are necessary to produce goods; therefore, both types of costs should be inventoried
B) all manufacturing costs plus some design costs should be inventoried
C) fixed manufacturing costs are related to the capacity to produce rather than to the actual production of specific units
D) except direct labor no other costs are truly variable in output

Question

Quizplus · Accepted Answer

Advocates of throughput costing believe that fixed manufacturing costs are related to the capacity to produce and not the actual production of specific units. Therefore, they argue that these costs should not be included in inventory and instead be treated as period expenses. This approach helps in determining the true profitability of an enterprise by focusing on the contribution margin per unit and the throughput of the system. The other options are not consistent with the tenets of throughput costing.

Advocates of Throughput Costing Maintain That ________