Advantages of throughput costing include all of the following EXCEPT
A)throughput costing reduces management's tendency to build inventory levels over which to spread fixed manufacturing costs of production.
B)throughput costing motivates managers to reduce operating costs such as direct labour and variable overhead, which are treated as period costs rather than product costs.
C)throughput costing is simpler than normal costing or absorption costing since all manufacturing overhead is expensed as a period cost immediately.
D)throughput costing motivates managers to reduce operating costs such as direct materials and variable overhead, which are treated as period costs rather than product costs.

Question

Quizplus · Accepted Answer

The advantages of throughput costing include the reduction of management's tendency to build inventory levels over which to spread fixed manufacturing costs of production, motivation for managers to reduce operating costs such as direct labour and variable overhead, which are treated as period costs rather than product costs, and simplicity compared to normal costing or absorption costing since all manufacturing overhead is expensed as a period cost immediately. Choice D is not an advantage of throughput costing because direct materials and variable overhead are treated as product costs in throughput costing, not period costs.

Advantages of Throughput Costing Include All of the Following EXCEPT