In absorption costing, the fixed factory overhead is included_____.
A)entirely in the cost of goods sold
B)as part of cost of goods sold and as a production-volume variance
C)entirely as a production-volume variance
D)entirely in ending inventory

Question

Quizplus · Accepted Answer

In absorption costing, fixed factory overhead is included as part of the cost of goods sold and as a production-volume variance. This means that a portion of fixed factory overhead is allocated to each unit produced and is included in the cost of goods sold. The remaining portion of fixed factory overhead that is not absorbed by production is classified as a production-volume variance and is reported separately in the financial statements.

In Absorption Costing, the Fixed Factory Overhead Is Included_____