When using variable costing which of the following is not considered a product cost?
A) Direct materials
B) Variable manufacturing overhead
C) Fixed manufacturing overhead
D) Direct labor

Question

Quizplus · Accepted Answer

Fixed manufacturing overhead is not considered a product cost under variable costing. This is because, under variable costing, fixed manufacturing overhead is considered a period cost and is expensed in the period in which it is incurred rather than being allocated to the products manufactured. The product costs under variable costing include direct materials, direct labor, and variable manufacturing overhead.

When Using Variable Costing Which of the Following Is Not