Assuming that direct labor is a variable cost, product costs under variable costing include only:
A) direct materials and direct labor.
B) direct materials, direct labor, and variable manufacturing overhead.
C) direct materials, direct labor, variable manufacturing overhead, and variable selling and administrative expenses.
D) direct material, variable manufacturing overhead, and variable selling and administrative expenses.

Question

Quizplus · Accepted Answer

Variable costing only includes costs that vary with the level of production, which are direct materials, direct labor, and variable manufacturing overhead. Variable selling and administrative expenses are not included in product costs under variable costing.

Assuming That Direct Labor Is a Variable Cost, Product Costs